3/30/2017
By Charles Payne, CEO and Principal Analyst

Perhaps the biggest investment news was out of Big D yesterday, where the Dallas Fed released its business surveys that pointed to big confidence and the return of big projects. Overall, 55% of businesses in Texas reported higher activity, and 46% expect to invest more in capital expenditures.   

More importantly, the optimism is over oil prices.

Pumping the Permian

This renewed excitement all revolves around the hottest oil patch in the country – the Permian Basin. 

The Permian Basin is largely in the state of Texas, but there is a big chunk in New Mexico as well.  There has been a good old-fashioned gold rush in the area, in addition to a recent wave of billions of dollars of mergers and acquisitions; the oil rig count in the Permian has risen to 315 from 156 in the past year. 

The midland Permian can be operated profitably at $24 per crude, but crude must be at $48 or higher to justify new drilling projects.

By the way, there are two names I like a lot in this area: Concho Resources (CXO) and EOG Resources (EOG). As far as crude oil is concerned, I am looking for $60 at some point in 2017. 

Charles Payne
Wall Street Strategies

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