Market Overview

Concho Resources Inc. Reports Fourth-Quarter and Full-Year 2017 Results and Provides 2018 Outlook

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Exceeds Crude Oil and Total Production Growth Guidance

Increases Total Resource Potential to an Estimated 10 Billion
Barrels of Oil Equivalent

Provides New Long-Term Growth Outlook to 2020

Accelerates Value with Recent Portfolio Management Activities

Concho Resources Inc. (NYSE:CXO) (the "Company" or "Concho")
today reported financial and operating results for fourth-quarter and
full-year 2017.

Fourth-Quarter & Full-Year 2017 Highlights

  • For fourth quarter, delivered crude oil production of 130 MBopd and
    total production of 211 MBoepd, exceeding the high end of the
    Company's guidance range.
  • For 2017, grew crude oil production 29% and total production 28% on a
    $1.7 billion capital program, excluding acquisitions, which was fully
    funded by cash flows from operations.
  • Reported fourth quarter net income of $267 million, or $1.79 per
    diluted share. Adjusted net income totaled $98 million, or $0.66 per
    diluted share (non-GAAP). For 2017, net income totaled $956 million,
    or $6.41 per diluted share, and adjusted net income was $311 million,
    or $2.09 per diluted share (non-GAAP).
  • Generated $513 million of EBITDAX (non-GAAP) in the fourth quarter and
    $1.9 billion for 2017.
  • Delivered outstanding results from the Company's large-scale
    development projects in the Northern and Southern Delaware Basin and
    in the Midland Basin.
  • Increased estimated proved reserves 17% to 840 MMBoe, driven by a 26%
    increase in proved developed reserves to 588 MMBoe.
  • Achieved a 275% reserves replacement ratio at $8.68 per Boe proved
    developed finding costs.

2018 Outlook & Recent Events

  • For 2018, expecting crude oil production growth of approximately 20%
    and total production growth of 16% to 20% on a $2 billion capital
    program at the midpoint. The capital program is consistent with
    Concho's strategy of delivering returns-based, capital-efficient
    growth within cash flows from operations.
  • Provided new three-year production growth outlook of 20% CAGR over the
    2017 to 2020 time period.
  • Enhanced asset position and accelerated value realization with recent
    portfolio management actions. Divestiture proceeds of $280 million
    reinforce balance sheet strength and flexibility. Strategic asset
    trade enhances core leasehold in Midland Basin and New Mexico Shelf.

See "Supplemental Non-GAAP Financial Measures" and "Supplemental
Measures" at the end of this press release for a description of non-GAAP
measures adjusted net income, adjusted earnings per share and EBITDAX as
well as a reconciliation of these measures to the associated GAAP
measure. An explanation of how we calculate and use the reserves
replacement ratio and proved developed finding costs also can be found
at the end of the press release.

Tim Leach, Chairman and Chief Executive Officer, commented, "The fourth
quarter was an excellent end to a great year for Concho. Our operational
and financial performance demonstrated our ability to consistently
execute, control costs and capitalize on opportunities that strengthen
our competitive position. For the year, crude oil production exceeded
our target, increasing 29% year-over-year, and our disciplined capital
program was fully funded by operating cash flow. We have a powerful
portfolio that continues to outperform. The depth and quality of our
resource base is unmatched throughout our history and allows us to
assemble multi-year programs capable of delivering premium value within
cash flow. We continue to complement our development program with active
portfolio management that accelerates value and improves capital
efficiency. Our high-quality resource base, scale advantage and
execution strength uniquely position Concho to navigate a dynamic
operating environment while maximizing returns and building sustainable
value for our shareholders."

Fourth-Quarter and Full-Year 2017 Operations Summary

Production for fourth-quarter 2017 was 19 million barrels of oil
equivalent (MMBoe), or an average of 211 thousand Boe per day (MBoepd),
an increase of approximately 28% from fourth-quarter 2016 and 9% from
third-quarter 2017. Average daily crude oil production for
fourth-quarter 2017 totaled 130 thousand barrels per day (MBopd), an
increase of approximately 30% from fourth-quarter 2016 and 9% from
third-quarter 2017. Natural gas production for fourth-quarter 2017
totaled 487 million cubic feet per day (MMcfpd).

For full-year 2017, total production increased 28% to 70 MMBoe, or 193
MBoepd, driven by a 29% increase in crude oil production to 119 MBopd.
Natural gas production for full-year 2017 was 441 MMcfpd.

During fourth-quarter 2017, Concho averaged 16 rigs, compared to 19 rigs
in third-quarter 2017. The table below summarizes the Company's gross
drilling and completion activity by core area for fourth-quarter and
full-year 2017.

       
Number of Number of Number of

Number of

Operated Wells Wells Operated Wells

Wells Drilled

Drilled Completed Completed
4Q17   FY17 4Q17   FY17 4Q17   FY17 4Q17   FY17
Northern Delaware Basin 38 149 20 83 30 126 14 65
Southern Delaware Basin 14 61 11 44 24 53 17 36
Midland Basin 14 58 14 58 22 78 22 75
New Mexico Shelf 5 43 4 32 15 48 5 35
Total 71 311 49 217 91 305 58 211
 

The Company is currently running 19 rigs, including eight rigs in the
Northern Delaware Basin, six rigs in the Southern Delaware Basin and
five rigs in the Midland Basin. Additionally, the Company is currently
utilizing six completion crews.

Northern Delaware Basin

In the Northern Delaware Basin, Concho added 24 wells with at least 60
days of production as of the end of fourth-quarter 2017. The average
30-day peak and average 60-day peak rates for these wells were 1,805
Boepd (68% oil) and 1,703 Boepd (67% oil), respectively. The Company
also achieved a record average lateral length of 6,685 feet during
fourth-quarter 2017.

Maximizing Recovery and Returns with Large-Scale Development Projects

Concho continues to see strong performance from the Vast and Windward
projects, two large-scale development projects in the Red Hills area.
The Vast project includes seven wells targeting the Wolfcamp Sands and
Wolfcamp A Shale, and the Windward project includes eight wells
targeting the Avalon Shale. The Vast and Windward projects have produced
an aggregate 3 MMBoe (71% oil) in the first four months of their
production.

From these projects, Concho is collecting valuable data that helps the
Company optimize lateral placement, completion design and facilities
planning. In addition, both projects delivered improvements in drilling
days and stages completed per day.

Southern Delaware Basin

In the Southern Delaware Basin, Concho added three wells targeting the
Wolfcamp A with at least 60 days of production as of the end of
fourth-quarter 2017. The average 30-day peak and average 60-day peak
rates for these wells were 1,644 Boepd (71% oil) and 1,474 Boepd (71%
oil), respectively, and the average lateral length of 10,354 feet set a
Company record for the Southern Delaware Basin.

Optimizing Development of Stacked Resource

Concho also recently completed a large-scale, multi-well project in the
Southern Delaware Basin. The Brass Monkey project, originally an
eight-well project, includes 10 wells testing simultaneous development
of the 3rd Bone Spring, Wolfcamp A and Wolfcamp B with an
average lateral length of 9,700 feet. The average 30-day peak rate for
the project was 26 MBoepd (73% oil).

Midland Basin

Concho added six wells targeting the Wolfcamp A and Wolfcamp B in the
Midland Basin during fourth-quarter 2017. The average 30-day peak and
average 60-day peak rates for these wells were 1,272 Boepd (82% oil) and
1,195 Boepd (83% oil), respectively, and the average lateral length of
11,656 feet set a Company record for the Midland Basin.

Improving Capital Productivity from Technology Deployed at the Mabee
Ranch Project

Concho recently completed the 13-well, two-mile Mabee Ranch project
located in Andrews County, Texas. The early production results are
strong, as the Mabee Ranch project has achieved an initial 24-hour peak
rate of approximately 15 MBoepd (85% oil). Additionally, Concho is
utilizing leading-edge technologies, including fiber optic monitoring,
to collect valuable proprietary data with real-time and long-term
implications for full-field optimization. The Company expects to
transfer these techniques to other assets across the portfolio.

Fourth-Quarter and Full-Year 2017 Financial Summary

Concho's average realized price for crude oil and natural gas for
fourth-quarter 2017, excluding the effect of commodity derivatives, was
$52.84 per Bbl and $3.33 per Mcf, respectively, compared with $45.66 per
Bbl and $2.93 per Mcf, respectively, for fourth-quarter 2016. For 2017,
Concho's average realized price for crude oil and natural gas, excluding
the effect of commodity derivatives, was $48.13 per Bbl and $3.07 per
Mcf, respectively, compared with $39.90 per Bbl and $2.23 per Mcf,
respectively, for 2016.

Net income for fourth-quarter 2017 was $267 million, or $1.79 per
diluted share, compared to net loss of $125 million, or $0.86 per
diluted share, for fourth-quarter 2016. Adjusted net income (non-GAAP),
which excludes non-cash and unusual items, for fourth-quarter 2017 was
$98 million, or $0.66 per diluted share, compared with adjusted net
income (non-GAAP) of $28 million, or $0.20 per diluted share, for
fourth-quarter 2016.

Net income for full-year 2017 was $956 million, or $6.41 per diluted
share, compared to net loss of $1.5 billion, or $10.85 per diluted
share, for full-year 2016. Adjusted net income (non-GAAP), which
excludes non-cash and unusual items, for full-year 2017 was $311
million, or $2.09 per diluted share, compared with adjusted net income
(non-GAAP) of $111 million, or $0.81 per diluted share, for full-year
2016.

Net income for fourth-quarter and full-year 2017 reflected income tax
changes related to the Tax Cuts and Jobs Act. Due to the reduction of
the U.S. federal corporate income tax rate and subsequent re-measurement
of the Company's net deferred tax liability, the Company recorded a
provisional non-cash decrease to its income tax provision of $398
million and a corresponding provisional reduction to its net non-current
deferred tax liability. For 2018, the Company estimates an effective tax
rate of approximately 25%, including state taxes, before discrete items.

EBITDAX (non-GAAP) for fourth-quarter 2017 totaled $513 million,
compared to $396 million for fourth-quarter 2016. EBITDAX (non-GAAP) for
full-year 2017 was $1.9 billion, compared to $1.6 billion for full-year
2016.

See "Supplemental Non-GAAP Financial Measures" at the end of this press
release for a description of non-GAAP measures adjusted net income,
adjusted earnings per share and EBITDAX as well as a reconciliation of
these me

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