After a nice run off the lows earlier this year, the price of oil seems to be hitting a roadblock around the $60 level. It appears that barring an international incident, it may be stuck there for a while. In a new research report from SunTrust Robinson Humphrey, they are vocal in the firm’s positive view of the Permian Basin in West Texas and have three top stocks to buy now.

The SunTrust team feels that some parts of the Permian have the best well returns in the United States. With a much lower benchmark price than this time just one year ago, well returns becomes a very crucial metric. Three top companies are the analysts’ favorite near-term plays.

Concho Resources

This is one of the top energy plays in the Permian Basin in West Texas. Concho Resources Inc. (NYSE: CXO) is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. It also may be a possible takeover candidate. Concho completed a successful secondary stock offering earlier this year that raised close to $650 million. The company plans to use the net proceeds from this offering to repay the debts under the company’s credit facility, as well as for corporate purposes that includes financing its three-year accelerated growth plan, capital expenditure tied to the recently announced midstream joint venture and potential future asset buys.

The company posted strong fourth-quarter results that beat estimates, and it remains one of the best run independent E&P companies for investors to consider. The SunTrust team sees the company as the most active in the Delaware basin.

The SunTrust price target for the stock is $157. The Thomson/First Call consensus target is set at $142.47. Shares closed Friday at $123.70.

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Energen

This company is an oil and gas exploration and production company with headquarters in Birmingham, Ala., and is another top near-term favorite at SunTrust. Energen Corp. (NYSE: EGN) has 1.1 billion barrels of oil-equivalent proved, probable and possible reserves and another 2.2 billion barrels of oil-equivalent contingent resources. These all-domestic reserves and resources are located primarily in the Permian Basin. The company actually has been active in the region since the late 1960s and has made numerous major acquisitions in the past five years.

The company posted a first-quarter loss of $15.4 million, after reporting a profit in the same period a year earlier. The stock also got hit hard recently on the back-end of a secondary stock offering and has dropped almost 15%. Investors may have a very good entry point on the stock.

The SunTrust price target is $91. The consensus target is $83.65. Shares closed Friday at $66.84.

Diamondback Energy

This stock is the third current favorite of the SunTrust team. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin. Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.

The SunTrust analysts cite the company’s top-tier asset base, solid accretive additions and financial discipline, which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target.

SunTrust price target on the stock is $98, while they consensus is at $95.13. The stock closed Friday at $76.62.

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Well returns and yield are critical in a lower price environment, and the SunTrust team has very smartly put their call on some of these top companies in the Permian Basin.

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