Concho Resources (CXO) Q4 Results

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Concho Resources (CXO) Q4 Results

Post by dan_s »

Concho Resources Inc. (CXO) (the “Company” or “Concho”) today reported financial and operating results for the fourth quarter and full year of 2016.

Fourth-Quarter & Full-Year 2016 Highlights

Delivered quarterly production of 164.3 MBoepd, up 7% quarter-over-quarter. < Compared to my forecast of 166.0 MBoepd
Achieved quarterly crude oil production in excess of 100 MBopd for the first time in Company history. < Compared to my forecast of 97.5 MBOPD

Reported a quarterly net loss of $125.1 million, or $0.86 per diluted share.
Adjusted net income totaled $29.0 million, or $0.20 per diluted share (non-GAAP). < Compared to my forecast of $0.09 per share

Generated $397.2 million of EBITDAX (non-GAAP) in the fourth quarter of 2016.
Achieved record 30-day production rates in the Company’s New Mexico Shelf and Midland Basin assets.
Generated 1 million gross barrels of oil equivalent in just over 100 days from the Company’s eight well Windham project.
Full-year 2016 daily production averaged 150.5 MBoepd, up 5% from 2015.
Exploration and development capital expenditures were $1.1 billion during 2016, down 37% from 2015.

Year-end 2016 estimated proved reserves totaled 720 MMBoe, up from 623 MMBoe at year-end 2015.
Reserves replaced at a ratio of 344%, excluding price revisions, and a drill-bit finding and development cost of $9.21 per Boe.
Total resource potential at year-end estimated at approximately 8 billion Boe, up 60% from 5 billion Boe at year-end 2015.

Raised full-year 2017 production growth target to 20% to 24%; targeting 25% crude oil production growth over 2016.
Recently closed the sale of the Alpha Crude Connector system netting $803 million in proceeds to Concho.
Dan Steffens
Energy Prospectus Group
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: Concho Resources (CXO) Q4 Results

Post by dan_s »

This is nice: Concho and our joint interest partner previously announced the sale of our respective ownership interests in the Alpha Crude Connector system. The transaction closed in February 2017 for $1.215 billion. The $803 million in net proceeds received by Concho from the sale provides further optionality to redeploy capital into the Company’s drilling program, fund future acquisitions or reduce long-term debt. The 10-year dedication and transportation agreement, which includes a tariff structure, will remain in place until expiration of the agreement in 2025.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Concho Resources (CXO) Q4 Results

Post by dan_s »

Financial Position and Liquidity

Concho continues to reinforce its strong financial position. During the fourth quarter of 2016, the Company issued $600 million 4.375% senior notes due 2025 at par. The net proceeds from the offering, along with cash on hand, financed the satisfaction and discharge of all its outstanding 6.5% senior notes due January 2022.

After adjusting for the ACC sale and previously announced Northern Delaware Basin acquisition, Concho had pro forma cash of approximately $749 million, long-term debt of $2.7 billion and net debt-to-EBITDAX ratio of 1.2x at December 31, 2016. Additionally, the Company’s pro forma liquidity totaled approximately $3.2 billion, which reflects its undrawn revolving credit facility with total capacity of $2.5 billion.
Dan Steffens
Energy Prospectus Group
dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Re: Concho Resources (CXO) Q4 Results

Post by dan_s »

I have updated my forecast/valuation model for CXO. It will be posted to the EPG website later this evening.

This is an incredible growth company.

Cash flow from operations should more than cover their 2017 capex budget of $1.4 to $1.6 million.

Primarily because they have increased production guidance to 20% to 24% in 2017 (which they are likely to exceed), I am raising my valuation $8.00 to $198.00/share. First Call's price target is $162.23, but my guess is that FC will increase their price target.
Dan Steffens
Energy Prospectus Group
jb2257
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Joined: Sat Apr 20, 2013 8:12 pm

Re: Concho Resources (CXO) Q4 Results

Post by jb2257 »

Any idea why the stock price took a plunge? I am holding PE which I bought on the secondary and am starting to get nervous since they report tomorrow.
dan_s
Posts: 34463
Joined: Fri Apr 23, 2010 8:22 am

Re: Concho Resources (CXO) Q4 Results

Post by dan_s »

Nothing wrong with CXO. See my forecast. Double digit production growth per year is locked in.
Dan Steffens
Energy Prospectus Group
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