Exceeds Production Guidance
Provides Outlook for 2019 and 2020
Announces Plan to Initiate Dividend
Concho Resources Inc. (NYSE: CXO) (the “Company” or
“Concho”) today reported third-quarter 2018 results.
Highlights
- Achieved production of 287 MBoepd,
exceeding the high end of the Company’s guidance range.
- Delivered crude oil production of 185
MBopd.
- Generated cash flow from operating
activities greater than capital expenditures, excluding
acquisitions, year-to-date.
- Recorded a net loss of $199 million, or
$1.05 per diluted share. Adjusted net income totaled $269 million,
or $1.42 per diluted share (non-GAAP).
- EBITDAX (non-GAAP) was $829
million.
- Completed the acquisition of RSP
Permian, Inc.
- Provided 2019 and 2020 outlook for free
cash flow, strong crude oil growth and improving corporate
returns.
- Announced plans to initiate a regular
quarterly dividend of $0.125 per share beginning in first-quarter
2019. The indicated annual rate of $0.50 per share underscores the
Company’s commitment to sustainable, profitable growth and value
creation.
Tim Leach, Chairman and Chief Executive Officer, commented, “Our
strong third quarter results demonstrate Concho’s positive momentum
following the acquisition of RSP Permian. We have been disciplined
over the last several years – generating free cash flow, prudently
growing oil production, reducing our cost structure and building
for the future with accretive acquisitions and strategic portfolio
management. These efforts position us well for the next stage of
our company, which includes delivering high-margin oil growth and
initiating a return-of-capital strategy to our shareholders. We are
a growth company, and our platform for delivering growth,
demonstrating the benefits of scale and enhancing shareholder
value, has never been better.”
Third-Quarter 2018 Operations Summary
Production for third-quarter 2018 was 26 million barrels of oil
equivalent (MMBoe), or an average of 287 thousand Boe per day
(MBoepd). Average daily crude oil production for third-quarter 2018
totaled 185 thousand barrels per day (MBopd). Natural gas
production for third-quarter 2018 totaled 612 million cubic feet
per day (MMcfpd).
Concho completed the acquisition of RSP Permian, Inc. (RSP) on
July 19, 2018. Following the RSP acquisition, which enhanced the
Company’s assets in both the Midland Basin and the Delaware Basin,
the Company simplified its asset structure, changing from four core
operating areas to two – comprising the Midland Basin and the
Delaware Basin, which includes the Northern Delaware Basin,
Southern Delaware Basin and the New Mexico Shelf.
During third-quarter 2018, Concho averaged 31 rigs, and the
Company is currently running 34 horizontal rigs, including 22 rigs
in the Delaware Basin and 12 rigs in the Midland Basin.
Additionally, Concho is currently utilizing 8 completion crews. The
table below summarizes the Company’s drilling and completion
activity on a gross basis during third-quarter 2018.
Number of Wells Drilled
Number ofOperated Wells
Drilled
Number of Wells
Completed
Number ofOperated
WellsCompleted
Delaware Basin 85 54 75 51 Midland Basin 36 27 40 28 Total 121 81
115 79
Delaware Basin
In the Delaware Basin, excluding the New Mexico Shelf, Concho
added 31 wells with at least 60 days of production as of the end of
third-quarter 2018. The average 30-day and 60-day peak rates for
these wells were 1,422 Boepd (73% oil) and 1,269 Boepd (73% oil),
respectively, from an average lateral length of 6,685 feet.
Concho’s White Falcon project in Lea County, New Mexico,
included seven wells with an average lateral length of 8,772 feet
per well. The project, which targeted intervals in the 3rd Bone
Spring and Wolfcamp A zones, produced average 30-day and 60-day
peak rates of 1,804 Boepd (84% oil) and 1,566 Boepd (84% oil) per
well, respectively.
Additionally, Concho recently completed the Hollywood &
Iceman project in Reeves County, Texas. The project included eight
wells with an average lateral length of 11,679 feet per well. The
Hollywood and Iceman project, which targeted the 3rd Bone Spring
and Wolfcamp A zones, produced an average 30-day peak rate of 1,765
Boepd (70% oil) per well.
Midland Basin
In the Midland Basin, Concho added 34 wells with at least 60
days of production as of the end of third-quarter 2018. The average
30-day and 60-day peak rates for these wells were 1,178 Boepd (86%
oil) and 1,066 Boepd (85% oil), respectively, from an average
lateral length of 9,686 feet.
Concho’s Windham B project included 10 wells with an average
lateral length of 10,332 feet per well. The project, which targeted
intervals in the Lower Spraberry, Wolfcamp A, Wolfcamp B and
Wolfcamp C zones, produced average 30-day and 60-day peak rates of
1,238 Boepd (84% oil) and 1,162 Boepd (84% oil) per well,
respectively.
Third-Quarter 2018 Financial Summary
Concho’s average realized price for crude oil and natural gas
for third-quarter 2018, excluding the effect of commodity
derivatives, was $56.38 per Bbl and $4.18 per Mcf, respectively,
compared to $45.29 per Bbl and $3.18 per Mcf, respectively, for
third-quarter 2017.
Net loss for third-quarter 2018 was $199 million, or $1.05 per
diluted share, compared to net loss of $113 million, or $0.77 per
diluted share, for third-quarter 2017. Adjusted net income
(non-GAAP), which excludes non-cash and unusual items, for
third-quarter 2018 was $269 million, or $1.42 per diluted share,
compared with adjusted net income for third-quarter 2017 of $67
million, or $0.45 per diluted share.
EBITDAX (non-GAAP) for third-quarter 2018 totaled $829 million,
compared to $458 million for third-quarter 2017.
Concho’s effective income tax rate for third-quarter 2018 was
26%, compared to 37% for third-quarter 2017, primarily due to the
reduction of the U.S. federal statutory corporate income tax rate
from 35% to 21%.
In the nine months ended September 30, 2018, cash flow from
operating activities was approximately $1.9 billion, exceeding $1.7
billion in capital expenditures (additions to oil and natural gas
properties).
Maintaining a Strong Financial Position
Concho maintains a strong financial position, with
investment-grade ratings, a low leverage ratio and substantial
liquidity.
As previously reported, during third-quarter 2018, Concho closed
its offering of $1.6 billion aggregate principal amount of senior
unsecured notes, consisting of $1.0 billion aggregate principal
amount of 4.3% senior unsecured notes due 2028 and $600 million
aggregate principal amount of 4.85% senior unsecured notes due
2048. The proceeds from the offering were used to redeem RSP’s
6.625% senior notes due 2022 and 5.25% senior notes due 2025 for
approximately $1.2 billion, as well as repay a portion of the
outstanding balance under RSP’s existing credit facility. Concho
repaid the remaining balance under RSP’s credit facility with
borrowings under Concho’s $2.0 billion credit facility.
At September 30, 2018, Concho had cash of $24 million and
long-term debt of $4.1 billion, including $193 million of
outstanding borrowings under its credit facility.
Outlook
2018
For full-year 2018, the Company updated it guidance for natural
gas price realizations as a percent of NYMEX Henry Hub to
110%-120%; gathering, processing and transportation expense to
$0.55-$0.65 per Boe; cash general and administrative expense to
$2.30-$2.50 per Boe; and its income tax rate to 24%.
2019-2020
Concho has a track record of generating free cash flow and
delivering strong production growth on both an absolute and per
debt-adjusted share basis. The Company’s success is driven by its
high-quality portfolio and efficient execution. Concho’s transition
to manufacturing-style development – and the transition of RSP’s
assets to manufacturing mode – enhances the Company’s ability to
grow free cash flow, expand profitability, improve return on
capital employed (ROCE) and initiate capital returns to
shareholders.
Capital spending for 2019 is expected to be between $3.4 billion
and $3.6 billion. During 2019, Concho expects to run an average of
34 rigs, increasing to approximately 38 rigs in 2020. In 2019,
approximately 80% of capital will be allocated to large-scale
projects, up from two-thirds of the Company’s capital directed to
large-scale projects in 2018. Additionally, the Company’s average
lateral length will trend significantly higher in 2019. The average
lateral length for the program is expected to be approximately
9,700 feet, up more than 20% year over year. Oil production is
expected to grow more than 25% from fourth-quarter 2018 to
fourth-quarter 2019. Further, Concho’s planned activity level is
expected to drive two-year crude oil and total production compound
annual growth rates of 30% and 25%, respectively, from 2018 to
2020. Importantly, disciplined capital allocation and high-margin
oil growth is expected to drive strong free cash flow generation
and improving ROCE in 2019 and 2020.
The Company’s outlook for 2019 and 2020 excludes acquisitions
and is subject to change without notice depending upon a number of
factors, including commodity prices and industry conditions.
Capital Returns
Subject to declaration by the Board of Directors, the Company
plans to initiate a quarterly dividend of $0.125 per share in the
first quarter of 2019. The indicated annual rate of $0.50 per share
underscores the Company’s outlook for strong free cash flow and its
commitment to sustainable, profitable growth and value
creation.
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, October 31, 2018,
at 8:00 AM CT (9:00 AM ET) to discuss third-quarter 2018 results.
The telephone number and passcode to access the conference call are
provided below:
Dial-in: (844) 263-8298Intl. dial-in: (478) 219-0007Participant
Passcode: 3856276
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.
Upcoming Conferences
The Company will present at the Bank of America Merrill Lynch
Global Energy Conference on November 15, 2018 at 12:20 PM CT (1:20
PM ET). The presentation will be webcast and accessible on the
Events & Presentations page under the Investors section of the
Company’s website, www.concho.com.
About Concho Resources
Concho Resources (NYSE: CXO) is the largest unconventional shale
producer 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 and Section
21E of the Securities Exchange Act of 1934. 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. Forward-looking statements
contained in this press release specifically include statements
relating to benefits of the acquisition of RSP. 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 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. The declaration and payment of any
dividend described in this release remains fully subject to further
approval by the Board of Directors, and no dividend has been
declared or approved. 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.
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 net income per diluted
share and EBITDAX.
See “Supplemental Non-GAAP Financial Measures” at the end of
this press release 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.
The release also contains the non-GAAP term free cash flow. Free
cash flow is cash flow provided by operating activities in excess
of exploration and development costs incurred. 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.
Additionally, return on capital employed, or ROCE, is a non-GAAP
measure that is defined as net income plus after-tax interest
expense divided by average stockholders’ equity plus average net
debt.
Concho Resources Inc.
Consolidated Balance Sheets
Unaudited
September 30,
December 31, (in millions, except share and per share
amounts) 2018
2017 Assets Current assets: Cash and cash
equivalents $ 24 $ - Accounts receivable, net of allowance for
doubtful accounts: Oil and natural gas 520 331 Joint operations and
other 387 212 Inventory 36 14 Prepaid costs and other 61
35 Total current assets 1,028
592 Property and equipment: Oil and natural gas
properties, successful efforts method 30,980 21,267 Accumulated
depletion and depreciation (9,362 ) (8,460 ) Total
oil and natural gas properties, net 21,618 12,807 Other property
and equipment, net 277 234 Total
property and equipment, net 21,895 13,041
Deferred loan costs, net 11 13 Goodwill 2,246 -
Intangible assets, net
20 26 Other assets 10 60 Total assets $
25,210 $ 13,732
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable - trade $ 44 $ 43
Bank overdrafts 87 116 Revenue payable 283 183 Accrued drilling
costs 548 330 Derivative instruments 547 277 Other current
liabilities 367 216 Total current
liabilities 1,876 1,165 Long-term debt
4,143 2,691 Deferred income taxes 1,431 687 Noncurrent derivative
instruments 363 102 Asset retirement obligations and other
long-term liabilities 165 172 Stockholders’ equity:
Common stock, $0.001 par value;
300,000,000 authorized; 201,268,321 and 149,324,849 shares issued
at September 30, 2018 and December 31, 2017, respectively
- - Additional paid-in capital 14,749 7,142 Retained earnings 2,613
1,840
Treasury stock, at cost; 1,028,138 and
598,049 shares at September 30, 2018 and December 31, 2017,
respectively
(130 ) (67 ) Total stockholders’ equity 17,232
8,915 Total liabilities and stockholders’ equity $
25,210 $ 13,732
Concho Resources Inc.
Consolidated Statements of Operations Unaudited
Three Months Ended
Nine Months Ended September 30, September 30,
(in millions, except per share amounts)
2018 2017 2018
2017 Operating
revenues: Oil sales $ 957 $ 498 $ 2,545 $ 1,461 Natural gas
sales 235 129 539
345 Total operating revenues 1,192 627
3,084 1,806
Operating costs
and expenses: Oil and natural gas production 156 106 416 293
Production and ad valorem taxes 89 48 229 140 Gathering, processing
and transportation 16 - 36 - Exploration and abandonments 10 7 36
42 Depreciation, depletion and amortization 406 284 1,033 848
Accretion of discount on asset retirement obligations 3 2 7 6
General and administrative (including
non-cash stock-based compensation of $23 and $17 for the three
months ended September 30, 2018 and 2017, respectively, and $58 and
$43 for the nine months ended September 30, 2018 and 2017,
respectively)
84 64 221 180 (Gain) loss on derivatives 625 206 793 (289 ) (Gain)
loss on disposition of assets, net 5 (13 ) (719 ) (667 )
Transaction costs 23 - 39
2 Total operating costs and expenses 1,417
704 2,091 555
Income (loss) from operations (225 ) (77 )
993 1,251
Other income
(expense): Interest expense (46 ) (39 ) (103 ) (118 ) Loss on
extinguishment of debt - (65 ) - (66 ) Other, net 3
2 108 20 Total other
income (expense) (43 ) (102 ) 5
(164 )
Income (loss) before income taxes (268 ) (179 ) 998
1,087 Income tax (expense) benefit 69 66
(225 ) (398 )
Net income (loss) $ (199
) $ (113 ) $ 773 $ 689
Earnings per share:
Basic net income (loss) $ (1.05 ) $ (0.77 ) $ 4.74 $ 4.64 Diluted
net income (loss) $ (1.05 ) $ (0.77 ) $ 4.74 $ 4.63
Concho
Resources Inc. Earnings per Share Unaudited
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 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 per
share attributable to common stockholders is computed as (i) basic
earnings 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 from
operations and earnings attributable to common stockholders to the
basic and diluted earnings used to determine the Company’s earnings
per share amounts for the three and nine months ended September 30,
2018 and 2017, respectively, under the two-class method:
Three Months Ended
Nine Months Ended September 30, September
30, (in millions) 2018
2017 2018
2017 Net income (loss) as
reported $ (199 ) $ (113 ) $ 773 $ 689 Participating basic earnings
(a) - - (6 ) (5 ) Basic
earnings attributable to common stockholders (199 ) (113 ) 767 684
Reallocation of participating earnings - -
- - Diluted earnings
attributable to common stockholders $ (199 ) $ (113 ) $ 767
$ 684
(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 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 three and nine months ended
September 30, 2018 and 2017:
Three Months Ended
Nine Months Ended September 30, September 30,
(in thousands) 2018
2017 2018
2017 Weighted average common
shares outstanding: Basic 188,953 147,557 161,605 147,233
Dilutive common stock options - - - 4 Dilutive performance units
313 - 342 549 Diluted 189,266 147,557 161,947 147,786
Concho Resources Inc.
Consolidated Statements of Cash Flows Unaudited
Nine Months Ended
September 30, (in millions)
2018 2017 CASH FLOWS FROM OPERATING
ACTIVITIES: Net income $ 773 $ 689 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 1,033 848 Accretion of
discount on asset retirement obligations 7 6 Exploration and
abandonments, including dry holes 20 29 Non-cash stock-based
compensation expense 58 43 Deferred income taxes 225 392 Gain on
disposition of assets, net (719 ) (667 ) (Gain) loss on derivatives
793 (289 ) Net settlements received from (paid on) derivatives (238
) 126 Loss on extinguishment of debt - 66 Other (94 ) 1 Changes in
operating assets and liabilities, net of acquisitions and
dispositions: Accounts receivable (57 ) (61 ) Prepaid costs and
other (15 ) (1 ) Inventory (12 ) (1 ) Accounts payable (27 ) 7
Revenue payable 62 5 Other current liabilities 52
(8 ) Net cash provided by operating activities 1,861
1,185
CASH FLOWS FROM INVESTING
ACTIVITIES: Additions to oil and natural gas properties (1,669
) (1,092 ) Acquisitions of oil and natural gas properties (105 )
(866 ) Additions to property, equipment and other assets (53 ) (34
) Proceeds from the disposition of assets 260 803 Direct
transaction costs for disposition of assets (3 ) (18 ) Distribution
from equity method investment 148 - Net
cash used in investing activities (1,422 ) (1,207 )
CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under
credit facility 2,408 473 Payments on credit facility (2,537 ) (105
) Issuance of senior notes, net 1,595 1,794 Repayments of senior
notes - (2,150 ) Repayments of RSP debt (1,690 ) - Debt
extinguishment costs (83 ) (63 ) Payments for loan costs (16 ) (25
) Purchase of treasury stock (63 ) (23 ) Increase (decrease) in
bank overdrafts (29 ) 68 Net cash used in
financing activities (415 ) (31 ) Net increase
(decrease) in cash and cash equivalents 24 (53 ) Cash and cash
equivalents at beginning of period - 53
Cash and cash equivalents at end of period $ 24 $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES: Issuance of
common stock for business combinations $ 7,549 $ 291
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. The actual
historical data in this table excludes results from the RSP
acquisition for periods prior to July 19, 2018.
Three Months Ended Nine
Months Ended September 30, September 30,
2018 2017
2018 2017
Production and operating data: Net production
volumes: Oil (MBbl) 16,979 11,000 42,947 31,527 Natural gas
(MMcf) 56,348 40,626 148,633 116,241 Total (MBoe) 26,370 17,771
67,719 50,901
Average daily production volumes: Oil
(Bbl) 184,554 119,565 157,315 115,484 Natural gas (Mcf) 612,478
441,587 544,443 425,791 Total (Boe) 286,634 193,163 248,056 186,449
Average prices per unit: Oil, without derivatives
(Bbl) $ 56.38 $ 45.29 $ 59.25 $ 46.34 Oil, with derivatives (Bbl)
(a) $ 53.67 $ 47.81 $ 53.55 $ 50.45 Natural gas, without
derivatives (Mcf) $ 4.18 $ 3.18 $ 3.63 $ 2.96 Natural gas, with
derivatives (Mcf) (a) $ 4.21 $ 3.22 $ 3.67 $ 2.94 Total, without
derivatives (Boe) $ 45.23 $ 35.29 $ 45.54 $ 35.47 Total, with
derivatives (Boe) (a) $ 43.56 $ 36.96 $ 42.02 $ 37.95
Operating costs and expenses per Boe: (b) Oil and natural
gas production $ 5.93 $ 5.99 $ 6.15 $ 5.76 Production and ad
valorem taxes $ 3.37 $ 2.70 $ 3.38 $ 2.75 Gathering, processing and
transportation $ 0.60 $ - $ 0.53 $ - Depreciation, depletion and
amortization $ 15.43 $ 16.00 $ 15.27 $ 16.66 General and
administrative $ 3.13 $ 3.60 $ 3.26 $ 3.56
(a) Includes the effect of net cash
receipts from (payments on) derivatives:
Three Months Ended Nine Months Ended September
30, September 30, (in millions)
2018 2017
2018 2017 Net cash receipts
from (payments on) derivatives: Oil derivatives $ (46 ) $ 28 $
(245 ) $ 129 Natural gas derivatives 2 2
7 (3 ) Total $ (44 ) $ 30 $ (238 ) $ 126
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. Costs Incurred
Unaudited
The table below provides the costs
incurred for oil and natural gas producing activities for the
periods indicated:
Three Months Ended
Nine Months Ended September 30, September 30,
(in millions) 2018
2017 2018 2017
Property acquisition costs: Proved $
4,126 $ 162 $ 4,126 $ 301 Unproved 3,578 472 3,596 865 Exploration
481 252 1,059 725 Development 280 175 653
478 Total costs incurred for oil and natural gas properties
$ 8,465 $ 1,061 $ 9,434 $ 2,369
Concho Resources Inc.
Derivatives Information Unaudited
The table below provides data associated with the Company’s
derivatives at October 30, 2018, for the periods indicated.
2019
FourthQuarter 2018
FirstQuarter
SecondQuarter
ThirdQuarter
FourthQuarter
Total 2020 Oil Price
Swaps: (a) Volume (Bbl) 11,902,007 11,992,250 10,835,750
10,066,000 9,484,000 42,378,000 26,534,000 Price per Bbl $ 56.86 $
56.80 $ 56.40 $ 56.24 $ 56.12 $ 56.41 $ 58.44
Oil
Three-Way Collars: (a) Volume (Bbl) 1,227,000 - - - - - -
Ceiling price per Bbl $ 60.96 $ - $ - $ - $ - $ - $ - Floor price
per Bbl $ 48.00 $ - $ - $ - $ - $ - $ - Short put price per Bbl $
38.00 $ - $ - $ - $ - $ - $ -
Oil Costless Collars:
(a) Volume (Bbl) 1,058,000 1,335,250 1,213,250 1,135,000
1,058,000 4,741,500 - Ceiling price per Bbl $ 60.11 $ 64.67 $ 64.00
$ 63.47 $ 62.95 $ 63.83 $ - Floor price per Bbl $ 46.52 $ 56.46 $
56.06 $ 55.74 $ 55.43 $ 55.96 $ -
Oil Basis Swaps:
(b) Volume (Bbl) 10,517,000 11,730,000 11,419,500 10,994,000
10,533,000 44,676,500 34,770,000 Price per Bbl $ (0.77 ) $ (2.93 )
$ (3.02 ) $ (2.97 ) $ (3.07 ) $ (2.99 ) $ (0.82 )
Natural
Gas Price Swaps: (c) Volume (MMBtu) 18,458,000 7,291,533
7,231,387 7,178,537 7,089,535 28,790,992 12,808,000 Price per MMBtu
$ 3.00 $ 2.82 $ 2.81 $ 2.81 $ 2.81 $ 2.81 $ 2.70
(a) The oil derivative contracts are settled based on the New
York Mercantile Exchange (“NYMEX”) – West Texas Intermediate
(“WTI”) monthly 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 Net Income per Diluted Share
The Company’s presentation of adjusted net income and adjusted
net income per diluted share exclude the effect of certain items
and are non-GAAP financial measures. Adjusted net income and
adjusted net income per diluted share represent net income and
diluted net income 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 net income
per diluted share should not be considered in isolation or as a
substitute for net income or diluted net income 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 (non-GAAP),
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)
2018 2017 2018
2017 Net income
(loss) - as reported $ (199 ) $ (113 ) $ 773 $ 689
Adjustments for certain non-cash and unusual items: (Gain)
loss on derivatives 625 206 793 (289 ) Net cash receipts from
(payments on) derivatives (44 ) 30 (238 ) 126 Leasehold
abandonments 6 - 20 24 Loss on extinguishment of debt - 65 - 66
(Gain) loss on disposition of assets and other 5 (15 ) (711 ) (669
) Gain on equity method investment distribution - - (103 ) - RSP
transaction costs 23 - 33 - Tax impact (140 ) (106 ) 47 274 Excess
tax benefit - - (3 ) (6 ) Change in state statutory effective
income tax rate (7 ) - (7 ) -
Adjusted net income $ 269 $ 67 $ 604
$ 215
Net income (loss) per diluted share -
as reported $ (1.05 ) $ (0.77 ) $ 4.74 $ 4.63
Adjustments for certain non-cash and unusual items per diluted
share: (Gain) loss on derivatives 3.29 1.40 4.85 (1.95 ) Net
cash receipts from (payments on) derivatives (0.23 ) 0.20 (1.45 )
0.85 Leasehold abandonments 0.03 - 0.12 0.16 Loss on extinguishment
of debt - 0.44 - 0.44 (Gain) loss on disposition of assets and
other 0.03 (0.10 ) (4.35 ) (4.49 ) Gain on equity method investment
distribution - - (0.63 ) - RSP transaction costs 0.12 - 0.20 - Tax
impact (0.73 ) (0.72 ) 0.28 1.84 Excess tax benefit - - (0.02 )
(0.04 ) Change in state statutory effective income tax rate
(0.04 ) - (0.04 ) -
Adjusted
net income per diluted share $ 1.42 $ 0.45 $ 3.70
$ 1.44
Adjusted earnings per share:
Basic net income $ 1.42 $ 0.45 $ 3.71 $ 1.44 Diluted net income $
1.42 $ 0.45 $ 3.70 $ 1.44
Reconciliation of Net Income (Loss) to EBITDAX
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 EBITDAX as net income (loss), plus (1)
exploration and abandonments expense, (2) depreciation, depletion
and amortization expense, (3) accretion of discount on asset
retirement obligations expense, (4) non-cash stock-based
compensation expense, (5) (gain) loss on derivatives, (6) net cash
receipts from (payments on) derivatives, (7) (gain) loss on
disposition of assets, net, (8) interest expense, (9) loss on
extinguishment of debt, (10) gain on equity method investment
distribution, (11) RSP transaction costs and (12) income tax
expense (benefit). EBITDAX is not a measure of net income (loss) or
cash flows as determined by GAAP.
The Company’s EBITDAX measure provides additional information
which may be used to better understand the Company’s operations.
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 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.
EBITDAX, as used by the Company, may not be comparable to similarly
titled measures reported by other companies. The Company believes
that 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, 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 EBITDAX (non-GAAP) for the periods
indicated:
Three Months Ended
Nine Months Ended September 30, September 30,
(in millions) 2018
2017 2018 2017
Net income (loss) $ (199 ) $
(113 ) $ 773 $ 689 Exploration and abandonments 10 7 36 42
Depreciation, depletion and amortization 406 284 1,033 848
Accretion of discount on asset retirement obligations 3 2 7 6
Non-cash stock-based compensation 23 17 58 43 (Gain) loss on
derivatives 625 206 793 (289 ) Net cash receipts from (payments on)
derivatives (44 ) 30 (238 ) 126 (Gain) loss on disposition of
assets, net 5 (13 ) (719 ) (667 ) Interest expense 46 39 103 118
Loss on extinguishment of debt - 65 - 66 Gain on equity method
investment distribution - - (103 ) - RSP transaction costs 23 - 33
- Income tax expense (benefit) (69 ) (66 ) 225
398
EBITDAX $ 829 $ 458 $
2,001 $ 1,380
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181030006096/en/
Concho Resources Inc.Investor Relations:Megan P.
Hays, 432-685-2533Vice President of Investor Relations and
Public AffairsorMary T. Starnes, 432-221-0477Investor
Relations Manager
Concho Resources (NYSE:CXO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Concho Resources (NYSE:CXO)
Historical Stock Chart
From Jul 2023 to Jul 2024