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On Apr 17, 2014, the shares of exploration and production company Athlon Energy Inc. (ATHL - Snapshot Report) soared to a 52-week high of $42.74 backed by the strategic acquisition of assets in the reserve-rich West Texas province, active drilling programs in the Permian basin, sound liquidity position and an increased 2014 guidance. The shares finally closed at $42.00, up 1.8% from the previous day’s closing.

Predominantly a vertical drilling operator, Athlon Energy’s steady shift to horizontal drilling has proved beneficial for the company. The company has already completed two horizontal wells in the WolfCamp A zone in Texas and initial production results look favorable.

Prompted by the success of its horizontal drilling programs, Athlon is targeting a third horizontal well, Tubb 39#H, in Howard County, which it drilled and cased successfully.

The company reported a sharp 71% year-over-year rise in production levels in the first quarter 2014. Given the bullish drilling prospects in the U.S., we could expect strong performance from Athlon Energy in 2014. It projects daily production to average between 23,000 and 24,250 barrels of oil equivalent per day (Boe/d) for 2014.

The ongoing shale development in the U.S. will give an impetus to Athlon Energy’s drilling operations in the reserve-rich plays. In addition, the company’s liquidity position which as on Mar 31, 2014 was $956.5 million will amply meet Athlon Energy’s future capital needs to support its growth initiatives.

The recent acquisition of assets in the northern Midland Basin is also expected to boost Athlon Energy’s drilling potential and is well timed given the country’s drive to turn energy independent in the not-so-distant future.

Texas-based Athlon Energy presently holds a Zacks Rank #2 (Buy). Other well-placed oil and gas operators include Zacks Ranked #2 (Buy) Abraxas Petroleum Corp. (AXAS - Snapshot Report), EOG Resources, Inc. (EOG - Analyst Report) and Callon Petroleum Co. (CPE - Snapshot Report).

Read the Full Research Report on ATHL
Read the Full Research Report on EOG
Read the Full Research Report on AXAS
Read the Full Research Report on CPE


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