Concho Resources (NYSE:CXO), in our opinion, is one of the highest quality oil and gas producers in the U.S. and it maintains an enormous acreage position in the most attractive parts of the Permian Basin. This large inventory of future drilling locations should allow Concho to invest at high returns for years to come. The market is currently valuing this strategically attractive set of assets at a discount to recent private market transactions and below Permian peers on a per acre basis, despite the company’s superior economics and strong management team. Concho has a long history of creating value for shareholders through both efficient operations and savvy capital allocation. We expect shareholders can once again be rewarded as the company develops and monetizes its acreage footprint.
From Bill Nygren (Trades, Portfolio)'s second-quarter 2019 Oakmark Fund shareholder letter.
