Item 1.01 Entry into a Material Definitive Agreement.
Underwriting Agreement
On August 15, 2016, Concho Resources Inc. (the
Company
) entered into an underwriting agreement (the
Underwriting Agreement
) with Credit Suisse Securities (USA), LLC, as representative (the
Representative
) of the several underwriters named therein (the
Underwriters
), in
connection with an underwritten public offering of 10,350,000 shares of common stock (the
Common Shares
), including the Underwriters option to purchase up to an additional 1,350,000 Common Shares. On August 16,
2016, the Underwriters exercised in full their option to purchase additional Common Shares. The Company expects the net proceeds from the offering to be approximately $1,327.4 million, after deducting estimated fees and expenses. Net proceeds from
the offering are expected to be used to finance part of the cash portion of the purchase price for the Companys recently announced acquisition of Midland Basin assets (the
Acquisition
), subject to the closing of the
Acquisition, and fund part of the redemption of the Companys 7.0% Senior Notes due January 2021 (the
7.0% Notes
), with any remaining balance to be used for general corporate purposes, including funding future capital
expenditures associated with the Companys acquisition, exploration and development activities. Consummation of this offering, however, is not conditioned upon completion of the Acquisition. If the Acquisition is not consummated, the Company
intends to use the net proceeds after the funding of a portion of the redemption of the 7.0% Notes for general corporate purposes, including funding future capital expenditures associated with the Companys acquisition, exploration and
development activities.
The issuance and sale of the Common Shares has been registered under the Securities Act of 1933, as amended (the
Securities Act
), pursuant to an automatic shelf Registration Statement on Form S-3 (Registration No. 333-206172) of the Company, filed with and deemed automatically effective by the Securities and Exchange Commission
on August 6, 2015. Closing of the issuance and sale of the Common Shares is scheduled for August 19, 2016. A legal opinion relating to the validity of the Common Shares is filed herewith as Exhibit 5.1.
The Underwriting Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing,
obligations of the parties and termination provisions. Additionally, the Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Underwriters may
be required to make because of any of those liabilities. Furthermore, the Company has agreed with the Underwriters not to offer or sell any shares of its common stock (or securities convertible into or exchangeable for common stock), subject to
limited exceptions, for a period of 60 days after the date of the Underwriting Agreement without the prior written consent of the Representative.
The Underwriters or their affiliates may be holders of the 7.0% Notes and, therefore, may receive a portion of the net proceeds from this
offering. Certain of the Underwriters or their affiliates have from time to time provided investment banking, commercial banking and financial advisory services to the Company, for which they have received customary compensation. The Underwriters
and their affiliates may provide similar services in the future. Certain of the underwriters and their affiliates act as administrative agent, lender, swingline lender and/or letter of credit lender under the Companys credit facility. In
addition, from time to time,
certain of the Underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short
positions in the Companys debt or equity securities or loans, and may do so in the future.
The foregoing description of the
Underwriting Agreement is qualified in its entirety by reference to such Underwriting Agreement, a copy of which is filed herewith as Exhibit 1.1 and is incorporated herein by reference.