Concho To Sell Shelf Asset, Plans To Begin Buyback Program
Zacks Investment Research | Sep 03, 2019 11:58PM ET
Concho Resources Inc. (NYSE:CXO) has been executing its strategy to boost the value of its legacy assets and minimize its cost structure. To this end, it has announced that it will divest its New Mexico property for $925 million to a unit of Spur Energy Partners LLC.
In line with this, the company has plans to initiate a $1.5-billion stock repurchase program. This will be partly backed by the divestiture of the New Mexico asset wherein 40% of the proceeds will be used for the buyback program and the remaining will be utilized in repaying the debts.
Currently, the Continental Shelf asset produces 25,000 barrels of oil equivalent per day (bpd) at 100,000 gross acres adjoining Concho Resources’ operation in the Delaware Basin. Notwithstanding the New Mexico asset sell-off, this Midland-based E&P company intends to continue with its various development projects in southeastern New Mexico for helping its employees.
The oil-levered producer in the Permian Basin focuses on selling its non-core assets to enhance its portfolio value. Further, it aims to streamline its cost structure leading to cost-efficient growth. Additionally, Concho Resources concentrates on attaining its debt-reduction target and improve returns to its shareholders.
So selling this non-core Shelf asset will help Concho Resources save its cash operating costs and inch closer to its 2020 target expense of $9 per barrel of oil equivalent (bpd) compared with the current figure of $9.83 bpd. Moreover, the stock repurchase program shows Concho Resources’ strong belief in its strategy. Tim Leach, chairman and CEO, Concho Resources, feels that this venture is a vindication of the company’s scheme to generate solid cash flow along with sustainable oil production.
The transaction is contingent on pending approvals and is estimated to complete during November 2019.
Concho Resources Inc. Price
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.