Concho Resources Inc. Reports First Quarter 2009 Financial and Operating Results.MIDLAND, Texas Midland is the county seat of Midland CountyGR6 located on the Southern Plains of the western area of the U.S. State of Texas. As of the 2006 U.S. Census estimate, the city had a total population of 102,073. -- Concho Resources Inc. (NYSE NYSE See: New York Stock Exchange : CXO CXO Chief Executive Officer (corporate title) CXO Chandra X-ray Observatory CXO Chief Experience Officer (corporate title) CXO Conroe, TX (Airport Identifier) ) ("Concho" or the "Company") today reported financial and operating results for the three months ended March 31, 2009. Highlights for the three months ended March 31, 2009 include: * Production of 2.5 million barrels of oil equivalents ("MMBoe") for the three months ended March 31, 2009, a 79% increase over the first quarter of 2008 and a 9% increase over the fourth quarter of 2008 * First quarter net loss of $13.2 million, which includes the following non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. (a $42.2 million mark to market loss on derivatives not designated as hedges, a $4.1 million impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of long-lived assets, and a $3.9 million leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. leasehold n. impairment) * First quarter EBITDAX Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization, and Exploration Expenses - EBITDAX An indicator of a company's financial performance calculated as: 1 of $88.5 million, up 11% from the same period in 2008 1For an explanation of how we calculate and use EBITDAX and a reconciliation of net income (loss) to EBITDAX, please see "Supplemental non-GAAP financial measures" below. Production for the first quarter of 2009 totaled 2.5 MMBoe (1.7 million barrels of oil ("MMBbls") and 5.0 billion cubic feet of natural gas ("Bcf")), an increase of 79% as compared to 1.4 MMBoe (0.9 MMBbls and 3.1 Bcf) produced in the first quarter of 2008. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma for the Company's July 2008 acquisition of Henry Petroleum LP and certain of its affiliates, the first quarter of 2009 production increased 35% over the first quarter of 2008. For the three months ended March 31, 2009, the Company reported a net loss of $13.2 million, or $0.16 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share as compared to net income of $22.4 million, or $0.29 per diluted share for the three months ended March 31, 2008. EBITDAX (defined as net income (loss), plus (1) exploration and abandonments expense, (2) depreciation, depletion and amortization expense, (3) accretion expense In accounting, accretion expense is the expense created when updating the present value(PV) of a financial instrument. For example, if one originally recognizes the present value of a liability at $650, which has a future value (FV) of $1000, every year one must increase the , (4) impairments of long-lived assets, (5) non-cash stock-based compensation expense, (6) ineffective portion of cash flow hedges A cash flow hedge is a hedge of the exposure to the variability of cash flow that
income - the financial gain (earned or unearned) accruing over a given period of time ) increased to $88.5 million in the first quarter of 2009, as compared to $79.4 million in the first quarter of 2008. For the three months ended March 31, 2009, the Company received cash receipts for settlements on derivatives contracts not designated as hedges of $37.1 million. The non-cash mark-to-market loss for the derivatives contracts not designated as hedges was $42.2 million. This is compared to cash payments of $4.0 million and a non-cash mark-to-market loss of $13.2 million for the three months ended March 31, 2008. To better understand the impact of the Company's derivatives positions and their impact on the first quarter statement of operations See Income statement. , please see the "summary production and price data" table at the end of this press release. Timothy A. Leach, Concho's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. commented, "During the first quarter of 2009, our production grew significantly over the fourth quarter of 2008 and the pro forma first quarter of 2008. This growth was driven by activities in our core area and by increasing contributions from the Lower Abo and Bakken oil plays. For the remainder of 2009, we will maintain an activity level consistent with our strategy of operating within cash flow while maintaining the flexibility to increase or decrease activity depending on changes in commodity prices and capital costs." Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for the first quarter of 2009 decreased 19% when compared to the first quarter of 2008, despite the 79% increase in production. This decrease is attributable to the 59% decrease in the Company's realized oil price and the 58% decrease in the Company's realized natural gas price in the first quarter of 2009 compared to the same period in 2008. Exploration and abandonments costs for the first quarter of 2009 totaled $6.0 million, as compared to $2.7 million in the first quarter 2008. The increase is primarily associated with $3.9 million of leasehold abandonments in the first quarter of 2009 which relates primarily to the write-off of one prospect in New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). and two prospects in Texas, compared with $0.8 million of leasehold abandonments in the first quarter of 2008. Impairments of long-lived assets increased to $4.1 million in the first quarter of 2009 as compared to $0.02 million in the first quarter of 2008. This increase was primarily the result of lower commodity prices and their effect on the resulting recoverability of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain properties in Eddy County, New Mexico Eddy County is a county located in the U.S. state of New Mexico. As of 2000, the population was 51,658. Its county seat and largest city is Carlsbad6. Carlsbad Caverns National Park is located in Eddy County. at the end of the first quarter 2009 as compared to the first quarter of 2008. General and administrative expense ("G&A") for the quarter ended March 31, 2009 totaled $11.7 million. Recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. cash G&A for the quarter totaled $7.2 million, stock-based compensation (non-cash) totaled $1.9 million, and the remaining $2.6 million was attributable to amounts owed to certain employees of the Henry Entities which are to be paid over a two year period commencing July 31, 2008 under the terms of the Henry Petroleum purchase agreement. Operations For the three months ended March 31, 2009, the Company commenced the drilling of or participated in a total of 73 gross wells (67 operated), 36 of which had been completed as producers, 37 of which were in progress and none of which were unsuccessful at March 31, 2009. In addition, the Company participated in 34 gross recompletions (all operated), 28 of which had been completed as producers, six of which were in progress and none of which were unsuccessful at March 31, 2009. Currently, the Company is operating nine drilling rigs, all in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. ; six of these rigs are drilling Yeso wells in New Mexico and three of these rigs are drilling Wolfberry wolf·ber·ry n. A deciduous shrub (Symphoricarpos occidentalis) of western North America, having white berries and pinkish bell-shaped flowers. wells in Texas. New Mexico Permian For the three months ended March 31, 2009, the Company drilled 41 wells (all operated) and initiated 33 recompletions (all operated) on its New Mexico Permian assets, with a 100% success rate on the 22 wells and the 27 recompletions that had been completed by March 31, 2009. Texas Permian For the three months ended March 31, 2009, the Company drilled 26 wells (all operated) and initiated one operated recompletion on its Texas Permian assets, with a 100% success rate on the eleven wells and the one recompletion that had been completed by March 31, 2009. Lower Abo and Bakken Oil Plays The Company completed and placed on production three operated Lower Abo oil wells in the first quarter of 2009. To date, the Company has drilled eight operated wells in the Lower Abo oil play and participated in an additional six wells for a total of fourteen wells in the play. In the first quarter of 2009, production from the Lower Abo wells, net to the Company's interest, averaged approximately 1,300 barrels of oil equivalents per day ("Boepd"). In addition, the Company participated in three Bakken wells during the quarter ended March 31, 2009. In total, the Company has participated as a non-operator in 31 Bakken wells in North Dakota North Dakota, state in the N central United States. It is bordered by Minnesota, across the Red River of the North (E), South Dakota (S), Montana (W), and the Canadian provinces of Saskatchewan and Manitoba (N). , and in the first quarter of 2009 production from the Bakken, net to the Company's interest, averaged approximately 400 Boepd. Conference Call Information The Company will host a conference call on Thursday, May 7, 2009 at 8:00 a.m. Central Time to discuss first quarter 2009 financial and operating results. Interested parties may listen to the conference call via the Company's website at http://www.conchoresources.com or by dialing 866-713-8564 (passcode: 76592228). A replay of the conference call will be available on the Company's website or by dialing 888-286-8010 (passcode: 10378783). Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 facts, 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. Without limiting the generality gen·er·al·i·ty n. pl. gen·er·al·i·ties 1. The state or quality of being general. 2. An observation or principle having general application; a generalization. 3. of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivatives activities, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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 risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc financial performance and results, prices and demand for oil and natural gas, availability of drilling equipment and personnel, availability of sufficient capital to execute our business plan, difficulties integrating Henry's properties and employees into our Company, our ability to replace reserves and efficiently develop and exploit our current reserves and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the Securities and Exchange Commission("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. About Concho Resources Inc. Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties. The Company's operations are focused in the Permian Basin of Southeast New Mexico and West Texas. In addition, the Company is involved in a number of emerging plays. For more information, visit Concho's website at www.conchoresources.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Concho Resources, Inc. Supplemental Non-GAAP Financial Measures Unaudited EBITDAX (as defined below) is presented herein, and reconciled from the generally accepted accounting principle ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund exploration and development activities. We define EBITDAX as net income (loss), plus (1) exploration and abandonments expense, (2) depreciation, depletion and amortization expense, (3) accretion expense, (4) impairments of long-lived assets, (5) non-cash stock-based compensation expense, (6) ineffective portion of cash flow hedges and unrealized (gain) loss on derivatives not designated as hedges, (7) interest expense, (8) bad debt expense and (9) federal and state income taxes, less other ancillary income including interest income, gathering income and rental income. EBITDAX is not a measure of net income or cash flow as determined by GAAP. Our EBITDAX measure provides additional information which may be used to better understand our operations. EBITDAX is one of several metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. that we use as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of our 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 depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. assets, none of which are components of EBITDAX. EBITDAX as used by us may not be comparable to similarly titled measures reported by other companies. We believe that EBITDAX is a widely followed measure of operating performance and is one of many metrics used by our management team and by other users of our consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . For example, EBITDAX can be used to assess our 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 our assets and our company without regard to capital structure or historical cost basis. The following table provides a reconciliation of net income (loss) to EBITDAX: [TABLE OMITTED] [TABLE OMITTED] |
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