RBC currently feels comfortable about this small-cap stock. Callon Petroleum Co. (NYSE: CPE) is an independent oil and natural gas company engaged in the exploration, development, acquisition and production of oil and natural gas properties. The company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin.
The company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. Callon made a huge $570 million acquisition of 29,000 net acres in May that more than doubled its Delaware Basin footprint.
The $15 RBC price target compares with a $16.68 consensus target. The stock closed trading on Monday at $11.29.
Centennial Resource Development
This off-the-radar stock could have solid upside potential. Centennial Resource Development Inc. (NASDAQ: CDEV) is a pure play Permian oil and gas producer. The company holds 87.9 thousand net acres across the Delaware Basin, with its largest position in Reeves and Pecos, Texas, (76.1 thousand net acres) and its recently acquired position in Lea County, New Mexico, (11.9 thousand net acres). The company’s legacy position, which it was held since the time of its initial public offering (IPO) in late 2016 covers 42.5 thousand net acres in Reeves, Pecos and Ward counties.
First-quarter net income increased 116% to $66.1 million, or $0.25 per diluted share, compared to the fourth quarter 2017. For the quarter, average daily crude oil production increased 15% from the prior quarter and 201% year over year.
The RBC price target was raised to $28 from $26, while the consensus target was last seen at $25.82. The stock closed trading on Monday at $18.47.
This company has been mentioned recently as a potential takeover target. Matador Resources Co. (NYSE: MTDR) is an independent energy company that engages in the exploration, development, production and acquisition of oil and natural gas resources in the United States.
The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas.
Since its IPO, Matador has grown its Permian acreage by more than tenfold as a result of acquisitions, and it has 2,151 net horizontal locations across multiple prospective zones.
The $39 RBC price target was raised to $42. The posted consensus target is $37.44, and the shares closed Monday at $32.52.
This smaller independent could be an outstanding play for more aggressive accounts. Oasis Petroleum Inc. (NYSE: OAS) is an independent exploration and production company that focuses on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. Its principal projects are located in West Williston and East Nesson.
The company expanded its presence when it closed on a Permian Basin acquisition on February 14, 2018, adding an average of approximately 3.6 thousand barrels of oil equivalents per day of production and approximately 22,000 net undeveloped acres. The company bought the acreage in the Delaware Basin from privately held Forge Energy for about $946 million.
RBC raised its $14 price target to $15. The consensus figure is $14.64, and the shares closed Monday at $13.34.
These are two large cap plays and four small and mid-cap favorites from the energy team at RBC. All these picks are good for growth accounts with a degree of risk tolerance looking for more energy exposure.