CXO Report Strong Q1 Results

[dan_s]

Concho Resources Inc. (CXO) (the “Company” or “Concho”) today reported financial and operating results for the first quarter of 2017.

First-Quarter 2017 Highlights

Delivered quarterly production of 181.4 MBoepd (my forecast was 174.5 MBoepd), exceeding the high end of the Company’s guidance range. Raised full-year 2017 production outlook to a range of 21% - 25% annual growth and maintained capital expenditure outlook.
Increased crude oil production to 113.6 MBopd, up 28% year-over-year.
Achieved record well performance in the Company’s Delaware Basin and New Mexico Shelf assets.
Making the shift to manufacturing mode with large-scale development projects in the Delaware Basin and in the Midland Basin.
Reduced per-unit production expense and interest expense 27% and 42%, respectively, year-over-year. Lowered full-year 2017 guidance for per-unit production and depreciation, depletion and amortization expenses.
Continued to execute a disciplined capital program with cash flows exceeding capital expenditures for the seventh consecutive quarter.
Reported quarterly net income of $650 million, or $4.37 per diluted share. Adjusted net income totaled $72 million, or $0.49 per diluted share (non-GAAP).
Generated $461 million of EBITDAX (non-GAAP).

Tim Leach, Chairman, Chief Executive Officer and President, commented, “First quarter was an outstanding start to the year in which we anticipate strong growth within cash flow. We delivered exceptional production growth while preserving our low cost structure. As activity rapidly accelerates in the Permian Basin, our execution strength and scale are great advantages that together provide a tight grip on costs and logistics as well as a solid platform for creating long-term shareholder value.”

[dan_s]

Zacks: "Permian-focused energy explorer Concho Resources Inc. CXO reported first-quarter adjusted net earnings per share of 49 cents, comfortably beating the Zacks Consensus Estimate of 31 cents and way above the prior-year quarter adjusted loss of 5 cents. The outperformance came on the back of higher commodity prices and strong production growth. Concho Resources’ total operating revenues for the first quarter amounted to $612 million, which increased substantially from $284 million a year ago but was slightly below the Zacks Consensus Estimate of $617.4 million."

I have update my forecast model and it will be posted to the EPG website on May 5. CXO had a strong quarter, but I am lowering my forecast a bit for lower realize oil prices. My valuation adjusts to $194.00/share (down $4.00), compared to First Call's price target of $163.30.

CXO has approximately 72% of their 2017 oil production hedged at $53.48/Bbl, so they have strong cash flow from operations locked in. Based on my forecast, cash flow from operations will more than cover this year's capital program.

CXO reported natural gas production and price includes NGL's.

Find the RED BOX on the forecast model. It will help you understand the valuation.