This is another top play for investors looking to the Permian Basin and the other top pick at Deutsche Bank. Cimarex Energy Co. (NYSE: XEC) is an independent exploration and production company. Its primary activities are in the Mid-Continent and Permian Basin areas of the United States. The company is focused on increasing shareholder value through strategies linked to generating attractive economic returns on capital employed and profitable growth in per-share reserves, production and cash flow. It intends to profitably grow reserves and production through a balanced mix of exploration, exploitation and acquisitions.
Cimarex has a diversified base of high-quality production and attractive drilling opportunities. It should be noted that hedge funds have initiated sizable new positions in the company over the past year, and like its brethren in the Permian, many consider the company a very solid takeover target.
Investors in Cimarex receive just a 0.3% dividend. Deutsche Bank has a whopping $164 price target, while the posted consensus target is $143.60. The shares closed Friday at $110.95, down just over 2%.
This company also remains a top pick across Wall Street. RSP Permian Inc. (NYSE: RSPP) is an independent oil and natural gas company focused on the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The vast majority of the company’s acreage is located on large, contiguous acreage blocks in the core of the Midland Basin, a subbasin of the Permian.
The company caught a string of upgrades from top Wall Street companies last year, and many have pointed to the possibility that the company could be a potential takeover candidate. Historically a vertical producer, the company has been transitioning to horizontal drilling the past few years.
Deutsche Bank has set its price objective at $55. The consensus price target is $50.15, and shares closed Friday at $38.30, down almost 3%.
This company has very large exposure to crude oil. Continental Resources Inc. (NYSE: CLR) is primarily a producer of onshore U.S. oil and has positioned itself in two growing hydrocarbon discoveries in the country: 1) the Bakken oil play in Montana and North Dakota, and 2) the SCOOP/STACK in Oklahoma, giving the company good growth opportunities for years to come.
Many on Wall Street feel that the company’s investment thesis is virtually unmatched. Investors get core Permian-like acreage at a non-Permian valuation. Of greatest importance, Continental is one of few diversified large-cap stocks that offers investors exposure to low-cost oil outside of the Permian. With some anticipated growing pains in the Permian, diversification is important in the high-quality peer class.
The Deutsche Bank price target is $70. The consensus target is $60.52, and shares closed Friday at $53.74, down over 5%.
The Deutsche Bank choices skew to the Permian, and with good reason, as it remains the premier shale play in the United States. Given the markets current volatile state, it may make sense to nibble at some of these stocks and see if we don’t trade lower in the next week or so.
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