Marathon Oil Corporation (MRO), Chesapeake Energy Corporation (CHK), EXCO Resources Inc (XCO): Build a Stronger Portfolio With These Oil and Gas Companies

EXCO Resources Inc (NYSE:XCO) is consistently grabbing underlying growth opportunities in the Eagle Ford Shale and Haynesville Shale formation. Therefore, it acquired the producing and undeveloped oil and gas assets in these regions from Chesapeake Energy Corporation (NYSE:CHK). The company projects spending of $273 million for 2013, allowing it to add a combined 355 drilling locations in both these regions. It is expected that these acquisitions will provide EXCO a leading edge over its competitors. Moreover, its expansion platform enables it to deliver immediate production and reserve additions.

This will allow EXCO Resources Inc (NYSE:XCO) to use its technical expertise in drilling activities and timely completion of its exploration projects, resulting higher exploration efficiency. Through these acquisitions, it is expected that EXCO should increase its production by 6,100 boepd and 114 million cubic feet equivalent per day or cfepd of natural gas in 2013 in these regions.

In July 2013, Chesapeake Energy Corporation (NYSE:CHK) signed the Mississippi Lime joint venture with China’s Sinopec International Petroleum Exploration and Production. In this deal, Chesapeake sold its 50% stake for $1.02 billion. Both companies will share all future exploration and development costs and Chesapeake, as the operator, will manage the leasing, drilling, operational, and marketing activities. By signing this deal, it is expected that Chesapeake will efficiently develop and enhance production from this asset in the future. Further, this JV will enable it to raise its total revenue to around $14 billion this year from $12.32 billion last year.

Conclusion

To grow and enhance their footprint, the oil and gas companies are looking to expand their presence by focusing on core areas and enhancing their drilling activities. Marathon Oil Corporation (NYSE:MRO) is installing new infrastructure with improved pad drilling technique, and the JV with Sinopec will help the company raise production and improve its EPS. Chesapeake’s sale of non-core assets will enable it to reduce its debt burden and fund expansion in oil-rich areas. EXCO Resources Inc (NYSE:XCO) acquired acreage in Eagle Ford and Haynesville shale region to enhance its footprint in these regions and raise its production level.

Therefore, I recommend buying these stocks.

Madhukar Dubey has no position in any stocks mentioned. The Motley Fool has the following options: long January 2014 $30 calls on Chesapeake Energy.

The article Build a Stronger Portfolio With These Oil and Gas Companies originally appeared on Fool.com and is written by Madhukar Dubey.

Madhukar is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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