Market Overview

Concho Resources Inc. Reports Fourth-Quarter and Full-Year 2018 Results; Updates 2019 Outlook

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Delivers Strong 2018 Results from Large-Scale Development
Efficiencies

Provides Updated 2019 Outlook Reinforcing Focus on Free Cash Flow
Growth

Concho Resources Inc. (NYSE:CXO) (the "Company" or "Concho")
today reported results for fourth-quarter and full-year 2018.

2018 Highlights

  • Delivered full-year production of 263 MBoepd (64% oil), in-line with
    the high-end of the Company's guidance range.
  • Generated $2.6 billion of cash from operating activities, exceeding
    $2.5 billion of cash used in investing activities for additions to oil
    and natural gas properties.
  • Reported net income of $2.3 billion, or $13.25 per share. Adjusted net
    income (non-GAAP) totaled $792 million, or $4.59 per share.
  • Generated $2.8 billion of adjusted EBITDAX (non-GAAP).
  • Acquired and integrated RSP Permian, enhancing the Company's scale
    advantage in the Permian Basin.
  • Advanced manufacturing-style development across asset portfolio,
    driving strong well performance with the Company's average 30-day peak
    rate up 21% year-over-year on an absolute and lateral-adjusted basis.
  • Executed 15 asset trades, improving the Company's development platform
    for large-scale, long-lateral manufacturing projects.
  • Divested non-core assets for $361 million in proceeds, bringing the
    Company's total divestiture proceeds to approximately $1.5 billion
    since 2016.
  • Ended 2018 in a strong financial position with investment-grade credit
    ratings from Fitch, Moody's and S&P.
  • Issued $1.6 billion aggregate senior notes and redeemed $1.2 billion
    of RSP's aggregate senior notes. These debt management transactions
    reduce annual interest expense by more than $15 million (pro forma for
    RSP).
  • Received $157 million cash distribution from Oryx Southern Delaware
    Holdings, LLC.

2019 Outlook & Recent Events

  • Reducing 2019 planned capital expenditures to approximately $2.9
    billion; moderating activity enhances free cash flow outlook and
    capital efficiency.
  • Expecting to generate 15% oil volume growth from fourth-quarter 2018
    to fourth-quarter 2019.
  • Diversifying a portion of the Company's oil sales to waterborne market
    pricing with a firm sales agreement covering 50 MBopd.

See "Supplemental Non-GAAP Financial Measures" below for descriptions of
non-GAAP measures including adjusted net income, adjusted earnings per
share and adjusted EBITDAX as well as a reconciliation of these measures
to the associated GAAP (as defined herein) measures.

Tim Leach, Chairman and Chief Executive Officer, commented, "Last year
was an exceptional year for Concho. Throughout the year, we demonstrated
our ability to execute consistently, control costs and capitalize on
opportunities to strengthen our competitive position, highlighted by the
acquisition of RSP Permian. Our updated plans for 2019 improve our
trajectory for free cash flow growth while maintaining strong
operational efficiencies. The fundamentals of our business are strong,
and in an increasingly dynamic macroenvironment, we are confident that
our scale and the quality of our portfolio, as well as our high-margin
cash flow and financial flexibility, will enable us to build value for
our shareholders."

Full-Year 2018 Summary

Total production for 2018 increased 36% to 96 million barrels of oil
equivalent (MMBoe), or 263 thousand Boe per day (MBoepd), driven by a
41% increase in oil production to 168 thousand barrels per day (MBopd).
Natural gas production for 2018 was 571 million cubic feet per day
(MMcfpd).

For 2018, Concho's average realized price for oil and natural gas,
excluding the effect of commodity derivatives, was $56.22 per Bbl and
$3.40 per Mcf, respectively, compared with $48.13 per Bbl and $3.07 per
Mcf, respectively, for 2017.

Net income for 2018 was $2.3 billion, or $13.25 per share, compared with
net income of $956 million, or $6.41 per share, in 2017. Excluding
non-cash and special items, full-year 2018 adjusted net income was $792
million, or $4.59 per share, compared with adjusted net income of $311
million, or $2.09 per share, for full-year 2017.

Adjusted EBITDAX for 2018 totaled $2.8 billion, compared with $1.9
billion in 2017.

In 2018, cash flow from operating activities was approximately $2.6
billion, exceeding $2.5 billion in cash used for investing activities
for additions to oil and natural gas properties.

Fourth-Quarter 2018 Summary

Production for fourth-quarter 2018 was 28 MMBoe, or an average of 307
MBoepd, an increase of 45% from fourth-quarter 2017 and 7% from
third-quarter 2018. Average daily oil production for fourth-quarter 2018
totaled 199 MBopd, an increase of 53% from fourth-quarter 2017 and 8%
from third-quarter 2018. Natural gas production for fourth-quarter 2018
totaled 649 MMcfpd.

Concho's average realized price for oil and natural gas for
fourth-quarter 2018, excluding the effect of commodity derivatives, was
$49.10 per Bbl and $2.82 per Mcf, respectively, compared with $52.84 per
Bbl and $3.33 per Mcf, respectively, for fourth-quarter 2017.

Net income for fourth-quarter 2018 was $1.5 billion, or $7.55 per share,
compared with net income of $267 million, or $1.79 per share, for
fourth-quarter 2017. Excluding non-cash and special items,
fourth-quarter 2018 adjusted net income was $189 million, or $0.94 per
share, compared with adjusted net income of $98 million, or $0.66 per
share, for fourth-quarter 2017.

Adjusted EBITDAX for fourth-quarter 2018 totaled $751 million, compared
with $513 million for fourth-quarter 2017.

Operations Update

During fourth-quarter 2018, Concho averaged 34 rigs, compared to 31 rigs
in third-quarter 2018. The Company is currently running 34 rigs,
including 22 rigs in the Delaware Basin and 12 rigs in the Midland
Basin. Additionally, the Company is currently utilizing 7 completion
crews. See the table under "Operating Activity" below for detailed
information about the Company's drilling and completion activity by
operating area for fourth-quarter and full-year 2018.

Delaware Basin

In the Delaware Basin, excluding the New Mexico Shelf, the Company added
50 wells with at least 60 days of production as of the end of
fourth-quarter 2018. The average 30-day and 60-day peak rates for these
wells were 1,594 Boepd (73% oil) and 1,454 Boepd (72% oil),
respectively. These wells were drilled to an average lateral length of
7,807 feet.

Achieving Strong Results with Large-Scale Development Projects in the
Delaware Basin

Concho's Gettysburg project includes five wells targeting the 3rd
Bone Spring in the Deep area in Lea County, New Mexico. The average
30-day and 60-day peak rates for this project were 2,018 Boepd (79% oil)
and 1,857 Boepd (79% oil) per well, respectively. The project's average
lateral length was 6,989 feet.

Concho recently completed the Square Bill project, which includes four
wells targeting the 3rd Bone Spring and Wolfcamp A in the Red
Hills area in Lea County, New Mexico. The average 30-day and 60-day peak
rates for this project were 2,015 Boepd (82% oil) and 1,874 Boepd (82%
oil) per well, respectively. The project's average lateral length was
7,088 feet.

Midland Basin

In the Midland Basin, Concho added 23 wells with at least 60 days of
production as of the end of fourth-quarter 2018. The average 30-day and
60-day peak rates for these wells were 1,202 Boepd (86% oil) and 1,070
Boepd (85% oil), respectively. These wells were drilled to an average
lateral length of 7,869 feet.

Delivering Top-Tier Results in Midland Basin

Concho recently completed the Windham TXL project, which includes 11
wells targeting the Lower Spraberry and Wolfcamp B zones in Midland
County, Texas. The average 30-day and 60-day peak rates for this project
were 1,303 Boepd (83% oil) and 1,187 Boepd (82% oil) per well,
respectively. The project's average lateral length was 7,670 feet.

2018 Proved Reserves

At December 31, 2018, Concho's estimated proved reserves totaled 1.2
billion Boe, compared to 840 million Boe at year-end 2017. The Company's
proved reserves are approximately 63% oil and 37% natural gas. Proved
developed reserves totaled 824 MMBoe, or 69% of total proved reserves.
For a summary of the Company's estimated proved reserves, see "Estimated
Year-End Proved Reserves" below.

Maintaining a Strong Financial Position

Concho maintains a strong financial position with investment-grade
credit ratings, a low leverage ratio and substantial liquidity. At
December 31, 2018, Concho had long-term debt of $4.2 billion, including
$242 million of outstanding borrowings under its credit facility.

Outlook

Concho's updated outlook for 2019 reinforces the Company's commitment to
generating shareholder value at all points in the cycle. Capital
spending for 2019 is expected to be between $2.8 billion and $3.0
billion, representing a 17% reduction at the midpoint compared with the
Company's prior capital guidance. Additionally, the Company's base plans
for 2020 entail maintaining a consistent level of investment compared
with 2019. Prioritizing capital discipline and moderating activity
enhances Concho's free cash flow outlook, capital efficiency and
financial flexibility.

Approximately 94% of the 2019 capital program will be allocated to
drilling and completion operations. The Company's activity will be
primarily focused on large-scale manufacturing projects across Concho's
portfolio and will keep the Company on track to deliver the value
creation benefits of the RSP Permian, Inc. ("RSP") acquisition. Concho's
planned activity for 2019 is expected to deliver oil growth of 26% to
30%, and the base plan for 2020 is expected to drive a two-year oil
compound annual growth rate of 23% (from 2018 to 2020).

For first-quarter 2019, Concho expects production to average between 300
MBoepd and 306 MBoepd, and lease operating expense per Boe to average
between $6.30 and $6.50. Additionally, Concho expects capital
expenditures to total between $825 million and $875 million.

Detailed guidance for 2019 is provided under "2019 Guidance" below. 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, industry conditions and other risks described under
"Forward-Looking Statements and Cautionary Statements."

Oil Marketing and Commodity Derivatives Update

Consistent with the Company's strategy of diversifying its oil pricing,
Concho entered into a firm sales agreement with a third-party purchaser.
The purchaser provides an integrated transportation and marketing
strategy, including ample dock capacity. The agreement covers 50 MBopd.
Additionally, the barrels transported under this agreement will receive
waterborne market pricing following the startup of Plains All American
Pipeline LP's Cactus II pipeline system.

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, February 20, 2019, at 8:00
AM CT (9:00 AM ET) to discuss fourth-quarter and full-year 2018 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: 5077474

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 participate in the following upcoming conferences:

           
Conference Date Conference Presentation Time
February 27, 2019 Simmons Energy Conference 5:30 PM CT
March 4, 2019 Raymond James Institutional Investors Conference 8:50 AM CT
March 25, 2019 Scotia Howard Weil Energy Conference 8:50 AM CT
 

The Company's presentation at the Raymond James Institutional Investors
Conference 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 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.

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 and adjusted EBITDAX.

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.

The 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

 
December 31,
(in millions, except share and per share amounts)     2018     2017
Assets
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