Achieves Record Oil Production
Raises Full-Year 2019 Production Growth
Outlook
Maintains Capital Expenditure Plans
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) 263-8298Intl. dial-in: (478) 219-0007Participant
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 WellsDrilled
Number of WellsCompleted
Number of WellsPut on
Production
Delaware Basin 104 47 75 Midland Basin 43 55 60
Total 147 102 135
Total Activity (Gross Operated):
Number of WellsDrilled
Number of WellsCompleted
Number of WellsPut 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
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 provides an estimate of the cash generated from all
operating activities, prior to investments in or liquidations of
operating assets and liabilities, and therefore, may indicate
trends in operating performance and may call out significant
changes in the generation of cash through operating activities.
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 March 31, (in
millions) 2019 2018
Net cash provided by operating activities $
623 $ 488 Changes in cash due to changes in operating assets and
liabilities: 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 )
Total working capital changes
78 51
Operating cash flow before
working capital changes $ 701 $ 539
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190430006060/en/
INVESTOR RELATIONSMegan P. HaysVice President of
Investor Relations and Public Affairs432.685.2533
MEDIAMary T. StarnesManager of Public
Affairs432.221.0477
Concho Resources (NYSE:CXO)
Historical Stock Chart
From Aug 2024 to Sep 2024
Concho Resources (NYSE:CXO)
Historical Stock Chart
From Sep 2023 to Sep 2024