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September 8, 2020MMMM d, yyy Barclays Presentation
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Concho was built on a strategy of investing in high-quality, high rate-of-return projects, executing large, safe and efficient drilling programs and maintaining a strong financial position. Our strategy has allowed us to consistently increase our production and reserves at low costs and to capitalize on opportunities when they arise.

Recent News

10.27.20 Concho Resources Inc. Reports Third-Quarter 2020 Results

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) today announced third-quarter 2020 results, reporting a net loss of $61 million, or $0.31 per share. Adjusted net income (non-GAAP), which excludes certain non-cash and special items, for third-quarter 2020 was $282 million, or $1.43 per share.

Tim Leach, Chairman and Chief Executive Officer, commented, "Despite the challenging market environment, Concho delivered excellent results that demonstrate the strength of our business, our high-quality asset base and our ability to execute. On October 19, we announced our intention to merge with ConocoPhillips. We look forward to closing the transaction in the first quarter of next year.”

Third-Quarter 2020 Results

Third-quarter 2020 oil production volumes averaged 201 thousand barrels per day (MBopd). Natural gas production for third-quarter 2020 averaged 716 million cubic feet per day (MMcfpd). The Company’s total production for third-quarter 2020 was 320 thousand barrels of oil equivalent per day (MBoepd).

Concho’s average realized price for oil and natural gas for third-quarter 2020, excluding the effect of commodity derivatives, was $39.23 per Bbl and $1.64 per Mcf, respectively.

For third-quarter 2020, controllable costs totaled $7.06 per Boe, representing a 27% decrease year over year. Controllable costs include production expenses (consisting of lease operating and workover expenses), cash general and administrative (G&A) expenses (which excludes non-cash stock-based compensation) and interest expense.

Cash flow from operating activities was $608 million, including $60 million in working capital changes. Operating cash flow before working capital changes (non-GAAP) was $668 million, exceeding third-quarter capital expenditures of $284 million, and resulting in free cash flow (non-GAAP) of $384 million. Capital expenditures refers to the Company’s additions to oil and natural gas properties on the Company’s condensed consolidated statements of cash flows.

At September 30, 2020, Concho had long-term debt of $3.9 billion with no outstanding debt maturities until January 2027, no debt outstanding under its credit facility and approximately $400 million in cash and cash equivalents.

Investor Conference Call

Due to the pending transaction with ConocoPhillips, which was announced on Monday, October 19, 2020, the Company will not host a conference call/webcast to review its third-quarter 2020 results.

About Concho Resources

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on safely and efficiently developing and producing oil and natural gas resources. We are working today to deliver a better tomorrow for our shareholders, people and communities. For more information about Concho, visit www.concho.com.

Forward-Looking Statements and Cautionary Statements

The foregoing contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “enable,” “strategy,” “intend," “positioned,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal,” "target" or other similar expressions that convey the uncertainty of future events or outcomes are intended to identify forward-looking statements, which generally are not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. These statements are based on certain assumptions and analyses made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, current plans, anticipated future developments, access to capital, market conditions, impacts of hedges, the impact of the COVID-19 pandemic and the actions taken by regulators and third parties in response to such pandemic and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the risk factors and other information discussed or referenced in the Company’s most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. In particular, the unprecedented nature of the current economic downturn, pandemic and industry decline may make it particularly difficult to identify risks or predict the degree to which identified risks will impact the Company’s business and financial condition. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Information on Concho’s website is not part of this press release.

Use of Non-GAAP Financial Measures

To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains certain financial measures that are not prepared in accordance with GAAP, including adjusted net income, adjusted earnings per share, operating cash flow before working capital changes and free cash flow.

See “Supplemental Non-GAAP Financial Measures” below for a description and reconciliation of each of these non-GAAP measures to the most directly comparable financial measure calculated in accordance with GAAP.

For future periods, the Company is unable to provide a reconciliation of free cash flow to the most comparable GAAP financial measures because the information needed to reconcile this measure is dependent on future events, many of which are outside management’s control. Additionally, estimating free cash flow to provide a meaningful reconciliation consistent with the Company’s policies for future periods is extremely difficult and requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking estimates of free cash flow are estimated in a manner consistent with the relevant definitions and assumptions noted herein. 

 

Concho Resources Inc.

Condensed Consolidated Balance Sheets

Unaudited

 

(in millions, except share and per share amounts)

September 30,
2020

 

December 31,
2019

Assets

Current assets:

 

 

 

Cash and cash equivalents

$

402

 

 

$

70

 

Accounts receivable, net:

 

 

 

Oil and natural gas

392

 

 

584

 

Joint operations and other

130

 

 

304

 

Inventory

26

 

 

30

 

Derivative instruments

212

 

 

6

 

Prepaid costs and other

44

 

 

61

 

Total current assets

1,206

 

 

1,055

 

Property and equipment:

 

 

 

Oil and natural gas properties, successful efforts method

27,143

 

 

28,785

 

Accumulated depletion and depreciation

(16,643

)

 

(7,895

)

Total oil and natural gas properties, net

10,500

 

 

20,890

 

Other property and equipment, net

456

 

 

437

 

Total property and equipment, net

10,956

 

 

21,327

 

Deferred income taxes

19

 

 

 

Deferred loan costs, net

5

 

 

7

 

Goodwill

 

 

1,917

 

Intangible assets, net

16

 

 

17

 

Noncurrent derivative instruments

5

 

 

11

 

Other assets

330

 

 

398

 

Total assets

$

12,537

 

 

$

24,732

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

Accounts payable - trade

$

45

 

 

$

53

 

Revenue payable

140

 

 

268

 

Accrued drilling costs

181

 

 

386

 

Derivative instruments

5

 

 

112

 

Other current liabilities

326

 

 

363

 

Total current liabilities

697

 

 

1,182

 

Long-term debt

3,856

 

 

3,955

 

Deferred income taxes

 

 

1,654

 

Noncurrent derivative instruments

47

 

 

7

 

Asset retirement obligations and other long-term liabilities

150

 

 

152

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value; 300,000,000 authorized; 197,551,182 and 198,863,681 issued at September 30, 2020 and December 31, 2019, respectively

 

 

 

Additional paid-in capital

14,511

 

 

14,608

 

Retained earnings (accumulated deficit)

(6,573

)

 

3,320

 

Treasury stock, at cost; 1,244,629 and 1,175,026 at September 30, 2020 and December 31, 2019, respectively

(151

)

 

(146

)

Total stockholders’ equity

7,787

 

 

17,782

 

Total liabilities and stockholders’ equity

$

12,537

 

 

$

24,732

 

 

 

Concho Resources Inc.

Condensed Consolidated Statements of Operations

Unaudited

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions, except per share amounts)

2020

 

2019

 

2020

 

2019

Operating revenues:

 

 

 

 

 

 

 

Oil sales

$

725

 

 

$

1,023

 

 

$

2,027

 

 

$

3,007

 

Natural gas sales

109

 

 

92

 

 

203

 

 

339

 

Total operating revenues

834

 

 

1,115

 

 

2,230

 

 

3,346

 

Operating costs and expenses:

 

 

 

 

 

 

 

Oil and natural gas production

115

 

 

190

 

 

406

 

 

552

 

Production and ad valorem taxes

71

 

 

85

 

 

196

 

 

255

 

Gathering, processing and transportation

46

 

 

25

 

 

139

 

 

73

 

Exploration and abandonments

14

 

 

26

 

 

2,749

 

 

90

 

Depreciation, depletion and amortization

288

 

 

488

 

 

1,083

 

 

1,431

 

Accretion of discount on asset retirement obligations

2

 

 

3

 

 

6

 

 

8

 

Impairments of long-lived assets

 

 

20

 

 

7,772

 

 

888

 

Impairments of goodwill

 

 

81

 

 

1,917

 

 

81

 

General and administrative (including non-cash stock-based compensation of $18 and $20 for the three months ended September 30, 2020 and 2019, respectively, and $53 and $67 for the nine months ended September 30, 2020 and 2019, respectively)

70

 

 

75

 

 

204

 

 

254

 

(Gain) loss on derivatives, net

199

 

 

(397

)

 

(1,056

)

 

445

 

Net (gain) loss on disposition of assets and other

1

 

 

(303

)

 

(99

)

 

(302

)

Total operating costs and expenses

806

 

 

293

 

 

13,317

 

 

3,775

 

Income (loss) from operations

28

 

 

822

 

 

(11,087

)

 

(429

)

Other income (expense):

 

 

 

 

 

 

 

Interest expense

(44

)

 

(46

)

 

(127

)

 

(141

)

Loss on extinguishment of debt

(24

)

 

 

 

(24

)

 

 

Other, net

5

 

 

4

 

 

(208

)

 

311

 

Total other income (expense)

(63

)

 

(42

)

 

(359

)

 

170

 

Income (loss) before income taxes

(35

)

 

780

 

 

(11,446

)

 

(259

)

Income tax (expense) benefit

(26

)

 

(222

)

 

1,673

 

 

25

 

Net income (loss)

$

(61

)

 

$

558

 

 

$

(9,773

)

 

$

(234

)

Earnings per share:

 

 

 

 

 

 

 

Basic net income (loss)

$

(0.31

)

 

$

2.78

 

 

$

(50.04

)

 

$

(1.18

)

Diluted net income (loss)

$

(0.31

)

 

$

2.78

 

 

$

(50.04

)

 

$

(1.18

)

 

 

 

 

 

 

 

 

   
 

Concho Resources Inc.

Earnings per Share

Unaudited

 

The Company uses the two-class method of calculating earnings per share because certain of the Company’s unvested share-based awards qualify as participating securities.

 

The Company’s basic earnings (loss) per share attributable to common stockholders is computed as (i) net income (loss) as reported, (ii) less participating basic earnings (iii) divided by weighted average basic common shares outstanding. The Company’s diluted earnings (loss) per share attributable to common stockholders is computed as (i) basic earnings (loss) attributable to common stockholders, (ii) plus reallocation of participating earnings (iii) divided by weighted average diluted common shares outstanding.

 

The following table reconciles the Company’s income (loss) from operations and earnings (loss) attributable to common stockholders to the basic and diluted earnings (loss) used to determine the Company’s earnings (loss) per share amounts for the periods indicated under the two-class method:

   
 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(in millions)

2020

 

2019

 

2020

 

2019

 

Net income (loss) as reported

$

(61

)

 

$

558

 

 

$

(9,773

)

 

$

(234

)

 

Participating basic earnings (a)

 

 

(4

)

 

(1

)

 

(1

)

 

Basic earnings (loss) attributable to common stockholders

(61

)

 

554

 

 

(9,774

)

 

(235

)

 

Reallocation of participating earnings

 

 

 

 

 

 

 

 

Diluted earnings (loss) attributable to common stockholders

$

(61

)

 

$

554

 

 

$

(9,774

)

 

$

(235

)

 

 

 

 

 

 

 

 

 

(a)

Unvested restricted stock awards represent participating securities because they participate in nonforfeitable dividends or distributions with the common equity holders of the Company. Participating earnings represent the distributed and undistributed earnings of the Company attributable to the participating securities. Unvested restricted stock awards do not participate in undistributed net losses as they are not contractually obligated to do so.

 

The following table is a reconciliation of the basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the periods indicated:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in thousands)

2020

 

2019

 

2020

 

2019

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

195,323

 

 

199,448

 

 

195,311

 

 

199,272

 

Dilutive performance units

 

 

6

 

 

 

 

 

Diluted

195,323

 

 

199,454

 

 

195,311

 

 

199,272

 

 

 

 

 

 

 

 

 

 

Concho Resources Inc.

Condensed Consolidated Statements of Cash Flows

Unaudited

 

 

Nine Months Ended
September 30,

(in millions)

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$

(9,773

)

 

$

(234

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization

1,083

 

 

1,431

 

Accretion of discount on asset retirement obligations

6

 

 

8

 

Impairments of long-lived assets

7,772

 

 

888

 

Impairments of goodwill

1,917

 

 

81

 

Exploration and abandonments

2,726

 

 

68

 

Non-cash stock-based compensation expense

53

 

 

67

 

Deferred income taxes

(1,673

)

 

(25

)

Net gain on disposition of assets and other non-operating items

(104

)

 

(591

)

(Gain) loss on derivatives, net

(1,056

)

 

445

 

Net settlements received from (paid on) derivatives

789

 

 

(57

)

Loss on extinguishment of debt

24

 

 

 

Other

198

 

 

(6

)

Changes in operating assets and liabilities, net of acquisitions and dispositions:

 

 

 

Accounts receivable

326

 

 

(19

)

Prepaid costs and other

18

 

 

(1

)

Inventory

4

 

 

2

 

Accounts payable

(7

)

 

16

 

Revenue payable

(129

)

 

(20

)

Other current liabilities

(41

)

 

14

 

Net cash provided by operating activities

2,133

 

 

2,067

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Additions to oil and natural gas properties

(1,152

)

 

(2,344

)

Changes in working capital associated with oil and natural gas property additions

(156

)

 

(41

)

Acquisitions of oil and natural gas properties

(45

)

 

(34

)

Additions to property, equipment and other assets

(49

)

 

(82

)

Proceeds from the disposition of assets

6

 

 

393

 

Deposit for pending divestiture of oil and natural gas properties

 

 

93

 

Direct transaction costs for asset acquisitions and dispositions

(1

)

 

(5

)

Net cash used in investing activities

(1,397

)

 

(2,020

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Borrowings under credit facility

345

 

 

2,680

 

Payments on credit facility

(345

)

 

(2,527

)

Issuance of senior notes, net

499

 

 

 

Repayments of senior notes

(600

)

 

 

Debt extinguishment costs

(20

)

 

 

Payments for loan costs

(4

)

 

 

Payment of common stock dividends

(119

)

 

(75

)

Purchases of treasury stock

(5

)

 

(15

)

Purchases of common stock under share repurchase program

(150

)

 

 

Decrease in book overdrafts

 

 

(104

)

Other

(5

)

 

(6

)

Net cash used in financing activities

(404

)

 

(47

)

Net increase in cash and cash equivalents

332

 

 

 

Cash and cash equivalents at beginning of period

70

 

 

 

Cash and cash equivalents at end of period

$

402

 

 

$

 

 

 

 

 

 

 

Concho Resources Inc.

Summary Production and Price Data

Unaudited

 

The following table sets forth summary information concerning production and operating data for the periods indicated:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2020

 

2019

 

2020

 

2019

Production and operating data:

 

 

 

 

 

 

 

Net production volumes:

 

 

 

 

 

 

 

Oil (MBbl)

18,472

 

 

18,940

 

 

55,667

 

 

56,602

 

Natural gas (MMcf)

65,867

 

 

68,411

 

 

194,914

 

 

199,284

 

Total (MBoe)

29,450

 

 

30,342

 

 

88,153

 

 

89,816

 

 

 

 

 

 

 

 

 

Average daily production volumes:

 

 

 

 

 

 

 

Oil (MBbl)

201

 

 

206

 

 

203

 

 

207

 

Natural gas (MMcf)

716

 

 

744

 

 

711

 

 

730

 

Total (MBoe)

320

 

 

330

 

 

322

 

 

329

 

 

 

 

 

 

 

 

 

Average prices per unit: (a)

 

 

 

 

 

 

 

Oil, without derivatives (Bbl)

$

39.23

 

 

$

54.01

 

 

$

36.41

 

 

$

53.13

 

Oil, with derivatives (Bbl) (b)

$

48.43

 

 

$

52.84

 

 

$

49.76

 

 

$

51.85

 

Natural gas, without derivatives (Mcf)

$

1.64

 

 

$

1.34

 

 

$

1.04

 

 

$

1.70

 

Natural gas, with derivatives (Mcf) (b)

$

1.68

 

 

$

1.54

 

 

$

1.27

 

 

$

1.77

 

Total, without derivatives (Boe)

$

28.27

 

 

$

36.74

 

 

$

25.29

 

 

$

37.25

 

Total, with derivatives (Boe) (b)

$

34.13

 

 

$

36.46

 

 

$

34.23

 

 

$

36.60

 

 

 

 

 

 

 

 

 

Operating costs and expenses per Boe: (a)

 

 

 

 

 

 

 

Oil and natural gas production

$

3.90

 

 

$

6.26

 

 

$

4.60

 

 

$

6.14

 

Production and ad valorem taxes

$

2.41

 

 

$

2.79

 

 

$

2.22

 

 

$

2.84

 

Gathering, processing and transportation

$

1.55

 

 

$

0.82

 

 

$

1.57

 

 

$

0.81

 

Depreciation, depletion and amortization

$

9.77

 

 

$

16.07

 

 

$

12.28

 

 

$

15.93

 

General and administrative

$

2.30

 

 

$

2.50

 

 

$

2.30

 

 

$

2.82

 

 

(a)

Per unit and per Boe amounts calculated using dollars and volumes rounded to thousands.

 

 

 

 

 

 

 

 

 

(b)

Includes the effect of net cash receipts from (payments on) derivatives:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(in millions)

2020

 

2019

 

2020

 

2019

 

Net cash receipts from (payments on) derivatives:

 

 

 

 

 

 

 

 

Oil derivatives

$

171

 

$

(21

)

 

$

744

 

$

(72

)

 

Natural gas derivatives (c)

2

 

14

 

 

45

 

15

 

 

Total

$

173

 

$

(7

)

 

$

789

 

$

(57

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The presentation of average prices with derivatives is a result of including the net cash receipts from (payments on) commodity derivatives that are presented in the Company's condensed consolidated statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of the Company's commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.

 

 (c)

Includes propane and natural gasoline price swaps.

 

Concho Resources Inc.

Operational Activity

Unaudited

 

The tables below provide a summary of operational activity for third-quarter 2020:

 

Total Activity (Gross):

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

43

 

49

 

24

Midland Basin

 

20

 

14

 

33

Total

 

63

 

63

 

57

 

 

 

 

 

 

 

Total Activity (Gross Operated):

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

15

 

29

 

18

Midland Basin

 

20

 

14

 

33

Total

 

35

 

43

 

51

 

 

 

 

 

 

 

Total Activity (Net Operated):

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

15

 

24

 

14

Midland Basin

 

20

 

12

 

29

Total

 

35

 

36

 

43

 

 

 

 

 

 

 

   
 

Concho Resources Inc.

Derivatives Information

Unaudited

 

The table below provides data associated with the Company’s derivatives at October 27, 2020, for the periods indicated:

   
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

2021

 

2022

 

 

 

Fourth
Quarter

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Total

 

Total

 

Oil Price Swaps WTI: (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

13,778

 

 

9,720

 

 

9,555

 

 

8,096

 

 

8,096

 

 

35,467

 

 

9,159

 

 

Price per Bbl

 

$

52.11

 

 

$

46.46

 

 

$

46.61

 

 

$

46.80

 

 

$

46.80

 

 

$

46.66

 

 

$

42.21

 

 

Oil Price Swaps Brent: (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

2,727

 

 

1,890

 

 

1,684

 

 

1,518

 

 

1,518

 

 

6,610

 

 

1,825

 

 

Price per Bbl

 

$

48.66

 

 

$

41.43

 

 

$

41.21

 

 

$

40.82

 

 

$

40.82

 

 

$

41.09

 

 

$

45.98

 

 

Oil Basis Swaps: (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

11,192

 

 

7,650

 

 

7,735

 

 

7,636

 

 

7,636

 

 

30,657

 

 

6,570

 

 

Price per Bbl

 

$

(0.69

)

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.50

 

 

$

0.25

 

 

WTI Oil Roll Swaps: (d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

10,381

 

 

180

 

 

182

 

 

184

 

 

184

 

 

730

 

 

 

 

Price per Bbl

 

$

(0.31

)

 

$

(0.18

)

 

$

(0.18

)

 

$

(0.18

)

 

$

(0.18

)

 

$

(0.18

)

 

$

 

 

Natural Gas Price Swaps: (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

34,938

 

 

32,930

 

 

31,240

 

 

28,520

 

 

27,290

 

 

119,980

 

 

36,500

 

 

Price per MMBtu

 

$

2.44

 

 

$

2.64

 

 

$

2.60

 

 

$

2.57

 

 

$

2.57

 

 

$

2.60

 

 

$

2.38

 

 

Natural Gas Basis Swaps HH/EPP: (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

26,370

 

 

27,250

 

 

25,780

 

 

23,920

 

 

22,690

 

 

99,640

 

 

45,610

 

 

Price per MMBtu

 

$

(0.95

)

 

$

(0.62

)

 

$

(0.64

)

 

$

(0.61

)

 

$

(0.62

)

 

$

(0.62

)

 

$

(0.64

)

 

Natural Gas Basis Swaps HH/WAHA: (g)

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

8,280

 

 

9,000

 

 

8,490

 

 

8,280

 

 

8,280

 

 

34,050

 

 

16,410

 

 

Price per MMBtu

 

$

(1.03

)

 

$

(0.73

)

 

$

(0.76

)

 

$

(0.63

)

 

$

(0.63

)

 

$

(0.69

)

 

$

(0.55

)

 

Propane Price Swaps: (h)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (gal)

 

81,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price per gal

 

$

0.51

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

Natural Gasoline Price Swaps: (i)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (gal)

 

36,708

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Price per gal

 

$

0.86

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

These oil derivative contracts are settled based on the New York Mercantile Exchange (“NYMEX”) – West Texas Intermediate (“WTI”) calendar-month average futures price.

(b)

These oil derivative contracts are settled based on the Brent calendar-month average futures price.

(c)

The basis differential price is between Midland – WTI and Cushing – WTI. These contracts are settled on a calendar-month basis.

(d)

These oil derivative contracts are settled based on differentials between the NYMEX – WTI prices for certain futures contracts.

(e)

These natural gas derivative contracts are settled based on the NYMEX – Henry Hub last trading day futures price.

(f)

The basis differential price is between NYMEX – Henry Hub and El Paso Permian.

(g)

The basis differential price is between NYMEX – Henry Hub and WAHA.

(h)

These contracts are settled based on the OPIS Mont Belvieu Propane (non-TET) calendar-month average futures price.

(i)

These contracts are settled based on the OPIS Mont Belvieu Natural Gasoline (non-TET) calendar-month average futures price.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concho Resources Inc.

Supplemental Non-GAAP Financial Measures

Unaudited

 

The Company reports its financial results in accordance with the United States generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and the results of prior periods. In addition, the Company believes these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations throughout this release of GAAP financial measures to non-GAAP financial measures for the periods indicated.

 

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Earnings per Share

 

The Company’s presentation of adjusted net income and adjusted earnings per share that exclude the effect of certain items are non-GAAP financial measures. Adjusted net income and adjusted earnings per share represent earnings (loss) and diluted earnings (loss) per share determined under GAAP without regard to certain non-cash and special items. The Company believes these measures provide useful information to analysts and investors for analysis of its operating results on a consistent, comparable basis from period to period. Adjusted net income and adjusted earnings per share should not be considered in isolation or as a substitute for earnings (loss) or diluted earnings (loss) per share as determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.

 

The following table provides a reconciliation from the GAAP measure of net income (loss) to adjusted net income, both in total and on a per diluted share basis, for the periods indicated:

   
 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

(in millions, except per share amounts)

2020

 

2019

 

2020

 

2019

 

Net income (loss) - as reported

$

(61

)

 

$

558

 

 

$

(9,773

)

 

$

(234

)

 

Adjustments for certain non-cash and special items:

 

 

 

 

 

 

 

 

(Gain) loss on derivatives, net

199

 

 

(397

)

 

(1,056

)

 

445

 

 

Net cash received from (paid on) derivatives

173

 

 

(7

)

 

789

 

 

(57

)

 

Impairments of long-lived assets

 

 

20

 

 

7,772

 

 

888

 

 

Impairments of goodwill

 

 

81

 

 

1,917

 

 

81

 

 

Unproved impairments and leasehold abandonments

3

 

 

17

 

 

2,724

 

 

59

 

 

Loss on extinguishment of debt

24

 

 

 

 

24

 

 

 

 

Net (gain) loss on disposition of assets and other

2

 

 

(303

)

 

(98

)

 

(589

)

 

(Gain) loss on equity method investments

(9

)

 

 

 

186

 

 

(17

)

 

Voluntary separation program costs (a)

6

 

 

 

 

33

 

 

 

 

Tax impact (b)

(89

)

 

152

 

 

(2,334

)

 

(165

)

 

Changes in deferred taxes and other estimates

34

 

 

1

 

 

463

 

 

(6

)

 

Adjusted net income

$

282

 

 

$

122

 

 

$

647

 

 

$

405

 

 

Earnings (loss) per diluted share - as reported

$

(0.31

)

 

$

2.78

 

 

$

(50.04

)

 

$

(1.18

)

 

Adjustments for certain non-cash and special items per diluted share:

 

 

 

 

 

 

 

 

(Gain) loss on derivatives, net

1.01

 

 

(1.98

)

 

(5.40

)

 

2.24

 

 

Net cash received from (paid on) derivatives

0.88

 

 

(0.03

)

 

4.04

 

 

(0.29

)

 

Impairments of long-lived assets

 

 

0.10

 

 

39.78

 

 

4.44

 

 

Impairments of goodwill

 

 

0.40

 

 

9.81

 

 

0.41

 

 

Unproved impairments and leasehold abandonments

0.02

 

 

0.08

 

 

13.94

 

 

0.30

 

 

Loss on extinguishment of debt

0.12

 

 

 

 

0.12

 

 

 

 

Net (gain) loss on disposition of assets and other

0.01

 

 

(1.51

)

 

(0.50

)

 

(2.95

)

 

(Gain) loss on equity method investments

(0.05

)

 

 

 

0.95

 

 

(0.09

)

 

Voluntary separation program costs

0.03

 

 

 

 

0.17

 

 

 

 

Tax impact

(0.45

)

 

0.77

 

 

(11.95

)

 

(0.83

)

 

Changes in deferred taxes and other estimates

0.17

 

 

 

 

2.37

 

 

(0.03

)

 

Adjusted earnings per diluted share

$

1.43

 

 

$

0.61

 

 

$

3.29

 

 

$

2.02

 

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

Basic earnings

$

1.43

 

 

$

0.61

 

 

$

3.29

 

 

$

2.02

 

 

Diluted earnings

$

1.43

 

 

$

0.61

 

 

$

3.29

 

 

$

2.02

 

 

 

 

 

 

 

 

 

 

(a)

In May 2020, the Company offered employees who met certain eligibility criteria the option to participate in a voluntary separation program.

(b)

Estimated using statutory tax rate in effect for the period.

 

 

 

 

 

 

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Operating Cash Flow ("OCF") Before Working Capital Changes and to Free Cash Flow

 

The Company provides OCF before working capital changes, which is a non-GAAP financial measure. OCF before working capital changes represents net cash provided by operating activities as determined under GAAP without regard to changes in operating assets and liabilities, net of acquisitions and dispositions as determined in accordance with GAAP. The Company believes OCF before working capital changes is an accepted measure of an oil and natural gas company’s ability to generate cash used to fund development and acquisition activities and service debt or pay dividends. Additionally, the Company provides free cash flow, which is a non-GAAP financial measure. Free cash flow is cash flow from operating activities before changes in working capital in excess of additions to oil and natural gas properties. The Company believes that free cash flow is useful to investors as it provides a measure to compare both cash flow from operating activities and additions to oil and natural gas properties across periods on a consistent basis.

 

The Company previously defined free cash flow for periods prior to 2020 as cash flow from operating activities before changes in working capital in excess of exploration and development costs incurred. Exploration and development costs incurred include those costs that are capitalized or charged to expense such as geological and geophysical costs and capitalized asset retirement costs. The Company’s new calculation better aligns with the way its industry peers compute free cash flow and can be derived directly from line items appearing on the Company’s statement of cash flows.

 

These non-GAAP measures should not be considered as alternatives to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance.

 

The following tables provide a reconciliation from the GAAP measure of net cash provided by operating activities to OCF before working capital changes and to free cash flow:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions)

2020

 

2019

 

2020

 

2019

Net cash provided by operating activities

$

608

 

 

$

665

 

 

$

2,133

 

 

$

2,067

 

Changes in cash due to changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

19

 

 

52

 

 

(326

)

 

19

 

Prepaid costs and other

(2

)

 

5

 

 

(18

)

 

1

 

Inventory

(2

)

 

(1

)

 

(4

)

 

(2

)

Accounts payable

6

 

 

(11

)

 

7

 

 

(16

)

Revenue payable

33

 

 

25

 

 

129

 

 

20

 

Other current liabilities

6

 

 

(29

)

 

41

 

 

(14

)

Total working capital changes

60

 

 

41

 

 

(171

)

 

8

 

Operating cash flow before working capital changes

$

668

 

 

$

706

 

 

$

1,962

 

 

$

2,075

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions)

2020

 

2019

 

2020

 

2019

Operating cash flow before working capital changes

$

668

 

 

$

706

 

 

$

1,962

 

 

$

2,075

 

Additions to oil and natural gas properties

(284

)

 

(645

)

 

(1,152

)

 

(2,344

)

Free cash flow

$

384

 

 

$

61

 

 

$

810

 

 

$

(269

)

 

 

 

 

 

 

 

 

 

INVESTOR RELATIONS
Megan P. Hays
Vice President of Investor Relations & Public Affairs
432.685.2533

Michael Healey
Manager of Investor Relations
432.818.1387

MEDIA
Mary T. Starnes
Manager of Public Affairs & Corporate Responsibility Strategy
432.221.0477

Source: Concho Resources Inc.

Read More
10.27.20 Concho Resources Inc. Declares Quarterly Dividend

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) announced that its Board of Directors declared a quarterly dividend of $0.20 per share on the Company’s outstanding common stock. The quarterly dividend is payable December 18, 2020, to stockholders of record at the close of business on November 6, 2020.

Concho Resources Inc.

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on safely and efficiently developing and producing oil and natural gas resources. We are working today to deliver a better tomorrow for our shareholders, people and communities. For more information about Concho, visit www.concho.com.

INVESTOR RELATIONS
Megan P. Hays
Vice President of Investor Relations & Public Affairs
432.685.2533

Michael Healey
Manager of Investor Relations
432.818.1387

MEDIA
Mary T. Starnes
Manager of Public Affairs & Corporate Responsibility Strategy
432.221.0477

Source: Concho Resources Inc.

Read More

IR CONTACTS

Megan Hays
Vice President of Investor Relations and Public Affairs
(432) 685-2533
mhays@concho.com
Mary T. Starnes
Public Affairs & Corporate Strategy Manager
(432) 221-0477
mstarnes@concho.com

TRANSFER AGENT

American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
www.astfinancial.com

Concho Resources Inc. is an independent exploration and production company engaged in the acquisition, development and exploration of oil and natural gas properties. Concho’s operations are concentrated in the Permian Basin of Southeast New Mexico and West Texas.