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New energy purchases in Texas and New Mexico should boost share price further.

Oil and gas operator Concho Resources (NYSE: CXO, Stock Forum) made an acquisition and the market cheered. Shares moved up 11% and hit a 52-week high of $39.10 giving the firm a market cap of $2.7 billion.

CXO agreed to buy Henry Petroleum's energy holdings in Texas and New Mexico for $565 million in cash. According to the AP the properties, located in West Texas and New Mexico, include the equivalent of 163 billion cubic feet of proved reserves.

J.P. Morgan Securities Inc. and Banc of America Securities arranged the financing through a private placement. It will take a year or two to decide whether the dilution will be worth it. The company already has $300 million in long-term debt.

CXO is in very good shape, so if the new business it is adding does even modestly well, shareholders should be rewarded. In the first quarter, revenue hit $107 million, up from $60 million in the same quarter a year ago. Income from operations hit $41 million up from $18 million.

One or two more solid quarters, and these shares could push even higher.

ABOUT THE AUTHOR
From the news desk of 24/7 Wall St.

This report was prepared by 24/7 Wall St., LLC exclusively for Stockhouse. 

 
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