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Stock Strategist

Even After Rally, RSP Permian's Still Attractive

It's one of the lowest-cost oil producers in our coverage universe.


 RSP Permian’s (RSPP) stock price has risen 14% since our Nov. 7 fair value estimate change. After review, we believe there is further room for appreciation because of the cost advantage and potential longevity of RSP’s Permian Basin acreage. Our new fair value estimate of $57 per share reflects a 36% premium to the last close.

For 2018, we anticipate around 40% year-on-year production growth, 10% higher than preliminary guidance. The West Texas Intermediate benchmark has risen well above management’s base case of $50 a barrel, making it more likely than not that the company will add a completion crew and a horizontal rig this year as planned.

Dave Meats does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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