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October 29, 2019MMMM d, yyy Q3 2019 Earnings Presentation
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Investor News

11.11.19 Concho Resources Inc. to Present at Bank of America Merrill Lynch Global Energy Conference

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company”) today announced that Will Giraud, Executive Vice President and Chief Operating Officer, is scheduled to present at the Bank of America Merrill Lynch Global Energy Conference in Miami, on Thursday, November 14, 2019 at 10:15 AM ET.

A live audio webcast of the presentation will be available on the “Events & Presentations” page under the “Investors” section of the Company’s website at www.concho.com. Additionally, the slide presentation will be available on our website prior to the event.

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

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

Source: Concho Resources Inc.

10.31.19 Concho Resources Inc. Recommends Shareholders Reject “Mini-Tender” Offer by TRC Capital Investment Corporation

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today announced that it received notice of an unsolicited “mini-tender” offer by TRC Capital Investment Corporation (“TRC Capital”) to purchase up to two million shares of Concho common stock at a price of $62.85 per share in cash. TRC Capital’s offer price is approximately 4.51% lower than the $65.82 closing share price of Concho’s common stock on October 25, 2019, the last trading day before the offer was commenced. The offer is for approximately 0.99% of the Company’s common shares outstanding.

Concho is not affiliated or associated in any way with TRC Capital, the mini-tender offer or the offer documentation and recommends that shareholders not tender their shares in response to TRC Capital's unsolicited offer.

TRC Capital has made many similar mini-tender offers for shares of other companies. Mini-tender offers seek to acquire less than 5% of a company’s shares outstanding. Consequently, they can avoid many disclosure and procedural requirements of the U.S. Securities and Exchange Commission (SEC). The SEC has cautioned investors that some bidders making mini-tender offers at below-market prices are “…hoping that they will catch investors off guard if the investors do not compare the offer price to the current market price.” The SEC's guidance to investors on mini-tender offers is available at https://www.sec.gov/reportspubs/investor-publications/investorpubsminitendhtm.html.

Shareholders should obtain current market quotations for their shares, consult with their broker or financial advisor, and exercise caution with respect to TRC Capital’s mini-tender offer. Concho recommends that shareholders who have not responded to TRC Capital’s offer take no action. Shareholders who already have tendered their shares may withdraw them at any time prior to 12:01 a.m., New York City time, on Tuesday, November 26, 2019, according to TRC Capital’s offering documents. TRC Capital may extend the offering period at its discretion.

Concho encourages brokers and dealers, as well as other market participants, to review the SEC's letter regarding broker-dealer mini-tender offer dissemination and disclosure at http://www.sec.gov/divisions/marketreg/minitenders/sia072401.htm.

Concho requests that a copy of this news release be included with all distributions of materials relating to TRC Capital’s mini-tender offer related to shares of Concho’s common stock.

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.Information on our website is not part of this release.

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. 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, expected financings 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 SEC. 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.

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

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

Source: Concho Resources Inc.

10.29.19 Concho Resources Inc. Declares Quarterly Dividend

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) announced that its Board of Directors declared a quarterly dividend of $0.125 per share on the Company’s outstanding common stock. The quarterly dividend is payable December 20, 2019, to stockholders of record at the close of business on November 8, 2019.

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

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

Source: Concho Resources Inc.

10.29.19 Concho Resources Inc. Reports Third-Quarter 2019 Results

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) today reported financial and operating results for third-quarter 2019.

Third-Quarter 2019 Highlights

  • Delivered total production of 330 MBoepd, exceeding the high end of the Company's guidance range.
  • Achieved oil production volumes of 206 MBopd.
  • Reduced controllable cash costs per unit 3% year over year.
  • Surpassed year-end 2019 well cost reduction target with 20% lower well costs versus first-half 2019, led by a significant reduction in Delaware Basin well costs.
  • Announced strategic New Mexico Shelf divestiture for total cash consideration of $925 million, subject to customary closing and post-closing adjustments.
  • Authorized initiation of a $1.5 billion share repurchase program.
  • Generated cash flow from operating activities of $665 million; operating cash flow before working capital changes (non-GAAP) was $706 million, exceeding exploration and development costs incurred of $670 million.
  • Reported net income of $558 million, or $2.78 per share. Adjusted net income (non-GAAP) totaled $122 million, or $0.61 per share.
  • Generated $757 million of adjusted EBITDAX (non-GAAP).

See “Supplemental Non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as a reconciliation of these measures to the associated GAAP (as defined herein) measures.

Tim Leach, Chairman and Chief Executive Officer, commented, “The fundamentals of our business are solid, as demonstrated by our strong operational and financial performance in the third quarter. We achieved our production targets and materially reduced well costs, enabling us to surpass our well cost targets for the year and generate operating cash flow that exceeded capital spending. We also made significant progress on other important initiatives, including the sale of our New Mexico Shelf assets. The transaction was an important step in high-grading our portfolio, and we will use the proceeds to achieve our debt reduction target and accelerate the return of capital to shareholders. Through our focus on enhancing capital efficiency, improving costs and actively managing our portfolio, Concho is positioned to deliver sustainable, competitive growth and superior returns for investors.”

Third-Quarter 2019 Summary

Third-quarter 2019 oil production volumes increased 12% year over year to 206 thousand barrels per day (MBopd). Natural gas production for third-quarter 2019 totaled 744 million cubic feet per day (MMcfpd). The Company’s total production for third-quarter 2019 grew 15% year over year to 330 thousand barrels of oil equivalent per day (MBoepd).

Net income for third-quarter 2019 was $558 million, or $2.78 per share. Special items impacting earnings for the quarter included a $101 million impairment, primarily related to the Company’s New Mexico Shelf assets held for sale, and a $299 million gain on the disposition of assets as a result of the previously-announced contribution of assets to a water infrastructure joint venture. Excluding these and other special items, third-quarter 2019 adjusted net income (non-GAAP) was $122 million, or $0.61 per share. Concho’s average realized price for oil and natural gas for third-quarter 2019, excluding the effect of commodity derivatives, was $54.01 per Bbl and $1.34 per Mcf, respectively. Controllable cash costs, which include lease operating and workover expenses, cash general and administrative expenses and cash interest expense, totaled $9.57 per Boe, representing a 3% decrease year over year. The Company is targeting controllable cash costs of $9.00 per Boe by year-end 2020.

For third-quarter 2019, cash flow from operating activities was $665 million, including $41 million in working capital changes. Operating cash flow before working capital changes (non-GAAP) was $706 million, exceeding third quarter costs incurred for exploration and development activities of $670 million. During third-quarter 2019, the Company materially improved well costs and surpassed its year-end 2019 well cost reduction target of 10%. Drilling, completion & equipment (DC&E) costs totaled $955 per foot, representing a 20% reduction from first-half 2019. DC&E costs were $1,118 per foot in the Delaware Basin and $791 per foot in the Midland Basin.

Additional information on the Company’s operational results is included in the Company’s 3Q 2019 Quarterly Update at www.concho.com.

Strategic Asset Sale Accelerates Value

In September, the Company announced the sale of its New Mexico Shelf assets to an affiliate of Spur Energy Partners LLC for $925 million. The transaction is expected to close in early November and is subject to customary terms, conditions and closing and post-closing adjustments. The Company intends to use the proceeds from the transaction to pay down borrowings on its revolving credit facility and initiate a $1.5 billion share repurchase program. As of September 30, 2019, Concho had long-term debt of approximately $4.3 billion, including $395 million of outstanding borrowings under its credit facility.

Outlook

Fourth-quarter 2019 production is expected to be 318 MBoepd to 325 MBoepd (64% oil), which reflects the impact of the Company’s planned New Mexico Shelf sale. Excluding the impact of the planned asset sale, fourth-quarter 2019 production is expected to be 334 MBoepd to 341 MBoepd (64% oil). Fourth-quarter 2019 gathering, processing and transportation expense and depletion, depreciation and amortization expense are forecasted to be $1.35 per Boe to $1.45 per Boe and $16.50 per Boe to $16.85 per Boe, respectively.

Commodity Derivatives Update

The Company’s commodity derivatives strategy is intended to manage its exposure to commodity price fluctuations. Please see the table under “Derivatives Information” below for detailed information about Concho’s current derivatives positions.

Third-Quarter 2019 Conference Call

Concho will host a conference call tomorrow, October 30, 2019, at 8:00 AM CT (9:00 AM ET) to discuss third-quarter 2019 results. The telephone number and passcode to access the conference call are provided below:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 5785506

To access the live webcast and view the related earnings presentation, visit Concho’s website at www.concho.com. The replay will also be available on the Company’s website under the “Investors” section.

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” 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, expected financings 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. 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, adjusted EBITDAX and operating cash flow before working capital changes.

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

Concho Resources Inc.

Consolidated Balance Sheets

Unaudited

 

September 30,

 

December 31,

(in millions, except share and per share amounts)

2019

 

2018

Assets

Current assets:

 

 

 

Cash and cash equivalents

$

 

 

$

 

Accounts receivable, net of allowance for doubtful accounts:

 

 

 

Oil and natural gas

535

 

 

466

 

Joint operations and other

263

 

 

365

 

Inventory

30

 

 

35

 

Assets held for sale

930

 

 

 

Derivative instruments

201

 

 

484

 

Prepaid costs and other

58

 

 

59

 

Total current assets

2,017

 

 

1,409

 

Property and equipment:

 

 

 

Oil and natural gas properties, successful efforts method

28,497

 

 

31,706

 

Accumulated depletion and depreciation

(7,477

)

 

(9,701

)

Total oil and natural gas properties, net

21,020

 

 

22,005

 

Other property and equipment, net

408

 

 

308

 

Total property and equipment, net

21,428

 

 

22,313

 

Deferred loan costs, net

8

 

 

10

 

Goodwill

2,141

 

 

2,224

 

Intangible assets, net

17

 

 

19

 

Noncurrent derivative instruments

121

 

 

211

 

Other assets

400

 

 

108

 

Total assets

$

26,132

 

 

$

26,294

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

Accounts payable - trade

$

66

 

 

$

50

 

Book overdrafts

55

 

 

159

 

Revenue payable

220

 

 

253

 

Accrued drilling costs

471

 

 

574

 

Liabilities held for sale

69

 

 

 

Derivative instruments

15

 

 

 

Other current liabilities

444

 

 

320

 

Total current liabilities

1,340

 

 

1,356

 

Long-term debt

4,349

 

 

4,194

 

Deferred income taxes

1,783

 

 

1,808

 

Noncurrent derivative instruments

 

 

 

Asset retirement obligations and other long-term liabilities

149

 

 

168

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value; 300,000,000 authorized; 202,216,989 and 201,288,884 shares issued at September 30, 2019 and December 31, 2018, respectively

 

 

 

Additional paid-in capital

14,840

 

 

14,773

 

Retained earnings

3,817

 

 

4,126

 

Treasury stock, at cost; 1,172,545 and 1,031,655 shares at September 30, 2019 and December 31, 2018, respectively

(146

)

 

(131

)

Total stockholders’ equity

18,511

 

 

18,768

 

Total liabilities and stockholders’ equity

$

26,132

 

 

$

26,294

 

 

 

 

 

Concho Resources Inc.

Consolidated Statements of Operations

Unaudited

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(in millions, except per share amounts)

2019

 

2018

 

2019

 

2018

Operating revenues:

 

 

 

 

 

 

 

Oil sales

$

1,023

 

 

$

957

 

 

$

3,007

 

 

$

2,545

 

Natural gas sales

92

 

 

235

 

 

339

 

 

539

 

Total operating revenues

1,115

 

 

1,192

 

 

3,346

 

 

3,084

 

Operating costs and expenses:

 

 

 

 

 

 

 

Oil and natural gas production

190

 

 

156

 

 

552

 

 

416

 

Production and ad valorem taxes

85

 

 

89

 

 

255

 

 

229

 

Gathering, processing and transportation

25

 

 

16

 

 

73

 

 

36

 

Exploration and abandonments

26

 

 

10

 

 

90

 

 

36

 

Depreciation, depletion and amortization

488

 

 

406

 

 

1,431

 

 

1,033

 

Accretion of discount on asset retirement obligations

3

 

 

3

 

 

8

 

 

7

 

Impairments of long-lived assets

101

 

 

 

 

969

 

 

 

General and administrative (including non-cash stock-based compensation of $20 and $23 for the three months ended September 30, 2019 and 2018, respectively, and $67 and $58 for the nine months ended September 30, 2019 and 2018, respectively)

75

 

 

84

 

 

254

 

 

221

 

(Gain) loss on derivatives

(397

)

 

625

 

 

445

 

 

793

 

(Gain) loss on disposition of assets, net

(303

)

 

5

 

 

(303

)

 

(719

)

Transaction costs

 

 

23

 

 

1

 

 

39

 

Total operating costs and expenses

293

 

 

1,417

 

 

3,775

 

 

2,091

 

Income (loss) from operations

822

 

 

(225

)

 

(429

)

 

993

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

(46

)

 

(46

)

 

(141

)

 

(103

)

Other, net

4

 

 

3

 

 

311

 

 

108

 

Total other income (expense)

(42

)

 

(43

)

 

170

 

 

5

 

Income (loss) before income taxes

780

 

 

(268

)

 

(259

)

 

998

 

Income tax (expense) benefit

(222

)

 

69

 

 

25

 

 

(225

)

Net income (loss)

$

558

 

 

$

(199

)

 

$

(234

)

 

$

773

 

Earnings per share:

 

 

 

 

 

 

 

Basic net income (loss)

$

2.78

 

 

$

(1.05

)

 

$

(1.18

)

 

$

4.74

 

Diluted net income (loss)

$

2.78

 

 

$

(1.05

)

 

$

(1.18

)

 

$

4.74

 

 

 

 

 

 

 

 

 

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

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net income (loss) as reported

$

558

 

 

$

(199

)

 

$

(234

)

 

$

773

 

Participating basic earnings (a)

(4

)

 

 

 

(1

)

 

(6

)

Basic earnings (loss) attributable to common stockholders

554

 

 

(199

)

 

(235

)

 

767

 

Reallocation of participating earnings

 

 

 

 

 

 

 

Diluted earnings (loss) attributable to common stockholders

$

554

 

 

$

(199

)

 

$

(235

)

 

$

767

 

 

 

 

 

 

 

 

 

(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

 

Nine Months Ended

September 30,

 

September 30,

(in thousands)

2019

 

2018

 

2019

 

2018

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

199,448

 

 

188,953

 

 

199,272

 

 

161,605

 

Dilutive performance units

6

 

 

 

 

 

 

342

 

Diluted

199,454

 

 

188,953

 

 

199,272

 

 

161,947

 

 

 

 

 

 

 

 

 

Concho Resources Inc.

Consolidated Statements of Cash Flows

Unaudited

 

Nine Months Ended

September 30,

(in millions)

2019

 

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$

(234

)

 

$

773

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization

1,431

 

 

1,033

 

Accretion of discount on asset retirement obligations

8

 

 

7

 

Impairments of long-lived assets

969

 

 

 

Exploration and abandonments

68

 

 

20

 

Non-cash stock-based compensation expense

67

 

 

58

 

Deferred income taxes

(25

)

 

225

 

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

(591

)

 

(719

)

Loss on derivatives

445

 

 

793

 

Net settlements paid on derivatives

(57

)

 

(238

)

Other

(6

)

 

(94

)

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

 

 

 

Accounts receivable

(19

)

 

(57

)

Prepaid costs and other

(1

)

 

(15

)

Inventory

2

 

 

(12

)

Accounts payable

16

 

 

(27

)

Revenue payable

(20

)

 

62

 

Other current liabilities

14

 

 

52

 

Net cash provided by operating activities

2,067

 

 

1,861

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Additions to oil and natural gas properties

(2,385

)

 

(1,669

)

Acquisitions of oil and natural gas properties

(34

)

 

(105

)

Additions to property, equipment and other assets

(82

)

 

(53

)

Proceeds from the disposition of assets

393

 

 

260

 

Deposit for pending divestiture of oil and natural gas properties

93

 

 

 

Direct transaction costs for asset acquisitions and dispositions

(5

)

 

(3

)

Distribution from equity method investment

 

 

148

 

Net cash used in investing activities

(2,020

)

 

(1,422

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Borrowings under credit facility

2,680

 

 

2,408

 

Payments on credit facility

(2,527

)

 

(2,537

)

Issuance of senior notes, net

 

 

1,595

 

Repayments of RSP debt

 

 

(1,690

)

Debt extinguishment costs

 

 

(83

)

Payments for loan costs

 

 

(16

)

Payment of common stock dividends

(75

)

 

 

Purchases of treasury stock

(15

)

 

(63

)

Decrease in book overdrafts

(104

)

 

(29

)

Other

(6

)

 

 

Net cash used in financing activities

(47

)

 

(415

)

Net increase in cash and cash equivalents

 

 

24

 

Cash and cash equivalents at beginning of period

 

 

 

Cash and cash equivalents at end of period

$

 

 

$

24

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

Issuance of common stock for business combinations

$

 

 

$

7,549

 

 

 

 

 

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

 

Nine Months Ended

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

Production and operating data:

 

 

 

 

 

 

 

Net production volumes:

 

 

 

 

 

 

 

Oil (MBbl)

18,940

 

 

16,979

 

 

56,602

 

 

42,947

 

Natural gas (MMcf)

68,411

 

 

56,348

 

 

199,284

 

 

148,633

 

Total (MBoe)

30,342

 

 

26,370

 

 

89,816

 

 

67,719

 

 

 

 

 

 

 

 

 

Average daily production volumes:

 

 

 

 

 

 

 

Oil (Bbl)

205,870

 

 

184,554

 

 

207,333

 

 

157,315

 

Natural gas (Mcf)

743,598

 

 

612,478

 

 

729,978

 

 

544,443

 

Total (Boe)

329,803

 

 

286,634

 

 

328,996

 

 

248,056

 

 

 

 

 

 

 

 

 

Average prices per unit: (a)

 

 

 

 

 

 

 

Oil, without derivatives (Bbl)

$

54.01

 

 

$

56.38

 

 

$

53.13

 

 

$

59.25

 

Oil, with derivatives (Bbl) (b)

$

52.84

 

 

$

53.67

 

 

$

51.85

 

 

$

53.55

 

Natural gas, without derivatives (Mcf)

$

1.34

 

 

$

4.18

 

 

$

1.70

 

 

$

3.63

 

Natural gas, with derivatives (Mcf) (b)

$

1.54

 

 

$

4.21

 

 

$

1.77

 

 

$

3.67

 

Total, without derivatives (Boe)

$

36.74

 

 

$

45.23

 

 

$

37.25

 

 

$

45.54

 

Total, with derivatives (Boe) (b)

$

36.46

 

 

$

43.56

 

 

$

36.60

 

 

$

42.02

 

 

 

 

 

 

 

 

 

Operating costs and expenses per Boe: (a)

 

 

 

 

 

 

 

Oil and natural gas production

$

6.26

 

 

$

5.93

 

 

$

6.14

 

 

$

6.15

 

Production and ad valorem taxes

$

2.79

 

 

$

3.37

 

 

$

2.84

 

 

$

3.38

 

Gathering, processing and transportation

$

0.82

 

 

$

0.60

 

 

$

0.81

 

 

$

0.53

 

Depreciation, depletion and amortization

$

16.07

 

 

$

15.43

 

 

$

15.93

 

 

$

15.27

 

General and administrative

$

2.50

 

 

$

3.13

 

 

$

2.82

 

 

$

3.26

 

(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)

2019

 

2018

 

2019

 

2018

 

Net cash receipts from (payments on) derivatives:

 

 

 

 

 

 

 

 

Oil derivatives

$

(21

)

 

$

(46

)

 

$

(72

)

 

$

(245

)

 

Natural gas derivatives

14

 

 

2

 

 

15

 

 

7

 

 

Total

$

(7

)

 

$

(44

)

 

$

(57

)

 

$

(238

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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.

 

 

 

 

 

 

 

 

 

Concho Resources Inc.

Operational Activity

Unaudited

The tables below provide a summary of operational activity for third-quarter 2019:

Total Activity (Gross):

 

 

 

 

 

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

69

 

71

 

57

Midland Basin

 

40

 

28

 

54

Total

 

109

 

99

 

111

 

 

 

 

 

Total Activity (Gross Operated):

 

 

 

 

 

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

30

 

49

 

27

Midland Basin

 

33

 

28

 

47

Total

 

63

 

77

 

74

 

 

 

 

 

Total Activity (Net Operated):

 

 

 

 

 

 

 

 

Number of Wells
Drilled

 

Number of Wells
Completed

 

Number of Wells
Put on Production

Delaware Basin

 

20

 

40

 

19

Midland Basin

 

24

 

26

 

39

Total

 

44

 

66

 

58

 

 

 

 

 

 

 

Concho Resources Inc.

Costs Incurred

Unaudited

The table below provides the costs incurred for oil and natural gas producing activities for the periods indicated:

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

(in millions)

2019

 

2018

 

2019

 

2018

Property acquisition costs:

 

 

 

 

 

 

 

Proved

$

 

 

$

4,126

 

 

$

 

 

$

4,126

 

Unproved

20

 

 

3,578

 

 

33

 

 

3,596

 

Exploration (a)

412

 

 

481

 

 

1,309

 

 

1,059

 

Development (a)

258

 

 

280

 

 

1,072

 

 

653

 

Total costs incurred

$

690

 

 

$

8,465

 

 

$

2,414

 

 

$

9,434

 

 

 

 

 

 

 

 

 

(a) Asset retirement obligations included in the Company's costs incurred for oil and natural gas producing activities were $13 million and $1 million for the three months ended September 30, 2019 and 2018, respectively, and $16 million and $2 million for the nine months ended September 30, 2019 and 2018, respectively. Asset retirement obligations for the three and nine months ended September 30, 2019 were primarily the result of revised estimated future abandonment costs.

Concho Resources Inc.

Derivatives Information

Unaudited

The table below provides data associated with the Company’s derivatives at October 29, 2019, for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

2020

 

 

 

 

Fourth
Quarter

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

Total

 

2021

Oil Price Swaps WTI: (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

13,469

 

 

12,517

 

 

11,075

 

 

10,067

 

 

9,586

 

 

43,245

 

 

17,517

 

Price per Bbl

 

$

56.46

 

 

$

57.01

 

 

$

56.88

 

 

$

56.93

 

 

$

57.01

 

 

$

56.96

 

 

$

54.30

 

Oil Price Swaps Brent: (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

2,178

 

 

1,456

 

 

1,456

 

 

1,472

 

 

1,472

 

 

5,856

 

 

 

Price per Bbl

 

$

62.08

 

 

$

60.12

 

 

$

60.12

 

 

$

60.12

 

 

$

60.12

 

 

$

60.12

 

 

$

 

Oil Costless Collars: (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

1,058

 

 

 

 

 

 

 

 

 

 

 

 

 

Ceiling price per Bbl

 

$

62.95

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Floor price per Bbl

 

$

55.43

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Oil Basis Swaps: (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (MBbl)

 

16,053

 

 

14,651

 

 

10,647

 

 

10,580

 

 

10,120

 

 

45,998

 

 

16,790

 

Price per Bbl

 

$

(2.19

)

 

$

(0.46

)

 

$

(0.65

)

 

$

(0.66

)

 

$

(0.71

)

 

$

(0.60

)

 

$

0.60

 

Natural Gas Price Swaps - Henry Hub: (d)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

37,750

 

 

35,024

 

 

32,313

 

 

30,038

 

 

28,498

 

 

125,873

 

 

36,500

 

Price per MMBtu

 

$

2.51

 

 

$

2.46

 

 

$

2.46

 

 

$

2.47

 

 

$

2.47

 

 

$

2.47

 

 

$

2.52

 

Natural Gas Basis Swaps - HH/EPP: (e)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

28,820

 

 

25,770

 

 

23,960

 

 

22,080

 

 

21,770

 

 

93,580

 

 

36,500

 

Price per MMBtu

 

$

(0.76

)

 

$

(1.06

)

 

$

(1.07

)

 

$

(1.07

)

 

$

(1.07

)

 

$

(1.07

)

 

$

(0.66

)

Natural Gas Basis Swaps - HH/WAHA: (f)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Volume (BBtu)

 

9,200

 

 

7,280

 

 

7,280

 

 

7,360

 

 

7,360

 

 

29,280

 

 

10,950

 

Price per MMBtu

 

$

(0.77

)

 

$

(1.10

)

 

$

(1.10

)

 

$

(1.10

)

 

$

(1.10

)

 

$

(1.10

)

 

$

(0.66

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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. The majority of these contracts are settled on a calendar-month basis, while certain contracts assumed in connection with the RSP acquisition are settled on a trading-month basis.

(d)

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

(e)

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

(f)

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

 

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 recurring, 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

 

Nine Months Ended

September 30,

 

September 30,

(in millions, except per share amounts)

2019

 

2018

 

2019

 

2018

Net income (loss) - as reported

$

558

 

 

$

(199

)

 

$

(234

)

 

$

773

 

Adjustments for certain non-cash and special items:

 

 

 

 

 

 

 

(Gain) loss on derivatives

(397

)

 

625

 

 

445

 

 

793

 

Net cash payments on derivatives

(7

)

 

(44

)

 

(57

)

 

(238

)

Impairments of long-lived assets

101

 

 

 

 

969

 

 

 

Leasehold abandonments

17

 

 

6

 

 

59

 

 

20

 

(Gain) loss on disposition of assets and other

(303

)

 

5

 

 

(589

)

 

(711

)

Gain on equity method investments

 

 

 

 

(17

)

 

(103

)

RSP transaction costs

 

 

23

 

 

 

 

33

 

Tax impact (a)

152

 

 

(140

)

 

(165

)

 

47

 

Changes in deferred taxes and other estimates

1

 

 

(7

)

 

(6

)

 

(10

)

Adjusted net income

$

122

 

 

$

269

 

 

$

405

 

 

$

604

 

Earnings (loss) per diluted share - as reported

$

2.78

 

 

$

(1.05

)

 

$

(1.18

)

 

$

4.74

 

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

 

 

 

 

 

 

 

(Gain) loss on derivatives

(1.98

)

 

3.29

 

 

2.24

 

 

4.85

 

Net cash payments on derivatives

(0.03

)

 

(0.23

)

 

(0.29

)

 

(1.45

)

Impairments of long-lived assets

0.50

 

 

 

 

4.85

 

 

 

Leasehold abandonments

0.08

 

 

0.03

 

 

0.30

 

 

0.12

 

(Gain) loss on disposition of assets and other

(1.51

)

 

0.03

 

 

(2.95

)

 

(4.35

)

Gain on equity method investments

 

 

 

 

(0.09

)

 

(0.63

)

RSP transaction costs

 

 

0.12

 

 

 

 

0.20

 

Tax impact

0.77

 

 

(0.73

)

 

(0.83

)

 

0.28

 

Changes in deferred taxes and other estimates

 

 

(0.04

)

 

(0.03

)

 

(0.06

)

Adjusted earnings per diluted share

$

0.61

 

 

$

1.42

 

 

$

2.02

 

 

$

3.70

 

Adjusted earnings per share:

 

 

 

 

 

 

 

Basic earnings

$

0.61

 

 

$

1.42

 

 

$

2.02

 

 

$

3.71

 

Diluted earnings

$

0.61

 

 

$

1.42

 

 

$

2.02

 

 

$

3.70

 

 

 

 

 

 

 

 

 

(a) Estimated using statutory tax rate in effect for the period.

 

 

 

 

 

 

 

 

Reconciliation of Net Income (Loss) to Adjusted EBITDAX

Adjusted EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

The Company defines adjusted EBITDAX as net income (loss), plus (1) exploration and abandonments, (2) depreciation, depletion and amortization, (3) accretion of discount on asset retirement obligations, (4) impairments of long-lived assets, (5) non-cash stock-based compensation, (6) (gain) loss on derivatives, (7) net cash payments on derivatives, (8) (gain) loss on disposition of assets and other, (9) interest expense, (10) gain on equity method investments, (11) RSP transaction costs and (12) income tax expense (benefit). Adjusted EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.

The Company’s adjusted EBITDAX measure provides additional information that may be used to better understand the Company’s operations. Adjusted EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that adjusted EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company’s management team and by other users of the Company’s consolidated financial statements. For example, adjusted EBITDAX can be used to assess the Company’s operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure, and to assess the financial performance of the Company’s assets and the Company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of the GAAP measure of net income (loss) to adjusted EBITDAX for the periods indicated:

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net income (loss)

$

558

 

 

$

(199

)

 

$

(234

)

 

$

773

 

Exploration and abandonments

26

 

 

10

 

 

90

 

 

36

 

Depreciation, depletion and amortization

488

 

 

406

 

 

1,431

 

 

1,033

 

Accretion of discount on asset retirement obligations

3

 

 

3

 

 

8

 

 

7

 

Impairments of long-lived assets

101

 

 

 

 

969

 

 

 

Non-cash stock-based compensation

20

 

 

23

 

 

67

 

 

58

 

(Gain) loss on derivatives

(397

)

 

625

 

 

445

 

 

793

 

Net cash payments on derivatives

(7

)

 

(44

)

 

(57

)

 

(238

)

(Gain) loss on disposition of assets and other

(303

)

 

5

 

 

(589

)

 

(719

)

Interest expense

46

 

 

46

 

 

141

 

 

103

 

Gain on equity method investments

 

 

 

 

(17

)

 

(103

)

RSP transaction costs

 

 

23

 

 

 

 

33

 

Income tax expense (benefit)

222

 

 

(69

)

 

(25

)

 

225

 

Adjusted EBITDAX

$

757

 

 

$

829

 

 

$

2,229

 

 

$

2,001

 

 

 

 

 

 

 

 

 

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

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

The following table provides a reconciliation from the GAAP measure of net cash provided by operating activities to OCF before working capital changes:

 

Three Months Ended

 

Nine Months Ended

September 30,

 

September 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net cash provided by operating activities

$

665

 

 

$

771

 

 

$

2,067

 

 

$

1,861

 

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

 

 

 

 

 

 

 

Accounts receivable

52

 

 

1

 

 

19

 

 

57

 

Prepaid costs and other

5

 

 

(7

)

 

1

 

 

15

 

Inventory

(1

)

 

9

 

 

(2

)

 

12

 

Accounts payable

(11

)

 

32

 

 

(16

)

 

27

 

Revenue payable

25

 

 

(19

)

 

20

 

 

(62

)

Other current liabilities

(29

)

 

(30

)

 

(14

)

 

(52

)

Total working capital changes

41

 

 

(14

)

 

8

 

 

(3

)

Operating cash flow before working capital changes

$

706

 

 

$

757

 

 

$

2,075

 

 

$

1,858

 

 

 

 

 

 

 

 

 

 

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

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

Source: Concho Resources Inc.

09.26.19 Concho Resources Inc. Schedules Third-Quarter 2019 Results Conference Call for Wednesday, October 30, 2019

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) will host a conference call on Wednesday, October 30, 2019 at 8:00 AM CT (9:00 AM ET) to discuss third-quarter 2019 financial and operating results. The Company plans to announce results for the third quarter of 2019 on Tuesday, October 29, 2019, after close of trading.

Conference Call Information:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 5785506

To access the live webcast, visit the Company’s website at www.concho.com. The replay will also be available on Concho’s website under the “Investors” section.

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 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

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

Source: Concho Resources Inc.

09.03.19 Concho Resources Inc. to Sell New Mexico Shelf Assets for $925 Million and Initiate $1.5 Billion Share Repurchase Program

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today announced that it has entered into a definitive agreement to sell its assets in the New Mexico Shelf (the “Shelf”) to an affiliate of Spur Energy Partners LLC for $925 million.

In addition, the Company’s board of directors authorized the initiation of a repurchase program of up to $1.5 billion of the Company’s shares of common stock.

Tim Leach, Chairman and Chief Executive Officer, commented, “Proactively managing our asset portfolio has long been a key part of our strategy. Divesting our New Mexico Shelf position enables us to accelerate the value of these legacy assets, while focusing our portfolio on opportunities with the highest potential for strong returns. Further, the transaction reduces our cost structure and allows us to achieve the leverage target we communicated earlier this year, while delivering additional returns to shareholders under an initial $1.5 billion share repurchase program. The share repurchase program demonstrates our continued confidence in our strategy to generate sustainable oil growth and strong cash flow, and reflects our commitment to delivering long-term value to our shareholders.”

The divestiture includes approximately 100,000 gross acres. Current production from the Company’s Shelf assets is approximately 25 thousand barrels of oil equivalent per day. Following the sale, Concho will maintain a large presence and development program in southeastern New Mexico and will continue to support the local communities in which its employees live and work.

“Over the past decade, our Shelf team has done an excellent job of working safely and maximizing the value of these assets, and we are grateful for their hard work,” commented Tim Leach.

The Company intends to use the proceeds from the transaction to pay down borrowings on its revolving credit facility and initiate the share repurchase program.

The transaction is subject to customary terms and conditions and is expected to close in November 2019.

RBC Richardson Barr served as financial advisor to Concho on the sale of the Shelf.

Concho Resources Inc.

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing, and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal” 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, expected financings 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 SEC. 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.

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

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

Source: Concho Resources Inc.

08.22.19 Concho Resources Inc. to Present at Barclays CEO Energy-Power Conference

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company”) today announced that Tim Leach, Chairman and Chief Executive Officer, is scheduled to present at the Barclays CEO Energy-Power Conference in New York City, on Wednesday, September 4, 2019 at 9:05 AM ET.

A live audio webcast of the presentation will be available on the “Events & Presentations” page under the “Investors” section of the Company’s website at www.concho.com. Additionally, the slide presentation will be available on our website prior to the event.

Concho Resources Inc.

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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

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

Source: Concho Resources Inc.

07.31.19 Concho Resources Inc. and Solaris Water Midstream Form Joint Venture for Produced Water Management in the Northern Delaware Basin
  • Concho is contributing water infrastructure assets to Solaris Water in exchange for cash and equity.
  • Solaris Water will manage Concho's produced water gathering, transportation, disposal and recycling for an approximately 1.6 million-acre area located primarily in Eddy County, New Mexico.

 

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (“Concho”) and Solaris Water Midstream, LLC (“Solaris Water”) announced today the formation of a strategic joint venture focused on optimizing produced water logistics at scale in the Northern Delaware Basin. The joint venture includes a long-term produced water management agreement between Concho and Solaris Water.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20190731006009/en/

Under the terms of the agreement, Solaris Water will manage Concho’s produced water gathering, transportation, disposal and recycling for an area covering approximately 1.6 million acres located primarily in Eddy County, New Mexico. Concho will contribute 13 salt water disposal wells and approximately 40 miles of large-diameter produced water gathering pipelines in exchange for cash and an equity ownership in Solaris Midstream Holdings, LLC, the parent of Solaris Water.

The assets contributed by Concho will be incorporated into Solaris Water’s growing integrated Pecos Star System, which currently includes more than 300 miles of large-diameter gathering pipelines, more than 500,000 barrels per day of disposal capacity, storage and recycling facilities and water supply pipelines that serve nearly 20 oil and gas operators. This high-capacity water infrastructure network brings significant scale to producers that lowers operating and well completion costs while providing environmental benefits such as reduced truck traffic and less reliance on brackish or fresh water supplies. Solaris Water will deliver to Concho blended reuse source water, enabling a significant increase in the use of recycled water in Concho’s operations.

“Our joint venture with Solaris will provide effective and responsible water management and recycling solutions across our core position in Eddy County, New Mexico,” said Concho President Jack Harper. “Solaris is well positioned to deliver a reliable produced water takeaway solution and an innovative and efficient produced water recycling platform.”

“We are committed to providing dependable, low cost produced water handling and water supply solutions to operators across the Permian Basin,” said Solaris Water Chief Executive Officer Bill Zartler. “This joint venture accelerates the expansion of our Pecos Star System, which is the premier integrated water infrastructure system serving the prolific Northern Delaware Basin. Concho is a leading operator with top-tier assets, an impressive organization, and a stellar reputation, and we could not be more pleased to be Concho’s water infrastructure provider over such a large position in the Northern Delaware Basin.”

About Concho Resources

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. We are working today to deliver a better tomorrow for our shareholders, people and communities. For more information about Concho, visit www.concho.com.

About Solaris Water Midstream, LLC

A wholly owned subsidiary of Solaris Midstream Holdings, LLC, Solaris Water is an independent, growth-oriented company based in Houston with offices in Midland, Texas, and Carlsbad, New Mexico. Solaris Water owns, operates and designs crucial water midstream assets across the Permian Basin. Solaris Water currently operates cost-effective, efficient and reliable produced water gathering, transportation, disposal, recycling and storage infrastructure and frac water sourcing and infrastructure in the Midland and Delaware basins. For more information on Solaris Water please visit www.solarismidstream.com.

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

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

SOLARIS WATER CONTACT
Casey Nikoloric
Managing Principal, TEN|10 Group
303.433.4397 x 101 o
303.507.0510 m
casey.nikoloric@ten10group.com

Source: Concho Resources Inc. and Solaris Water Midstream, LLC

07.31.19 Concho Resources Inc. Reports Second-Quarter 2019 Results

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) today reported financial and operating results for second-quarter 2019.

Second-Quarter 2019 Highlights

  • Exceeded second-quarter guidance with production of 329 MBoepd.
  • Delivered strong execution towards full-year 2019 capital program.
  • Reported a net loss of $97 million, or $0.48 per share. Adjusted net income (non-GAAP) totaled $139 million, or $0.69 per share.
  • Generated $717 million of adjusted EBITDAX (non-GAAP).

See “Supplemental Non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as a reconciliation of these measures to the associated GAAP (as defined herein) measure.

Tim Leach, Chairman and Chief Executive Officer, commented, “The second quarter continued our track record of strong execution as we delivered production, capital investment and operating costs in-line with or better than our targets, highlighting the fundamental strength of our assets and development approach.”

Second-Quarter 2019 Summary

Production for second-quarter 2019 was approximately 30 million barrels of oil equivalent (MMBoe), or an average of 329 thousand Boe per day (MBoepd). Average daily oil production for second-quarter 2019 totaled 206 thousand barrels per day (MBopd). Natural gas production for second-quarter 2019 totaled 737 million cubic feet per day (MMcfpd).

Concho’s average realized price for oil and natural gas for second-quarter 2019, excluding the effect of commodity derivatives, was $56.02 per Bbl and $1.16 per Mcf, respectively, compared with $60.98 per Bbl and $3.19 per Mcf, respectively, for second-quarter 2018.

Net loss for second-quarter 2019 was $97 million, or $0.48 per share, compared with net income of $137 million, or $0.92 per share, for second-quarter 2018. Excluding certain non-cash and special items, second-quarter 2019 adjusted net income was $139 million, or $0.69 per share, compared with adjusted net income of $185 million, or $1.24 per share, for second-quarter 2018. Special items for the quarter included a non-cash asset impairment charge of $868 million to the carrying value of the Company's New Mexico Shelf assets.

During the quarter, Concho generated adjusted EBITDAX of $717 million, compared with $592 million for second-quarter 2018.

Cash flow from operating activities was $779 million for the quarter, including $111 million in working capital changes. Operating cash flow before working capital changes (non-GAAP) was $668 million.

During second-quarter 2019, Concho received $289 million of cash proceeds from the completion of the previously announced sale by Oryx Southern Delaware Holdings, LLC of its interests in the Oryx I oil gathering and transportation system. The Company used a portion of the proceeds to repay borrowings under its credit facility. At June 30, 2019, Concho had long-term debt of approximately $4.4 billion, including $397 million of outstanding borrowings under its credit facility.

Costs incurred for exploration and development activities for second-quarter 2019 totaled $785 million. During the quarter, Concho averaged 26 rigs, compared with 33 rigs in first-quarter 2019. The Company is currently running 18 rigs, including 11 rigs in the Delaware Basin and seven rigs in the Midland Basin. Additionally, the Company is currently utilizing seven completion crews. See the table under “Operational Activity” below for detailed information about the Company’s drilling and completion activity by operating area for second-quarter 2019.

Large-Scale Projects Accelerating Development Optimization

In the Delaware Basin, Concho completed the 23-well Dominator project, a well-spacing test targeting multiple landings within the Upper Wolfcamp. The average lateral length for the project was approximately 4,400 feet, and all 23 wells were drilled, completed and put on production safely and ahead of schedule. While the Dominator project accelerated the Company’s understanding across the project lifecycle (logistics, lateral placement, well spacing and facilities design), performance from the project indicates the well spacing was too tight. The Company has already incorporated learnings from this project into its second half of 2019 program and future Delaware Basin projects.

In the Midland Basin, Concho put on production the Marion Benge project, consisting of 18 wells targeting the Spraberry and Wolfcamp zones with an average lateral length of 9,900 feet. The Marion Benge project has demonstrated strong initial performance. Additional information on the Company’s operational results is included in the Company’s 2Q 2019 Quarterly Update at www.concho.com.

Outlook

“We have made near-term adjustments to our operational plans that reinforce our commitment to capital discipline and maximizing free cash flow. Moderating activity and building an inventory of drilled but uncompleted wells keeps us on track with our full year capital plan, preserves our balance sheet and positions the company for an inflection in free cash flow and momentum heading into 2020. This momentum combined with our high-quality asset base provide us confidence in our strategy to drive differentiated growth, expand free cash flow and strengthen returns over the long term,” commented Tim Leach.

The Company expects to produce between 316 MBoepd to 322 MBoepd in third-quarter 2019. The Company’s oil mix is expected to be approximately 63% in the second half of 2019 as fewer new wells are planned to come online. Additionally, due to weak natural gas and natural gas liquids pricing, the Company reduced its full-year 2019 natural gas price realization guidance to a range of 60% to 80% of NYMEX Henry Hub and expects to trend towards the low end of the range in the third quarter of 2019.

Commodity Derivatives Update

The Company’s commodity derivatives strategy is intended to manage its exposure to commodity price fluctuations. Please see the table under “Derivatives Information” below for detailed information about Concho’s current derivatives positions.

Conference Call

Concho will host a conference call tomorrow, August 1, 2019, at 8:00 AM CT (9:00 AM ET) to discuss second-quarter 2019 results. The telephone number and passcode to access the conference call are provided below:

Dial-in: (844) 263-8298

Intl. dial-in: (478) 219-0007

Participant Passcode: 7577052

To access the live webcast and view the related earnings presentation, visit Concho’s website at www.concho.com. The replay will also be available on the Company’s website under the “Investors” section.

About Concho Resources

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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,” “strategy,” “intend,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal” 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, expected financings 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. 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, adjusted EBITDAX and operating cash flow before working capital changes.

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

This release also contains the non-GAAP term free cash flow. Free cash flow is cash flow provided by operating activities in excess of cash flow used in investing activities for additions to oil and gas properties. The Company believes that free cash flow is useful to investors as it provides measures to compare cash provided by operating activities and exploration and development costs across periods on a consistent basis.

Concho Resources Inc.

Consolidated Balance Sheets

Unaudited

 
(in millions, except share and per share amounts)

June 30,
2019

 

December 31,
2018

Assets

Current assets:

 

 

 

Cash and cash equivalents

$

 

 

$

 

Accounts receivable, net of allowance for doubtful accounts:

 

 

 

Oil and natural gas

460

 

 

466

 

Joint operations and other

301

 

 

365

 

Inventory

33

 

 

35

 

Derivative instruments

12

 

 

484

 

Prepaid costs and other

54

 

 

59

 

Total current assets

860

 

 

1,409

 

Property and equipment:

 

 

 

Oil and natural gas properties, successful efforts method

33,321

 

 

31,706

 

Accumulated depletion and depreciation

(11,479

)

 

(9,701

)

Total oil and natural gas properties, net

21,842

 

 

22,005

 

Other property and equipment, net

374

 

 

308

 

Total property and equipment, net

22,216

 

 

22,313

 

Deferred loan costs, net

9

 

 

10

 

Goodwill

2,222

 

 

2,224

 

Intangible assets, net

18

 

 

19

 

Noncurrent derivative instruments

29

 

 

211

 

Other assets

124

 

 

108

 

Total assets

$

25,478

 

 

$

26,294

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

Accounts payable - trade

$

55

 

 

$

50

 

Book overdrafts

143

 

 

159

 

Revenue payable

255

 

 

253

 

Accrued drilling costs

506

 

 

574

 

Derivative instruments

126

 

 

 

Other current liabilities

318

 

 

320

 

Total current liabilities

1,403

 

 

1,356

 

Long-term debt

4,350

 

 

4,194

 

Deferred income taxes

1,561

 

 

1,808

 

Noncurrent derivative instruments

12

 

 

 

Asset retirement obligations and other long-term liabilities

193

 

 

168

 

Stockholders’ equity:

 

 

 

Common stock, $0.001 par value; 300,000,000 authorized; 201,764,616 and 201,288,884 shares issued at June 30, 2019 and December 31, 2018, respectively

 

 

 

Additional paid-in capital

14,820

 

 

14,773

 

Retained earnings

3,284

 

 

4,126

 

Treasury stock, at cost; 1,166,326 and 1,031,655 shares at June 30, 2019 and December 31, 2018, respectively

(145

)

 

(131

)

Total stockholders’ equity

17,959

 

 

18,768

 

Total liabilities and stockholders’ equity

$

25,478

 

 

$

26,294

 

 

 

 

 

Concho Resources Inc.

Consolidated Statements of Operations

Unaudited

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions, except per share amounts)

2019

 

2018

 

2019

 

2018

Operating revenues:

 

 

 

 

 

 

 

Oil sales

$

1,049

 

 

$

795

 

 

$

1,984

 

 

$

1,588

 

Natural gas sales

78

 

 

150

 

 

247

 

 

304

 

Total operating revenues

1,127

 

 

945

 

 

2,231

 

 

1,892

 

Operating costs and expenses:

 

 

 

 

 

 

 

Oil and natural gas production

188

 

 

130

 

 

362

 

 

260

 

Production and ad valorem taxes

84

 

 

70

 

 

170

 

 

140

 

Gathering, processing and transportation

22

 

 

9

 

 

48

 

 

20

 

Exploration and abandonments

17

 

 

8

 

 

64

 

 

26

 

Depreciation, depletion and amortization

478

 

 

310

 

 

943

 

 

627

 

Accretion of discount on asset retirement obligations

2

 

 

2

 

 

5

 

 

4

 

Impairments of long-lived assets

868

 

 

 

 

868

 

 

 

 

General and administrative (including non-cash stock-based compensation of $23 and $18 for the three months ended June 30, 2019 and 2018, respectively, and $47 and $35 for the six months ended June 30, 2019 and 2018, respectively)

88

 

 

72

 

 

179

 

 

137

 

(Gain) loss on derivatives

(217

)

 

133

 

 

842

 

 

168

 

(Gain) loss on disposition of assets, net

1

 

 

(1

)

 

 

 

(724

)

Transaction costs

1

 

 

9

 

 

1

 

 

16

 

Total operating costs and expenses

1,532

 

 

742

 

 

3,482

 

 

674

 

Income (loss) from operations

(405

)

 

203

 

 

(1,251

)

 

1,218

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

(48

)

 

(27

)

 

(95

)

 

(57

)

Other, net

303

 

 

1

 

 

307

 

 

105

 

Total other income (expense)

255

 

 

(26

)

 

212

 

 

48

 

Income (loss) before income taxes

(150

)

 

177

 

 

(1,039

)

 

1,266

 

Income tax (expense) benefit

53

 

 

(40

)

 

247

 

 

(294

)

Net income (loss)

$

(97

)

 

$

137

 

 

$

(792

)

 

$

972

 

Earnings per share:

 

 

 

 

 

 

 

Basic net income (loss)

$

(0.48

)

 

$

0.92

 

 

$

(3.98

)

 

$

6.52

 

Diluted net income (loss)

$

(0.48

)

 

$

0.92

 

 

$

(3.98

)

 

$

6.50

 

 

 

 

 

 

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

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net income (loss) as reported

$

(97

)

 

$

137

 

 

$

(792

)

 

$

972

 

Participating basic earnings (a)

 

 

(1

)

 

 

 

(8

)

Basic earnings (loss) attributable to common stockholders

(97

)

 

136

 

 

(792

)

 

964

 

Reallocation of participating earnings

 

 

 

 

 

 

 

Diluted earnings (loss) attributable to common stockholders

$

(97

)

 

$

136

 

 

$

(792

)

 

$

964

 

 

 

 

 

 

 

 

 

(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
June 30,

 

Six Months Ended
June 30,

(in thousands)

2019

 

2018

 

2019

 

2018

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

199,185

 

 

147,938

 

 

199,184

 

 

147,931

 

Dilutive performance units

 

 

177

 

 

 

 

357

 

Diluted

199,185

 

 

148,115

 

 

199,184

 

 

148,288

 

 

 

 

 

 

 

 

 

Concho Resources Inc.

Consolidated Statements of Cash Flows

Unaudited

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net income (loss)

$

(792

)

 

$

972

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation, depletion and amortization

943

 

 

627

 

Accretion of discount on asset retirement obligations

5

 

 

4

 

Impairments of long-lived assets

868

 

 

 

Exploration and abandonments

51

 

 

14

 

Non-cash stock-based compensation expense

47

 

 

35

 

Deferred income taxes

(247

)

 

294

 

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

(288

)

 

(724

)

Loss on derivatives

842

 

 

168

 

Net settlements paid on derivatives

(50

)

 

(194

)

Other

(10

)

 

(95

)

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

 

 

 

Accounts receivable

33

 

 

(56

)

Prepaid costs and other

4

 

 

(22

)

Inventory

1

 

 

(3

)

Accounts payable

5

 

 

5

 

Revenue payable

5

 

 

43

 

Other current liabilities

(15

)

 

22

 

Net cash provided by operating activities

1,402

 

 

1,090

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Additions to oil and natural gas properties

(1,726

)

 

(941

)

Acquisitions of oil and natural gas properties

(14

)

 

(19

)

Additions to property, equipment and other assets

(41

)

 

(11

)

Proceeds from the disposition of assets

311

 

 

261

 

Direct transaction costs for asset acquisitions and dispositions

(3

)

 

(3

)

Distribution from equity method investment

 

 

148

 

Net cash used in investing activities

(1,473

)

 

(565

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Borrowings under credit facility

2,060

 

 

1,222

 

Payments on credit facility

(1,905

)

 

(1,544

)

Payments for loan costs

 

 

(1

)

Payment of common stock dividends

(50

)

 

 

Purchases of treasury stock

(14

)

 

(31

)

Decrease in book overdrafts

(16

)

 

(116

)

Other

(4

)

 

 

Net cash provided by (used in) financing activities

71

 

 

(470

)

Net increase in cash and cash equivalents

 

 

55

 

Cash and cash equivalents at beginning of period

 

 

 

Cash and cash equivalents at end of period

$

 

 

$

55

 

 

 

 

 

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
June 30,

 

Six Months Ended
June 30,

 

2019

 

2018

 

2019

 

2018

Production and operating data:

 

 

 

 

 

 

 

Net production volumes:

 

 

 

 

 

 

 

Oil (MBbl)

18,726

 

 

13,029

 

 

37,662

 

 

25,968

 

Natural gas (MMcf)

67,104

 

 

46,837

 

 

130,873

 

 

92,285

 

Total (MBoe)

29,910

 

 

20,835

 

 

59,474

 

 

41,349

 

 

 

 

 

 

 

 

 

Average daily production volumes:

 

 

 

 

 

 

 

Oil (Bbl)

205,780

 

 

143,176

 

 

208,077

 

 

143,470

 

Natural gas (Mcf)

737,407

 

 

514,692

 

 

723,055

 

 

509,862

 

Total (Boe)

328,681

 

 

228,958

 

 

328,586

 

 

228,447

 

 

 

 

 

 

 

 

 

Average prices per unit: (a)

 

 

 

 

 

 

 

Oil, without derivatives (Bbl)

$

56.02

 

 

$

60.98

 

 

$

52.68

 

 

$

61.13

 

Oil, with derivatives (Bbl) (b)

$

53.15

 

 

$

54.34

 

 

$

51.35

 

 

$

53.47

 

Natural gas, without derivatives (Mcf)

$

1.16

 

 

$

3.19

 

 

$

1.88

 

 

$

3.29

 

Natural gas, with derivatives (Mcf) (b)

$

1.22

 

 

$

3.29

 

 

$

1.89

 

 

$

3.34

 

Total, without derivatives (Boe)

$

37.68

 

 

$

45.31

 

 

$

37.51

 

 

$

45.74

 

Total, with derivatives (Boe) (b)

$

36.02

 

 

$

41.37

 

 

$

36.68

 

 

$

41.04

 

 

 

 

 

 

 

 

 

Operating costs and expenses per Boe: (a)

 

 

 

 

 

 

 

Oil and natural gas production

$

6.31

 

 

$

6.24

 

 

$

6.09

 

 

$

6.28

 

Production and ad valorem taxes

$

2.81

 

 

$

3.37

 

 

$

2.86

 

 

$

3.39

 

Gathering, processing and transportation

$

0.73

 

 

$

0.45

 

 

$

0.80

 

 

$

0.49

 

Depreciation, depletion and amortization

$

15.96

 

 

$

14.88

 

 

$

15.86

 

 

$

15.16

 

General and administrative

$

2.89

 

 

$

3.37

 

 

$

2.98

 

 

$

3.35

 

(a)

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

(b)

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

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net cash receipts from (payments on) derivatives:

 

 

 

 

 

 

 

Oil derivatives

$

(54

)

 

$

(86

)

 

$

(51

)

 

$

(199

)

Natural gas derivatives

 

4

 

 

 

4

 

 

 

1

 

 

 

5

 

Total

$

(50

)

 

$

(82

)

 

$

(50

)

 

$

(194

)

 

 

 

 

 

 

 

 

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 our consolidated statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our 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.

Concho Resources Inc.

Operational Activity

Unaudited

The tables below provide a summary of operational activity for second-quarter 2019:

Total Activity (Gross):

 

 

 

Number of Wells

Drilled

 

Number of Wells

Completed

 

Number of Wells

Put on Production

Delaware Basin

78

 

68

 

78

Midland Basin

37

 

46

 

38

Total

115

 

114

 

116

 

 

 

 

 

 

 

 

 

 

 

 

Total Activity (Gross Operated):

 

 

 

Number of Wells

Drilled

 

Number of Wells

Completed

 

Number of Wells

Put on Production

Delaware Basin

35

 

37

 

46

Midland Basin

28

 

34

 

35

Total

63

 

71

 

81

 

 

 

 

 

 

Concho Resources Inc.

Costs Incurred

Unaudited

The table below provides the costs incurred for oil and natural gas producing activities for the periods indicated:

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

 

2019

 

2018

Property acquisition costs:

 

 

 

 

 

 

 

Proved

$

 

 

$

 

 

$

 

 

$

 

Unproved

9

 

 

5

 

 

13

 

 

18

 

Exploration

435

 

 

335

 

 

897

 

 

578

 

Development

350

 

 

166

 

 

814

 

 

373

 

Total costs incurred for oil and natural gas properties

$

794

 

 

$

506

 

 

$

1,724

 

 

$

969

 

 

 

 

Concho Resources Inc.

Derivatives Information

Unaudited

The table below provides data associated with the Company’s derivatives at July 31, 2019, for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

 

2019

 

 

 

 

 

 

Third

Quarter

 

Fourth

Quarter

 

Total

 

2020

 

2021

Oil Price Swaps WTI: (a)

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

16,570,000

 

 

12,513,000

 

 

29,083,000

 

 

40,080,500

 

 

13,137,000

 

Price per Bbl

 

$

56.96

 

 

$

56.65

 

 

$

56.83

 

 

$

57.27

 

 

$

55.33

 

Oil Price Swaps Brent: (b)

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

 

 

1,810,000

 

 

1,810,000

 

 

4,026,000

 

 

 

Price per Bbl

 

$

 

 

$

62.48

 

 

$

62.48

 

 

$

61.03

 

 

$

 

Oil Costless Collars: (a)

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

1,135,000

 

 

1,058,000

 

 

2,193,000

 

 

 

 

 

Ceiling price per Bbl

 

$

63.47

 

 

$

62.95

 

 

$

63.22

 

 

$

 

 

$

 

Floor price per Bbl

 

$

55.74

 

 

$

55.43

 

 

$

55.60

 

 

$

 

 

$

 

Oil Basis Swaps: (c)

 

 

 

 

 

 

 

 

 

 

Volume (Bbl)

 

15,778,000

 

 

16,053,000

 

 

31,831,000

 

 

45,083,000

 

 

14,600,000

 

Price per Bbl

 

$

(2.32

)

 

$

(2.19

)

 

$

(2.25

)

 

$

(0.63

)

 

$

0.57

 

Natural Gas Price Swaps: (d)

 

 

 

 

 

 

 

 

 

 

Volume (MMBtu)

 

17,298,537

 

 

17,209,535

 

 

34,508,072

 

 

61,303,000

 

 

29,200,000

 

Price per MMBtu

 

$

2.87

 

 

$

2.87

 

 

$

2.87

 

 

$

2.55

 

 

$

2.52

 

Natural Gas Basis Swaps: (e)

 

 

 

 

 

 

 

 

 

 

Volume (MMBtu)

 

2,400,000

 

 

7,360,000

 

 

9,760,000

 

 

29,280,000

 

 

 

Price per MMBtu

 

$

(0.70

)

 

$

(0.70

)

 

$

(0.70

)

 

$

(1.04

)

 

$

 

 

 

 

 

 

 

 

 

 

 

 

(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. The majority of these contracts are settled on a calendar-month basis, while certain contracts assumed in connection with the RSP acquisition are settled on a trading-month basis.

(d)

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

(e)

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

 

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 recurring, 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
June 30,

 

Six Months Ended
June 30,

(in millions, except per share amounts)

2019

 

2018

 

2019

 

2018

Net income (loss) - as reported

$

(97

)

 

$

137

 

 

$

(792

)

 

$

972

 

Adjustments for certain non-cash and special items:

 

 

 

 

 

 

 

(Gain) loss on derivatives

(217

)

 

133

 

 

842

 

 

168

 

Net cash payments on derivatives

(50

)

 

(82

)

 

(50

)

 

(194

)

Impairments of long-lived assets

868

 

 

 

 

868

 

 

 

Leasehold abandonments

12

 

 

4

 

 

42

 

 

14

 

(Gain) loss on disposition of assets and other

(285

)

 

3

 

 

(286

)

 

(716

)

Gain on equity method investments

(17

)

 

 

 

(17

)

 

(103

)

RSP transaction costs

 

 

6

 

 

 

 

10

 

Tax impact

(70

)

 

(15

)

 

(317

)

 

190

 

Changes in deferred taxes and other estimates

(5

)

 

(1

)

 

(7

)

 

(3

)

Adjusted net income

$

139

 

 

$

185

 

 

$

283

 

 

$

338

 

Earnings (loss) per diluted share - as reported

$

(0.48

)

 

$

0.92

 

 

$

(3.98

)

 

$

6.50

 

 

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

 

 

 

 

 

 

 

(Gain) loss on derivatives

(1.08

)

 

0.89

 

 

4.22

 

 

1.12

 

Net cash payments on derivatives

(0.25

)

 

(0.55

)

 

(0.25

)

 

(1.30

)

Impairments of long-lived assets

4.30

 

 

 

 

4.36

 

 

 

Leasehold abandonments

0.06

 

 

0.03

 

 

0.21

 

 

0.09

 

(Gain) loss on disposition of assets and other

(1.41

)

 

0.02

 

 

(1.43

)

 

(4.78

)

Gain on equity method investments

(0.08

)

 

 

 

(0.09

)

 

(0.69

)

RSP transaction costs

 

 

0.04

 

 

 

 

0.07

 

Tax impact

(0.35

)

 

(0.10

)

 

(1.59

)

 

1.27

 

Changes in deferred taxes and other estimates

(0.02

)

 

(0.01

)

 

(0.04

)

 

(0.02

)

Adjusted earnings per diluted share

$

0.69

 

 

$

1.24

 

 

$

1.41

 

 

$

2.26

 

Adjusted earnings per share:

 

 

 

 

 

 

 

Basic earnings

$

0.69

 

 

$

1.24

 

 

$

1.41

 

 

$

2.26

 

Diluted earnings

$

0.69

 

 

$

1.24

 

 

$

1.41

 

 

$

2.26

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income (Loss) to Adjusted EBITDAX

Adjusted EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

The Company defines adjusted EBITDAX as net income (loss), plus (1) exploration and abandonments, (2) depreciation, depletion and amortization, (3) accretion of discount on asset retirement obligations, (4) impairments of long-lived assets, (5) non-cash stock-based compensation, (6) (gain) loss on derivatives, (7) net cash payments on derivatives, (8) gain on disposition of assets and other (9) interest expense, (10) gain on equity method investments and (11) income tax expense (benefit). Adjusted EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.

The Company’s adjusted EBITDAX measure provides additional information that may be used to better understand the Company’s operations. Adjusted EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that adjusted EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company’s management team and by other users of the Company’s consolidated financial statements. For example, adjusted EBITDAX can be used to assess the Company’s operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure, and to assess the financial performance of the Company’s assets and the Company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of the GAAP measure of net income (loss) to adjusted EBITDAX for the periods indicated:

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net income (loss)

$

(97

)

 

$

137

 

 

$

(792

)

 

$

972

 

Exploration and abandonments

17

 

 

8

 

 

64

 

 

26

 

Depreciation, depletion and amortization

478

 

 

310

 

 

943

 

 

627

 

Accretion of discount on asset retirement obligations

2

 

 

2

 

 

5

 

 

4

 

Impairments of long-lived assets

868

 

 

 

 

868

 

 

 

Non-cash stock-based compensation

23

 

 

18

 

 

47

 

 

35

 

(Gain) loss on derivatives

(217

)

 

133

 

 

842

 

 

168

 

Net cash payments on derivatives

(50

)

 

(82

)

 

(50

)

 

(194

)

Gain on disposition of assets and other

(285

)

 

(1

)

 

(286

)

 

(724

)

Interest expense

48

 

 

27

 

 

95

 

 

57

 

Gain on equity method investments

(17

)

 

 

 

(17

)

 

(103

)

Income tax expense (benefit)

(53

)

 

40

 

 

(247

)

 

294

 

Adjusted EBITDAX

$

717

 

 

$

592

 

 

$

1,472

 

 

$

1,162

 

 

 

 

 

 

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Operating Cash Flow (“OCF”) Before Working Capital Changes

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. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net cash provided by operating activities as an indicator of operating performance.

The following table provides a reconciliation from the GAAP measure of net cash provided by operating activities to OCF before working capital changes:

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(in millions)

2019

 

2018

 

2019

 

2018

Net cash provided by operating activities

$

779

 

 

$

602

 

 

$

1,402

 

 

$

1,090

 

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

 

 

 

 

 

 

 

Accounts receivable

(144

)

 

(25

)

 

(33

)

 

56

 

Prepaid costs and other

5

 

 

20

 

 

(4

)

 

22

 

Inventory

(1

)

 

6

 

 

(1

)

 

3

 

Accounts payable

6

 

 

(17

)

 

(5

)

 

(5

)

Revenue payable

3

 

 

(41

)

 

(5

)

 

(43

)

Other current liabilities

20

 

 

17

 

 

15

 

 

(22

)

Total working capital changes

(111

)

 

(40

)

 

(33

)

 

11

 

Operating cash flow before working capital changes

$

668

 

 

$

562

 

 

$

1,369

 

 

$

1,101

 

 

 

 

 

 

 

 

 

 

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

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

Source: Concho Resources Inc.

07.30.19 Concho Resources Inc. Declares Quarterly Dividend

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) announced that its Board of Directors declared a quarterly dividend of $0.125 per share on the Company’s outstanding common stock. The quarterly dividend is payable September 30, 2019, to stockholders of record at the close of business on August 9, 2019.

Concho Resources Inc.

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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 and Public Affairs
432.685.2533

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

Source: Concho Resources Inc.

05.23.19 Concho Resources Inc. Schedules Second-Quarter 2019 Results Conference Call for Thursday, August 1, 2019, Announces Participation in Upcoming Conferences

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) will host a conference call on Thursday, August 1, 2019 at 8:00 AM CT (9:00 AM ET) to discuss second-quarter 2019 financial and operating results. The Company plans to announce results for the second quarter of 2019 on Wednesday, July 31, 2019, after close of trading.

Conference Call Information:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 7577052

To access the live webcast, visit the Company’s website at www.concho.com. The replay will also be available on Concho’s website under the “Investors” section.

Upcoming Conferences

Concho also announces the Company’s participation in the following upcoming conferences:

Conference Date     Conference     Presentation Time
May 30, 2019 Bernstein Strategic Decisions Conference 9:00 AM CT
June 5, 2019 RBC Capital Markets Global Energy Conference 7:30 AM CT
June 5, 2019 BAML Energy Credit Conference 11:00 AM CT
June 18, 2019 J.P. Morgan Energy Conference 10:25 AM CT
 

The Company’s presentation will be available on the Company’s website on or prior to the Company’s appearance at each conference.

Additionally, links to the webcast presentations for the Bernstein and J.P. Morgan conferences will be accessible on the “Events & Presentations” page under the “Investors” section of the Company’s website.

Concho Resources Inc.

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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 and Public Affairs
432.685.2533

MEDIA
Mary T. Starnes
Manager of Public Affairs
432.221.0477

Source: Concho Resources Inc.

04.30.19 Concho Resources Inc. Reports First-Quarter 2019 Results

Achieves Record Oil Production

Raises Full-Year 2019 Production Growth Outlook

Maintains Capital Expenditure Plans

MIDLAND, Texas--(BUSINESS WIRE)-- Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) today reported financial and operating results for first-quarter 2019.

First-Quarter 2019 Highlights

  • Achieved record oil production of 210 MBopd, a 46% increase over first-quarter 2018 and 6% over fourth-quarter 2018.
  • Delivered total production of 328 MBoepd, exceeding the high end of the Company’s quarterly guidance range.
  • Reduced per unit controllable cash costs year-over-year, with a 7% reduction in production expenses.
  • Raised full-year 2019 production growth outlook, while maintaining capital expenditure guidance.
  • Announced sale of the Oryx I oil gathering and transportation system, with expected net proceeds of approximately $300 million.
  • Reported a net loss of $695 million, or ($3.49) per share. Adjusted net income (non-GAAP) totaled $144 million, or $0.72 per share.
  • Generated $755 million of adjusted EBITDAX (non-GAAP).

See “Supplemental Non-GAAP Financial Measures” below for descriptions of the above non-GAAP measures as well as a reconciliation of these measures to the associated GAAP (as defined herein) measure.

Tim Leach, Chairman and Chief Executive Officer, commented, “We are delivering exceptional performance across our portfolio as we execute on our clear strategy to drive sustained, differentiated oil growth, free cash flow and corporate returns. Results for the first quarter of 2019 reflect our focus on large-scale development, controlling costs and generating solid returns on strategic investments, as demonstrated by the Oryx sale. During the quarter, we completed several important projects ahead of schedule, driving increased production that exceeded the high end of our guidance range. Given our strong start to the year, we are raising our full-year production growth outlook while maintaining our capital expenditure guidance. Our high-quality assets and returns-driven approach position us to extend our track record of enhancing value for shareholders.”

First-Quarter 2019 Summary

Production for first-quarter 2019 was 29.6 million barrels of oil equivalent (MMBoe), or an average of 328 thousand Boe per day (MBoepd), an increase of 44% from first-quarter 2018 and 7% from fourth-quarter 2018. Average daily oil production for first-quarter 2019 totaled 210 thousand barrels per day (MBopd), an increase of 46% from first-quarter 2018 and 6% from fourth-quarter 2018. Natural gas production for first-quarter 2019 totaled 709 million cubic feet per day (MMcfpd). First-quarter 2019 production volumes benefited from strong early production from the Company’s latest large-scale projects and an increase in non-operated activity.

Concho’s average realized price for oil and natural gas for first-quarter 2019, excluding the effect of commodity derivatives, was $49.39 per Bbl and $2.64 per Mcf, respectively, compared with $61.29 per Bbl and $3.39 per Mcf, respectively, for first-quarter 2018.

Net loss for first-quarter 2019 was $695 million, or ($3.49) per share, compared with net income of $835 million, or $5.58 per share, for first-quarter 2018. Excluding certain non-cash and special items, first-quarter 2019 adjusted net income was $144 million, or $0.72 per share, compared with adjusted net income of $149 million, or $1.00 per share, for first-quarter 2018.

During the quarter, Concho generated adjusted EBITDAX of $755 million, compared with $570 million for first-quarter 2018.

In first-quarter 2019, cash flow from operating activities was $623 million. Before ($78) million in working capital changes, operating cash flow (non-GAAP) was $701 million.

Costs incurred for exploration and development activities for first-quarter 2019 totaled $926 million, exceeding the Company’s quarterly guidance primarily due to an increase in non-operated capital activity of approximately $40 million.

Operations Update

During first-quarter 2019, Concho averaged 33 rigs, compared to 34 rigs in fourth-quarter 2018. The Company is currently running 29 rigs, including 20 rigs in the Delaware Basin and nine rigs in the Midland Basin. Additionally, the Company is currently utilizing eight completion crews. See the table under “Operational Activity” below for detailed information about the Company’s drilling and completion activity by operating area for first-quarter 2019.

In the Delaware Basin, excluding the New Mexico Shelf, Concho added 23 wells with at least 60 days of production as of the end of first-quarter 2019. The average 30-day and 60-day peak rates for these wells were 1,817 Boepd (73% oil) and 1,647 Boepd (72% oil), respectively. These wells were drilled to an average lateral length of 9,125 feet.

In the Midland Basin, Concho added 27 wells with at least 60 days of production as of the end of first-quarter 2019. The average 30-day and 60-day peak rates for these wells were 986 Boepd (86% oil) and 879 Boepd (85% oil), respectively. These wells were drilled to an average lateral length of 10,379 feet.

Concho continues to advance large-scale development across its high-quality asset base. This approach to development accelerates innovation and captures efficiencies to optimize resource recovery and overall project economics. The Company successfully started production on nine projects during first-quarter 2019, including the Dominator, Eider and Jack projects in the Delaware Basin as well as the Mabee project in the Midland Basin. Concho completed these projects on time or ahead of schedule.

Strategic Midstream Investments Enhance Asset Value and Returns

During first-quarter 2019, Concho announced that Oryx Southern Delaware Holdings, LLC (“Oryx”), the owner of the Oryx I oil gathering and transportation system, entered into an agreement to sell Oryx I. Concho owns a 23.75% equity interest in Oryx and expects to receive approximately $300 million at closing after repayment of Oryx’s outstanding borrowings. In February 2018, Concho received a $157 million distribution related to a recapitalization of Oryx. The sale proceeds from Oryx combined with the earlier distribution total approximately $457 million, representing a 10-times multiple on invested capital of approximately $45 million since December 2015.

Importantly, the transaction is not expected to impact oil price realizations or transportation costs as Concho’s existing gathering agreement remains unchanged. Transaction closing is expected to occur in the second quarter of 2019, subject to customary terms and conditions, with sale proceeds expected to be used to repay borrowings outstanding on Concho’s credit facility. As of March 31, 2019, Concho had $615 million of outstanding borrowings under its credit facility.

Following quarter end, Concho announced a joint venture with Frontier Midstream Solutions IV, LLC to construct the Beta Crude Connector (BCC) oil gathering, transportation and storage system in the Northern Midland Basin. BCC will consist of an approximately 100-mile gathering system and 250,000 barrels of crude oil storage facilities. The pipeline system will have initial capacity to deliver 150,000 barrels per day of crude oil to multiple delivery points, access local refineries and connect to several long-haul pipelines. Following an open season in April 2019, construction will commence, targeting initial flows in mid-2019. BCC will enhance the value of the Company’s high-quality footprint in the Midland Basin with a reliable, cost-efficient gathering and transportation solution.

Outlook

Second-quarter 2019 production is expected to be 316 MBoepd to 322 MBoepd. The Company increased full-year 2019 total production growth guidance to 23% to 27%, reflecting first-quarter 2019 outperformance and strong execution of a disciplined capital program. Additionally, the Company increased full-year 2019 oil production growth guidance to 27% to 31%.

Commodity Derivatives Update

The Company’s commodity derivatives strategy is intended to manage its exposure to commodity price fluctuations. Please see the table under “Derivatives Information” below for detailed information about Concho’s current derivatives positions.

Conference Call

Concho will host a conference call tomorrow, May 1, 2019, at 8:00 AM CT (9:00 AM ET) to discuss first-quarter 2019 results. The telephone number and passcode to access the conference call are provided below:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 4757136

To access the live webcast and view the related earnings presentation, visit Concho’s website at www.concho.com. The replay will also be available on the Company’s website under the “Investors” section.

About Concho Resources

Concho Resources (NYSE: CXO) is one of the largest unconventional shale producers in the Permian Basin, with operations focused on acquiring, exploring, developing and producing oil and natural gas resources. Concho is at the forefront of applying advanced technology and large-scale development to safely and efficiently maximize resource recovery while delivering attractive, long-term economic returns. 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,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal” 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, expected financings 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. 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, adjusted EBITDAX and operating cash flow before working capital changes.

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

 
 
Concho Resources Inc.
Consolidated Balance Sheets
Unaudited
 
    March 31,     December 31,
(in millions, except share and per share amounts)     2019     2018
Assets
Current assets:
Cash and cash equivalents $ - $ -
Accounts receivable, net of allowance for doubtful accounts:
Oil and natural gas 530 466
Joint operations and other 413 365
Inventory 34 35
Derivative instruments 1 484
Prepaid costs and other   49     59  
Total current assets   1,027     1,409  
Property and equipment:
Oil and natural gas properties, successful efforts method 32,559 31,706
Accumulated depletion and depreciation   (10,138 )   (9,701 )
Total oil and natural gas properties, net 22,421 22,005
Other property and equipment, net   350     308  
Total property and equipment, net   22,771     22,313  
Deferred loan costs, net 9 10
Goodwill 2,229 2,224
Intangible assets, net 18 19
Noncurrent derivative instruments 2 211
Other assets   112     108  
Total assets $ 26,168   $ 26,294  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade $ 61 $ 50
Bank overdrafts 105 159
Revenue payable 258 253
Accrued drilling costs 605 574
Derivative instruments 292 -
Other current liabilities   339     320  
Total current liabilities   1,660     1,356  
Long-term debt 4,567 4,194
Deferred income taxes 1,612 1,808
Noncurrent derivative instruments 75 -
Asset retirement obligations and other long-term liabilities 195 168
Stockholders’ equity:

Common stock, $0.001 par value; 300,000,000 authorized; 201,755,333 and 201,288,884 shares issued at March 31, 2019 and December 31, 2018, respectively

- -
Additional paid-in capital 14,797 14,773
Retained earnings 3,406 4,126

Treasury stock, at cost; 1,155,813 and 1,031,655 shares at March 31, 2019 and December 31, 2018, respectively

  (144 )   (131 )
Total stockholders’ equity   18,059     18,768  
Total liabilities and stockholders’ equity $ 26,168   $ 26,294  

 
 
Concho Resources Inc.
Consolidated Statements of Operations
Unaudited
 
    Three Months Ended
March 31,
(in millions, except per share amounts)     2019     2018
   
Operating revenues:
Oil sales $ 935 $ 793
Natural gas sales   169     154  
Total operating revenues   1,104     947  
Operating costs and expenses:
Oil and natural gas production 174 130
Production and ad valorem taxes 86 70
Gathering, processing and transportation 26 11
Exploration and abandonments 47 18
Depreciation, depletion and amortization 465 317
Accretion of discount on asset retirement obligations 3 2

General and administrative (including non-cash stock-based compensation of $24 and $17 for the three months ended March 31, 2019 and 2018, respectively)

91 65
Loss on derivatives 1,059 35
Gain on disposition of assets, net (1 ) (723 )
Transaction costs   -     7  
Total operating costs and expenses   1,950     (68 )
Income (loss) from operations   (846 )   1,015  
Other income (expense):
Interest expense (47 ) (30 )
Other, net   4     104  
Total other income (expense)   (43 )   74  
Income (loss) before income taxes (889 ) 1,089
Income tax (expense) benefit   194     (254 )
Net income (loss) $ (695 ) $ 835  
Earnings per share:
Basic net income (loss) $ (3.49 ) $ 5.60
Diluted net income (loss) $ (3.49 ) $ 5.58

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

                       
               
Three Months Ended
March 31,
(in millions)         2019       2018
 
Net income (loss) as reported $ (695 ) $ 835
Participating basic earnings (a)   -     (6 )
Basic earnings (loss) attributable to common stockholders (695 ) 829
Reallocation of participating earnings   -     -  
Diluted earnings (loss) attributable to common stockholders $ (695 ) $ 829  
                           
 
(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
March 31,
(in thousands)     2019     2018
 
Weighted average common shares outstanding:
Basic 199,148 147,925
Dilutive performance units - 537
Diluted 199,148 148,462

 
 
Concho Resources Inc.
Consolidated Statements of Cash Flows
Unaudited
 
    Three Months Ended
March 31,
(in millions)     2019     2018
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income (loss) $ (695 ) $ 835
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 465 317
Accretion of discount on asset retirement obligations 3 2
Exploration and abandonments 38 10
Non-cash stock-based compensation expense 24 17
Deferred income taxes (194 ) 254
Gain on disposition of assets, net (1 ) (723 )
Loss on derivatives 1,059 35
Net settlements paid on derivatives - (112 )
Other 2 (96 )
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable (111 ) (81 )
Prepaid costs and other 9 (2 )
Inventory - 3
Accounts payable 11 (12 )
Revenue payable 8 2
Other current liabilities   5     39  
Net cash provided by operating activities   623     488  
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties (885 ) (474 )
Acquisitions of oil and natural gas properties (5 ) (13 )
Additions to property, equipment and other assets (15 ) (6 )
Proceeds from the disposition of assets 5 255
Direct transaction costs for disposition of assets (2 ) (3 )
Distribution from equity method investment   -     148  
Net cash used in investing activities   (902 )   (93 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility 1,112 662
Payments on credit facility (739 ) (984 )
Payment of common stock dividends (25 ) -
Purchases of treasury stock (13 ) (29 )
Decrease in bank overdrafts (54 ) (44 )
Other   (2 )   -  
Net cash provided by (used in) financing activities   279     (395 )
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of period   -     -  
Cash and cash equivalents at end of period $ -   $ -  

 
 
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
March 31,
        2019     2018
   
Production and operating data:
Net production volumes:
Oil (MBbl) 18,936 12,939
Natural gas (MMcf) 63,769 45,448
Total (MBoe) 29,564 20,514
 
Average daily production volumes:
Oil (Bbl) 210,400 143,767
Natural gas (Mcf) 708,544 504,978
Total (Boe) 328,491 227,930
 
Average prices per unit:
Oil, without derivatives (Bbl) $ 49.39 $ 61.29
Oil, with derivatives (Bbl) (a) $ 49.56 $ 52.59
Natural gas, without derivatives (Mcf) $ 2.64 $ 3.39
Natural gas, with derivatives (Mcf) (a) $ 2.59 $ 3.41
Total, without derivatives (Boe) $ 37.33 $ 46.17
Total, with derivatives (Boe) (a) $ 37.34 $ 40.71
 
Operating costs and expenses per Boe: (b)
Oil and natural gas production $ 5.87 $ 6.33
Production and ad valorem taxes $ 2.92 $ 3.40
Gathering, processing and transportation $ 0.88 $ 0.53
Depreciation, depletion and amortization $ 15.74 $ 15.43
General and administrative $ 3.08 $ 3.31
                   
 
(a) Includes the effect of net cash receipts from (payments on) derivatives:
                   
Three Months Ended
March 31,
(in millions)     2019     2018
 
Net cash receipts from (payments on) derivatives:
Oil derivatives $ 3 $ (113 )
Natural gas derivatives   (3 )   1  
Total $ -   $ (112 )
                   
 
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 our statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our 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.
 
(b) Per Boe amounts calculated using dollars and volumes rounded to thousands.

 
 
Concho Resources Inc.
Operational Activity
Unaudited
 

The tables below provide a summary of operational activity for first-quarter 2019:

Total Activity (Gross):

 

   

Number of Wells
Drilled

   

Number of Wells
Completed

   

Number of Wells
Put on Production

Delaware Basin     104 47 75
Midland Basin 43 55 60
Total 147 102 135
 

Total Activity (Gross Operated):

 

   

Number of Wells
Drilled

   

Number of Wells
Completed

   

Number of Wells
Put on Production

Delaware Basin     51 32 54
Midland Basin 36 45 42
Total 87 77 96

 
 
Concho Resources Inc.
Costs Incurred
Unaudited
 

The table below provides the costs incurred for oil and natural gas producing activities for the periods indicated:

        Three Months Ended
March 31,
(in millions)     2019     2018
   
Property acquisition costs:
Proved $ - $ -
Unproved 4 13
Exploration 462 243
Development   464   207
Total costs incurred for oil and natural gas properties $ 930 $ 463

 
 
Concho Resources Inc.
Derivatives Information
Unaudited
 

The table below provides data associated with the Company’s derivatives at April 30, 2019, for the periods indicated:

      2019        
Second

Quarter

    Third

Quarter

    Fourth

Quarter

    Total 2020 2021
 
Oil Price Swaps: (a)
Volume (Bbl) 16,819,750 14,829,000 12,513,000 44,161,750 39,340,000 13,137,000
Price per Bbl $ 57.21 $ 57.06 $ 56.65 $ 57.00 $ 57.21 $ 55.33
 
Oil Costless Collars: (a)
Volume (Bbl) 1,213,250 1,135,000 1,058,000 3,406,250 - -
Ceiling price per Bbl $ 64.00 $ 63.47 $ 62.95 $ 63.50 $ - $ -
Floor price per Bbl $ 56.06 $ 55.74 $ 55.43 $ 55.76 $ - $ -
 
Oil Basis Swaps: (b)
Volume (Bbl) 11,965,500 12,742,000 16,053,000 40,760,500 44,537,000 10,585,000
Price per Bbl $ (3.03 ) $ (2.80 ) $ (2.19 ) $ (2.63 ) $ (0.64 ) $ 0.54
 
Natural Gas Swaps: (c)
Volume (MMBtu) 17,241,387 17,298,537 17,209,535 51,749,459 24,703,000 -
Price per MMBtu $ 2.87 $ 2.87 $ 2.87 $ 2.87 $ 2.70 $ -
                                     
 
(a)

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

(b)

The basis differential price is between Midland – WTI and Cushing – WTI. The majority of these contracts are settled on a calendar-month basis, while certain contracts assumed in connection with the RSP acquisition are settled on a trading-month basis.

(c) The natural gas derivative contracts are settled based on the NYMEX – Henry Hub last trading day 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 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 unusual items. The Company believes these measures provide useful information to analysts and investors for analysis of its operating results on a recurring, 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
March 31,
(in millions, except per share amounts)     2019     2018
   
Net income (loss) - as reported $ (695 ) $ 835
 
Adjustments for certain non-cash and unusual items:
Loss on derivatives 1,059 35
Net cash payments on derivatives - (112 )
Leasehold abandonments 30 10
Gain on disposition of assets and other (1 ) (719 )
Gain on equity method investment distribution - (103 )
Tax impact (247 ) 205
Changes in deferred taxes and other estimates   (2 )   (2 )
Adjusted net income $ 144   $ 149  
 
Earnings (loss) per diluted share - as reported $ (3.49 ) $ 5.58
 
Adjustments for certain non-cash and unusual items per diluted share:
Loss on derivatives 5.31 0.23
Net cash payments on derivatives - (0.75 )
Leasehold abandonments 0.16 0.07
Gain on disposition of assets and other (0.01 ) (4.80 )
Gain on equity method investment distribution - (0.69 )
Tax impact (1.24 ) 1.37
Changes in deferred taxes and other estimates   (0.01 )   (0.01 )
Adjusted earnings per diluted share $ 0.72   $ 1.00  
 
Adjusted earnings per share:
Basic earnings $ 0.72 $ 1.00
Diluted earnings $ 0.72 $ 1.00
 
 

Reconciliation of Net Income (Loss) to Adjusted EBITDAX

Adjusted EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

The Company defines adjusted EBITDAX as net income (loss), plus (1) exploration and abandonments, (2) depreciation, depletion and amortization, (3) accretion of discount on asset retirement obligations, (4) non-cash stock-based compensation, (5) loss on derivatives, (6) net cash payments on derivatives, (7) gain on disposition of assets, net, (8) interest expense, (9) gain on equity method investment distribution and (10) income tax expense (benefit). Adjusted EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.

The Company’s adjusted EBITDAX measure provides additional information that may be used to better understand the Company’s operations. Adjusted EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. Adjusted EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that adjusted EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company’s management team and by other users of the Company’s consolidated financial statements. For example, adjusted EBITDAX can be used to assess the Company’s operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure, and to assess the financial performance of the Company’s assets and the Company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of the GAAP measure of net income (loss) to adjusted EBITDAX for the periods indicated:

      Three Months Ended
March 31,
(in millions)     2019     2018
   
Net income (loss) $ (695 ) $ 835
Exploration and abandonments 47 18
Depreciation, depletion and amortization 465 317
Accretion of discount on asset retirement obligations 3 2
Non-cash stock-based compensation 24 17
Loss on derivatives 1,059 35
Net cash payments on derivatives - (112 )
Gain on disposition of assets, net (1 ) (723 )
Interest expense 47 30
Gain on equity method investment distribution - (103 )
Income tax expense (benefit)   (194 )   254  
Adjusted EBITDAX $ 755   $ 570