If anything gets the Wall Street juices flowing, it’s a big acquisition, and the recently announced $33 billion purchase of Anadarko Petroleum Corp. (NYSE: APC) by mega-cap integrated giant Chevron Corp. (NYSE: CVX) should be just the ticket. The combined company will become the largest operator in the massive Permian Basin, which is located in West Texas and New Mexico.
In addition, the takeover will place Chevron neck-and-neck with the oil and gas production of Exxon Mobil and Royal Dutch Shell, both of which have dominated Big Oil over the past 10 years. In fact, the combined company’s cash flow last year of $36.5 billion would have exceeded Exxon’s.
The question for investors now is whether there are more deals to come, and the answer appears to be most likely yes. In fact, in a new SunTrust Robinson Humphrey research note, the analysts see more deals in the offing, especially after talking with management teams at companies they cover.
Six companies are cited as potential targets, and all make sense for investors looking to add solid energy plays to existing portfolios. While there is no guarantee any will be actually acquired, they all are great companies to own for long-term investors. We screened the six SunTrust potential candidates against our 24/7 Wall St. research database looking for firms that had Buy ratings, and we found them for each and every one.
Last year, this company bought RSP Permian for $9.5 billion, and most on Wall Street loved the deal. Concho Resources Inc. (NYSE: CXO) is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties.
It offers investors a unique combination of investment themes, including valuation, rate-of-change and resource expansion themes. The company is the largest acreage holder of the publicly traded Permian large-caps and provides investors peer-leading exposure to three of the most impactful catalysts across the Delaware Basin, including the Wolfcamp XY, Wolfcamp D and Bone Spring Shale.
Concho Resources has reported strong earnings but still has a lot of upside to the posted price targets.
The company pays a small 0.45% dividend. The Stifel price target is a gigantic $239, while the Wall Street consensus target is $154.71. The shares closed Friday at $113.89, up almost 9% on the day.
This leading energy company’s stock is on the respected Goldman Sachs Conviction Buy List. 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 ranks third among all operators.
Shareholders receive a 0.95% dividend. The price target at Goldman Sachs is $128, and the consensus target is $119.11 The stock closed on Friday at $105.33, up almost 7% on the day.