Concho Resources Inc.
) recently announced the pricing of senior unsecured notes worth
$850 million. The notes, which carry a coupon rate of 5.5%, are
due in 2023. The company expects to close the sale of the notes
by Jun 4, 2013.
The proceeds from this issue would be utilized to repurchase
senior notes worth $300 million maturing in 2017 and repay
borrowings under the credit facility. The 2017 notes have a
dearer coupon rate of 8.625% that are adding to the interest
burden of the company.
Concho Resources Inc. is an independent oil and natural gas
company engaged in the acquisition, development, exploitation and
exploration of oil and natural gas properties. The company's
conventional operations are primarily focused in the Permian
Basin of Southeast New Mexico and West Texas. In addition, the
company is involved in a number of unconventional emerging
As of Dec 31, 2012, the company owned interests in approximately
1.3 million gross (745,000 net) acres in the New Mexico and Texas
Permian, alongside proved reserves of 458 million barrels of oil
However, recent times have not been particularly good for the
company. Earlier in May, the company reported weak first quarter
numbers. The bottom line fell 3.3% year over year owing to lower
prices dragging down revenues. Higher production at the same time
could salvage the performance only partially.
The company currently holds a Zacks Rank #3, which is equivalent
to a short-term Hold rating. However, there are other stocks in
the oil and gas sector -
Abraxas Petroleum Corp.
EPL Oil & Gas, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are expected to
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
CONCHO RESOURCS (CXO): Free Stock Analysis
EPL OIL&GAS INC (EPL): Free Stock Analysis
ENERPLUS CORP (ERF): Free Stock Analysis
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