Without a doubt, the Permian Basin has been one of the top-producing areas for U.S. energy companies over the past few years. While many analysts see a production decline coming, if a recent well that hit the jackpot is any indication, that pronouncement may be premature.
In a new SunTrust Robinson Humphrey research report, the energy team notes that Devon Energy Inc. (NYSE: DVN) reported Monday that two wells are producing the largest 24-hour initial production rates in the United States. The Boundary Raider 6-7 Com 212H and 213H both flowed at a stunning 11,000 barrels of oil equivalent per day. The analyst also points out that flow rates are some of the largest ever seen in the Permian Basin and the United States, with the previous high in the region being 6,500 barrels of oil equivalent per day.
The analysts also feel that this could be a big positive for operators in the region that are near the Devon find. The wells are located on the border of Lea and Eddy counties in New Mexico. SunTrust says that while few details are available on the wells, they appear to target the 2nd Bone Spring with roughly two-mile laterals. We cross-referenced the companies mentioned, looking for Buy ratings in our 24/7 Wall St. research database.
This leading energy company shows up well on many Wall Street screens. EOG Resources Inc. (NYSE: EOG) is one of the largest independent exploration and production companies operating in the United States, Canada, Trinidad, the United Kingdom and China.
The company has a big well in Loving County in the Delaware Basin. Top analysts say the well ranks as one of the best they have ever seen in the basin, and it could easily impact other companies drilling in the region. EOG’s average dollar gross per well on a yearly basis is a stunning $4.3 million, which ranks third among all operators.
The SunTrust team says that EOG has the largest acreage position to the southeast side of where the Devon wells are located.
Shareholders receive just a 0.62% dividend. Stifel has a price target of $149, while the Wall Street consensus target for the shares is $126.69 The stock closed trading on Wednesday at $116.65.
This remains a top Wall Street energy pick and is on the US 1 list at Merrill Lynch. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
The company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
Recently, Exxon announced estimated first-quarter 2018 earnings of $4.7 billion, or $1.09 per share assuming dilution, compared with $4.0 billion a year earlier. Cash flow from operations and asset sales was $10 billion, including proceeds associated with asset sales of $1.4 billion. In addition, Exxon has raised the dividend by $0.05 per share to $0.82. That now translates to a nifty 4.27% dividend.
The analysts noted that through an acquisition from the Bass brothers, Exxon has acreage that surrounds the north, south and west side of the position of the Devon wells.
The Merrill Lynch price objective is $100, and the consensus estimate is much lower at $85.98. Shares closed Wednesday at $86.80.