Why 4 Exploration and Production Energy Stocks May Be Takeover Targets

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Carrizo Oil & Gas

This is a top energy stock for value buyers to consider. Carrizo Oil & Gas Inc. (NASDAQ: CRZO) is a Houston-based energy company actively engaged in the exploration, development and production of oil and gas from resource plays located in the United States. Carrizo’s current operations are principally focused in proven, producing oil and gas plays, primarily in the Eagle Ford Shale, the Utica Shale in Ohio, the Niobrara Formation in Colorado and the Marcellus Shale in Pennsylvania.

Many on Wall Street see the company as one of the best positioned due to the low breakeven costs, solid operating scale and a very good balance sheet with ample liquidity. Top analysts also think the company may take advantage of difficult situations for others and make acquisitions, especially in the Eagle Ford.

SunTrust has a price target of $30, while the consensus target is much lower at $19.57. The stock closed Wednesday at $10.67 a share, down over 4% on the day.


This company has been mentioned recently as a potential takeover target, and it is another new member of the Best Ideas list. 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 $29 SunTrust price target compares with the $26.35 consensus target. The shares closed most recently at $17.47, down 4.65% on the day.

Parsley Energy

This is another smaller capitalization stock for aggressive investors to consider. Parsley Energy Inc. (NYSE: PE) is an oil and gas producer with 227,000 net acres in the Permian Basin. The majority of acreage sits on the Midland side of the basin, but the company also holds a small acreage position in the Delaware Basin. Through strategic acquisitions and acreage swaps, it has grown its acreage position since its initial public offering and has over 7,900 horizontal locations across multiple prospective zones.

The company is a catalyst rich and is a Permian Basin pure play. Parsley Energy has some of the strongest wells in the basin, generating returns that are among the best in the industry. It is also rapidly de-risking its drilling inventory and is well-positioned to continue to beat its strong growth projections.

SunTrust has set its price target at $27. The consensus price objective is $27.66, and the stock closed at $18.22, after climbing almost 3% on Wednesday.

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These four top companies could be potential takeover targets. Even if none of them are bought, the stocks are all very cheap and trading at valuations that make them great additions to aggressive portfolios for investors who are looking to add energy at solid discounts.