Photo credit: Flickr/zombieite.

Billionaire investor Ron Barron is a very bullish man. As a buy-and-hold investor, he can afford to be patient as he looks at the larger picture. He's not worried about what the market will do over the short term; instead, he's looking out over the longer term, where he sees the market doubling over the next 10 years, and then doubling again after that.

That outlook is based on a 7% annual return from the market. That's actually a quite conservative return for Baron, as his investment company, which he started in 1982, has returned on average 14.2% each year. That's because Baron isn't looking to just match the market; he's looking to crush its returns.

The one oil stock he's buying
One of the stocks he believes will achieve market-crushing returns for him in the future is oil and gas driller Concho Resources (CXO). On a recent CNBC appearance, Baron said Concho Resources was the company he likes best in exploiting the enormous shale boom. He noted that Concho Resources has been aggregating drilling lands, which makes it a prime takeover candidate for a big oil company that doesn't want to do all of the legwork.

While a buyout might pop the company's stock in the future, there's a lot more to like about Concho Resources than its appeal as a buyout candidate. The company has developed a leading position in Texas' Permian Basin. It has also recently accelerated its drilling program so that it's now on track to double its production by 2016. As the following slide shows, as Concho Resources' production increases, its returns should get better, because the company will produce more high-value oil, which will fuel the cash flow that will also improve its balance sheet. It's a great cycle, to say the least. 

Source: Concho Resources investor presentation.

However, while Concho Resources will be delivering a lot of growth, it's only scratching the surface.

Drilling down into the Permian Basin
Right now the company has approximately 605,000 net acres in the Permian Basin, which it believes contains 22,000 future drilling sites. Those future drilling sites are expected to unlock an incredible amount of oil and gas, as the company believes it is sitting on resource potential that is more than six times its current proven reserves.

It's not alone in its belief that he Permian Basin holds an incredible amount of oil and gas. Pioneer Natural Resources (PXD), for example, believes that its additional net recoverable resource potential is 22 times its current proven reserves in the Permian Basin. Overall, Pioneer Natural Resources now believes it's sitting on 9.6 billion barrels of oil equivalent, or BOE, resource potential in the Permian Basin alone. Those resources are located under the company's 900,000 net acres and will require 20,500 future horizontal, as the following slide shows.

Source: Pioneer Natural Resources investor presentation.

It's a similar story at Diamondback Energy Inc. (FANG -2.17%), which recently paid big money to add to its position in the Permian Basin. Right now Diamondback Energy currently has proven reserves of 63.6 million BOE; however, that's just a fraction of what it believes it will recover in the future. While Diamondback is a much smaller company, its opportunity still adds up its more than 1,000 future drilling locations that could potentially recover a resource potential of 393 million BOE. The list goes on, as the resource potential in the Permian Basin is really remarkable, which is why it can fuel the gains in Concho Resources stock that Ron Baron sees. 

Investor takeaway
It's hard to argue with Ron Baron on Concho Natural Resources. It's well positioned in the Permian Basin, and like both Diamondback Energy and Pioneer Natural Resources it's sitting on a massive resource potential. The company thus has ample room to grow its production and cash flow, which should yield nice returns to investors over the long term. Further, as Barron noted, there's enough appeal here that the company might even one day draw interest from a suitor. Add it all up, and investors following billionaire investor Ron Barron's advice should do well in buying Concho Resources.