Delivers Record Quarterly Production
Increases Crude Oil Production 45% over
Second Quarter of 2014
Raises Full-Year 2015 Production Growth
Target to 24% - 26%
Concho Resources Inc. (NYSE: CXO) (the “Company” or
“Concho”) today reported financial and operating results for the
second quarter of 2015.
Highlights
- Production for the second quarter 2015
of 13.4 million Boe, or 147.4 MBoepd, was 37% higher year-over-year
and exceeded the high end of the Company’s guidance.
- Crude oil production increased by 45%
over the same quarter a year ago and by 11% over the first quarter
of 2015.
- 2015 production growth target raised to
24% to 26%, with the capital expenditure outlook unchanged.
- Concho reported a net loss of $1.02 per
diluted share for the second quarter of 2015. This compares to net
income of $0.38 per diluted share for the quarter on an adjusted
basis (non-GAAP).
- EBITDAX (non-GAAP) for the second
quarter of 2015 was $457.8 million.
See “Supplemental Non-GAAP Financial Measures” at the end of
this press release for a description of adjusted net income and
EBITDAX (non-GAAP measures) and a reconciliation of these measures
to the associated GAAP measure.
Tim Leach, Chairman, Chief Executive Officer and President,
commented, “Concho continues to deliver strong results as we
progress through an uncertain year for commodity prices. In the
second quarter, our drilling program added nearly ten thousand
barrels of oil production per day quarter-over-quarter,
highlighting the strength of our assets, efficient drilling machine
and ongoing success with enhanced completions. We are on track to
balance drilling and completion capital with cash flow in the
second half of 2015, and we are raising our annual production
growth target to 24% to 26%. Faster cycle times, improving well
performance and lower service costs enable our operational teams to
do more with less – an impactful combination in any price
environment. Looking ahead, our inventory-rich asset base coupled
with our operational performance sets Concho apart to deliver value
today and in the future.”
Second Quarter 2015 Operations Summary
Production for the second quarter of 2015 was 13.4 million
barrels of oil equivalent (MMBoe), or an average of 147.4 thousand
Boe per day (MBoepd), an increase of 37% from the second quarter of
2014 and 11% from the first quarter of 2015.
Second quarter 2015 production included 9.0 million barrels
(MMBbls) of crude oil, or an average of 99.2 thousand barrels of
crude oil per day (MBopd), an increase of 30.8 MBopd, or 45%, from
the second quarter of 2014, and 9.6 MBopd, or 11%, from the first
quarter of 2015. Second quarter of 2015 production also included
26.3 billion cubic feet (Bcf) of natural gas.
Capital expenditures for the quarter were $564.5 million,
excluding property acquisition costs, and represented a 23%
decrease from the first quarter of 2015. Capital expenditures and
the resulting production growth were driven by faster cycle times,
strong well performance and increased working interest in operated
wells.
Concho averaged 18 rigs in the second quarter of 2015, compared
to 30 rigs in the first quarter of 2015. During the second quarter
of 2015, Concho started drilling or participating in a total of 91
gross wells (65 operated) and completed 137 gross wells. The table
below summarizes the Company’s drilling activity by core area for
the second quarter of 2015.
Number of Wells
Drilled(Gross)
Number ofOperated
WellsDrilled(Gross)
Number of
WellsCompleted(Gross)
Delaware Basin 58 44 82 New Mexico Shelf 19 12 25 Midland Basin 14
9 30 Total 91 65 137
Percent Horizontal 96 % 95 % 81 %
Delaware Basin
Production from horizontal wells in the Delaware Basin was 81.6
MBoepd in the second quarter of 2015, up 66% over the second
quarter of 2014 and 18% over the first quarter of 2015.
During the second quarter of 2015, Concho drilled 58 wells in
the Delaware Basin, including 34 wells targeting the Bone Spring
Sands, 17 wells targeting the Wolfcamp Shale and seven wells
targeting the Avalon Shale.
In the northern Delaware Basin, drilling days per well decreased
by 15% year-over-year. Concho added 52 new horizontal wells in the
northern Delaware Basin with at least 30 days of production as of
the end of the second quarter of 2015. The average peak 30-day and
24-hour rates for these wells were 994 Boepd (71% oil) and 1,459
Boepd, respectively.
In the southern Delaware Basin, drilling days per well decreased
by 25% year-over-year. Concho added 12 new horizontal wells in the
southern Delaware Basin with at least 30 days of production as of
the end of the second quarter of 2015. The average peak 30-day and
24-hour rates for these wells were 1,163 Boepd (78% oil) and 1,392
Boepd, respectively.
The Company currently has 12 horizontal rigs in the Delaware
Basin, down from a peak of 25 horizontal rigs in the fourth quarter
of 2014.
Midland Basin
In the Midland Basin, drilling days per well decreased by 25%
year-over-year. Concho added 21 new horizontal wells in the Midland
Basin with at least 30 days of production as of the end of the
second quarter of 2015. The average peak 30-day and 24-hour rates
for these wells were 758 Boepd (82% oil) and 996 Boepd,
respectively.
The Company currently has two horizontal rigs in the Midland
Basin.
New Mexico Shelf
On the New Mexico Shelf, Concho added 17 new horizontal wells
with at least 30 days of production as of the end of the second
quarter of 2015. The average peak 30-day and 24-hour rates for
these wells were 331 Boepd (83% oil) and 477 Boepd,
respectively.
The Company currently has two horizontal rigs on the New Mexico
Shelf.
Second Quarter 2015 Financial Summary
The Company’s total realized price during the second quarter of
2015, excluding the effect of commodity derivatives, was $40.07 per
Boe, compared with $71.84 per Boe during the second quarter of
2014. The lower total realized price in the 2015 period reflects
continued weak crude oil, natural gas and natural gas liquids
commodity prices.
Net loss for the second quarter of 2015 was $120.5 million, or
$1.02 per diluted share, compared to net income of $11.8 million,
or $0.11 per diluted share, in the second quarter of 2014.
Excluding non-cash and unusual items, adjusted net income
(non-GAAP) for the second quarter of 2015 was $45.5 million, or
$0.38 per diluted share, compared with adjusted net income
(non-GAAP) of $113.8 million, or $1.04 per diluted share, for the
second quarter of 2014.
EBITDAX (non-GAAP) for the second quarter of 2015 totaled $457.8
million, compared to $504.0 million in the second quarter of
2014.
Cash flows generated from operating activities in the first six
months of 2015 totaled $488.9 million, compared with $854.7 million
in the same period last year. Adjusted cash flows (non-GAAP), which
are cash flows from operating activities adjusted for settlements
on derivatives not designated as hedges, were $768.3 million for
the first six months of 2015, as compared to $813.8 million for the
same period last year.
See “Supplemental Non-GAAP Financial Measures” at the end of
this press release for a description of adjusted net income,
EBITDAX and adjusted cash flows (non-GAAP measures) and a
reconciliation of these measures to the associated GAAP
measures.
Commodity Derivatives Update
The Company enters into commodity derivatives to manage its
exposure to commodity price fluctuations. For the remainder of
2015, Concho has swap contracts covering approximately 75% of
expected crude oil production, or 63.8 MBopd, at a weighted average
price of $75.19 per Bbl. For 2016, Concho has swap contracts
covering 49.3 MBopd at a weighted average price of $75.71 per Bbl.
Please see the table under “Derivatives Information” for more
detailed information about the Company’s current derivatives
positions.
Outlook
For the third quarter of 2015, the Company expects production to
average between 143 MBoepd and 147 MBoepd.
In addition, Concho updated its full-year 2015 outlook for
certain items. The following table summarizes the Company’s current
guidance for those items, as compared to the Company’s prior
guidance.
Full Year 2015 Prior Current
Production Year-over-year production growth 18% - 22% 24% -
26% Oil mix 63% - 65% 64% - 66%
Price realization,
excluding commodity derivatives (percent of NYMEX) Natural gas
(per Mcf) 100% - 120% 90% - 100%
Operating costs and
expenses ($/Boe) Lease operating expense: Direct lease
operating expense $7.75 - $8.25 $7.50 - $8.00
Conference Call
Concho will discuss second quarter 2015 results on a conference
call tomorrow, July 30, 2015, at 8:30 AM CT (9:30 AM ET). The
telephone number and passcode to access the conference call are
provided below:
Dial-in: (855) 445-9894 Intl. dial-in: (330) 863-3281 Participant
Passcode: 63780959
To access the live webcast and view the related presentation,
visit Concho’s website at www.concho.com. The replay will
also be available on the Company’s website under the “Investors”
section.
Concho Resources Inc.
Concho Resources Inc. is an independent oil and natural gas
company engaged in the acquisition, development and exploration of
oil and natural gas properties. The Company’s operations are
primarily focused in the Permian Basin of southeast New Mexico and
west Texas. For more information, visit the Company’s website at
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 and Section
21E of the Securities Exchange Act of 1934. 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. Forward-looking statements
contained in this press release specifically include statements,
estimates and projections regarding the Company’s future financial
position, operations, performance, business strategy, oil and
natural gas reserves, drilling program, capital expenditure budget,
liquidity and capital resources, the timing and success of specific
projects, outcomes and effects of litigation, claims and disputes,
derivative activities and potential financing. The words
“estimate,” “project,” “predict,” “believe,” “expect,”
“anticipate,” “potential,” “could,” “may,” “foresee,” “plan,”
“goal” or other similar expressions 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, anticipated future developments 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 factors
discussed or referenced in the “Risk Factors” section of the
Company’s most recent Annual Report on Form 10-K; risks relating to
declines in the prices the Company receives for its oil and natural
gas; uncertainties about the estimated quantities of oil and
natural gas reserves; drilling and operating risks, including risks
related to properties where the Company does not serve as the
operator and risks related to hydraulic fracturing activities; the
adequacy of the Company’s capital resources and liquidity
including, but not limited to, access to additional borrowing
capacity under its credit facility; the effects of government
regulation, permitting and other legal requirements, including new
legislation or regulation of hydraulic fracturing and the export of
oil and natural gas; environmental hazards, such as uncontrollable
flows of oil, natural gas, brine, well fluids, toxic gas or other
pollution into the environment, including groundwater
contamination; difficult and adverse conditions in the domestic and
global capital and credit markets; risks related to the
concentration of the Company’s operations in the Permian Basin of
southeast New Mexico and west Texas; disruptions to, capacity
constraints in or other limitations on the pipeline systems that
deliver the Company’s oil, natural gas liquids and natural gas and
other processing and transportation considerations; the costs and
availability of equipment, resources, services and personnel
required to perform the Company’s drilling and operating
activities; potential financial losses or earnings reductions from
the Company’s commodity price management program; risks and
liabilities related to the integration of acquired properties or
businesses; uncertainties about the Company’s ability to
successfully execute its business and financial plans and
strategies; uncertainties about the Company’s ability to replace
reserves and economically develop its current reserves; general
economic and business conditions, either internationally or
domestically; competition in the oil and natural gas industry;
uncertainty concerning the Company’s assumed or possible future
results of operations; and other important factors that could cause
actual results to differ materially from those projected.
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.
Concho Resources Inc. Consolidated Balance Sheets
Unaudited June 30, December
31, (in thousands, except share and per share amounts)
2015 2014 Assets
Current assets: Cash and cash equivalents $ 280 $ 21 Accounts
receivable, net of allowance for doubtful accounts: Oil and natural
gas 251,497 250,600 Joint operations and other 257,956 409,665
Derivative instruments 351,360 490,351 Prepaid costs and other
40,599 37,759 Total current assets 901,692
1,188,396 Property and equipment: Oil and natural gas
properties, successful efforts method 15,183,313 13,867,831
Accumulated depletion and depreciation (4,353,015)
(3,790,953) Total oil and natural gas properties, net 10,830,298
10,076,878 Other property and equipment, net 146,138
129,136 Total property and equipment, net 10,976,436
10,206,014 Deferred loan costs, net 63,497 68,443 Intangible asset
- operating rights, net 26,424 27,154 Inventory 16,365 14,435
Noncurrent derivative instruments 93,843 262,349 Other assets
75,719 33,172 Total assets $ 12,153,976 $ 11,799,963
Liabilities and Stockholders’ Equity Current liabilities:
Accounts payable - trade $ 44,895 $ 20,380 Bank overdrafts 82,170
92,541 Revenue payable 202,542 238,098 Accrued and prepaid drilling
costs 472,424 718,300 Deferred income taxes 115,781 162,566 Other
current liabilities 181,317 195,308 Total current
liabilities 1,099,129 1,427,193 Long-term debt
3,582,465 3,517,320 Deferred income taxes 1,389,702 1,438,185
Noncurrent derivative instruments 3,970 - Asset retirement
obligations and other long-term liabilities 140,563 136,477
Stockholders’ equity:
Common stock, $0.001 par value;
300,000,000 authorized; 120,600,497 and 113,264,918 shares issued
at June 30, 2015 and December 31, 2014, respectively
121 113 Additional paid-in capital 3,802,137 3,027,412 Retained
earnings 2,166,770 2,279,741
Treasury stock, at cost; 299,249 and
260,124 shares at June 30, 2015 and December 31, 2014,
respectively
(30,881) (26,478) Total stockholders’ equity
5,938,147 5,280,788 Total liabilities and stockholders’
equity $ 12,153,976 $ 11,799,963
Concho Resources
Inc. Consolidated Statements of Operations
Unaudited
Three Months Ended Six Months Ended June
30, June 30, (in thousands, except per share
amounts) 2015 2014
2015 2014
Operating revenues: Oil sales $ 470,890 $ 580,772 $ 820,474
$ 1,120,629 Natural gas sales 66,535 123,930
130,473 245,032 Total operating revenues 537,425
704,702 950,947 1,365,661
Operating costs
and expenses: Oil and natural gas production 142,265 134,944
267,800 261,868 Exploration and abandonments 12,020 28,288 17,775
53,663 Depreciation, depletion and amortization 304,802 237,445
572,007 458,837 Accretion of discount on asset retirement
obligations 2,047 1,722 4,041 3,393
General and administrative (including
non-cash stock-based compensation of $15,450 and $9,775 for the
three months ended June 30, 2015 and 2014, respectively, and
$30,945 and $21,207 for the six months ended June 30, 2015 and
2014, respectively)
60,923 49,535 119,724 97,285 Loss on derivatives not designated as
hedges 147,399 164,707 32,059 200,322
Total operating costs and expenses 669,456 616,641
1,013,406 1,075,368
Income (loss) from
operations (132,031) 88,061 (62,459)
290,293
Other income (expense): Interest expense
(53,482) (55,388) (107,051) (111,523) Loss on extinguishment of
debt - (4,316) - (4,316) Other, net (5,678) (9,529)
(10,019) (8,988) Total other expense (59,160)
(69,233) (117,070) (124,827)
Income (loss)
before income taxes (191,191) 18,828 (179,529) 165,466 Income
tax (expense) benefit 70,708 (7,059) 66,558
(62,390)
Net income (loss) $ (120,483) $ 11,769 $
(112,971) $ 103,076
Earnings per share: Basic net income
(loss) $ (1.02) $ 0.11 $ (0.97) $ 0.96 Diluted net income (loss) $
(1.02) $ 0.11 $ (0.97) $ 0.96
Concho Resources
Inc. Consolidated Statements of Cash Flows
Unaudited Six Months Ended June
30, (in thousands) 2015 2014
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $
(112,971) $ 103,076 Adjustments to reconcile net income (loss) to
net cash provided by operating activities: Depreciation, depletion
and amortization 572,007 458,837 Accretion of discount on asset
retirement obligations 4,041 3,393 Exploration and abandonments,
including dry holes 12,352 41,762 Non-cash stock-based compensation
expense 30,945 21,207 Deferred income taxes (95,268) 34,951 (Gain)
loss on disposition of assets and other 1,620 9,457 Loss on
derivatives not designated as hedges 32,059 200,322 Other non-cash
items 5,298 9,418 Changes in operating assets and liabilities, net
of acquisitions and dispositions: Accounts receivable 55,870
(83,061) Prepaid costs and other (2,098) (6,154) Inventory (1,935)
4,782 Accounts payable 23,339 36,626 Revenue payable (35,556)
17,671 Other current liabilities (769) 2,441 Net cash
provided by operating activities 488,934 854,728
CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures
on oil and natural gas properties (1,492,547) (1,054,000) Additions
to property, equipment and other assets (26,146) (20,456) Proceeds
from the disposition of assets 96 394 Contribution to equity method
investment (45,000) (10,050) Settlements received from (paid on)
derivatives not designated as hedges 279,408 (40,891)
Net cash used in investing activities (1,284,189)
(1,125,003)
CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds
from issuance of debt 1,097,400 1,578,000 Payments of debt
(1,030,900) (1,828,000) Exercise of stock options 58 1,289 Excess
tax benefit from stock-based compensation 2,221 4,000 Net proceeds
from issuance of common stock 741,509 932,455 Payments for loan
costs - (10,642) Purchase of treasury stock (4,403) (4,642)
Decrease in bank overdrafts (10,371) (36,718) Net
cash provided by financing activities 795,514 635,742
Net increase in cash and cash equivalents 259 365,467 Cash and cash
equivalents at beginning of period 21 21 Cash and
cash equivalents at end of period $ 280 $ 365,488
Concho
Resources Inc. Summary Production and Price Data
Unaudited
The following table sets forth summary information concerning
production and operating data for the periods indicated:
Three Months Ended Six Months
Ended June 30, June 30,
2015 2014 2015
2014 Production and operating data:
Net production volumes: Oil (MBbl) 9,031 6,229 17,097 12,075
Natural gas (MMcf) 26,283 21,485 49,268 41,285 Total (MBoe) 13,412
9,810 25,308 18,956
Average daily production volumes:
Oil (Bbl) 99,242 68,451 94,459 66,713 Natural gas (Mcf) 288,824
236,099 272,199 228,094 Total (Boe) 147,379 107,801 139,826 104,729
Average prices: Oil, without derivatives (Bbl) $
52.14 $ 93.24 $ 47.99 $ 92.81 Oil, with derivatives (Bbl) (a) $
63.56 $ 89.29 $ 63.39 $ 89.96 Natural gas, without derivatives
(Mcf) $ 2.53 $ 5.77 $ 2.65 $ 5.94 Natural gas, with derivatives
(Mcf) (a) $ 2.88 $ 5.70 $ 2.97 $ 5.78 Total, without derivatives
(Boe) $ 40.07 $ 71.84 $ 37.57 $ 72.04 Total, with derivatives (Boe)
(a) $ 48.44 $ 69.18 $ 48.62 $ 69.89
Operating costs and
expenses per Boe: Lease operating expenses and workover costs $
7.30 $ 8.15 $ 7.46 $ 8.11 Oil and natural gas taxes $ 3.30 $ 5.61 $
3.12 $ 5.70 Depreciation, depletion and amortization $ 22.72 $
24.20 $ 22.60 $ 24.21 General and administrative $ 4.54 $ 5.05 $
4.73 $ 5.13
(a) Includes the effect of cash
receipts from (payments on) derivatives not designated as
hedges:
Three Months Ended Six Months
Ended June 30, June 30, (in thousands)
2015 2014 2015
2014 Cash receipts from (payments on) derivatives
not designated as hedges: Oil derivatives $ 103,129 $ (24,569)
$ 263,315 $ (34,338) Natural gas derivatives 9,123
(1,485) 16,093 (6,553) Total $ 112,252 $ (26,054) $
279,408 $ (40,891)
The presentation of average prices with
derivatives is a non-GAAP measure as a result of including the cash
receipts from (payments on) commodity derivatives that are
presented in loss on derivatives not designated as hedges in the
statements of operations. This presentation of average prices with
derivatives is a means by which to reflect the actual cash
performance of our commodity derivatives for the respective periods
and presents oil and natural gas prices with derivatives in a
manner consistent with the presentation generally used by the
investment community.
Concho Resources Inc. Costs Incurred Unaudited
The table below provides the costs incurred for oil and natural
gas producing activities for the periods indicated:
Three Months Ended Six Months
Ended June 30, June 30, (in thousands)
2015 2014 2015
2014 Property acquisition costs: Proved $ 2,243 $
2,137 $ 2,243 $ 22,627 Unproved 18,037 11,382 34,050 36,070
Exploration 343,051 342,424 772,220 666,921 Development
221,410 193,163 523,154 404,842 Total costs
incurred for oil and natural gas properties $ 584,741 $ 549,106 $
1,331,667 $ 1,130,460
Concho Resources Inc.
Derivatives Information Unaudited
The table below provides data associated with the Company’s
derivatives at July 29, 2015, for the periods indicated:
2015
ThirdQuarter
FourthQuarter
Total 2016 2017 Oil Swaps: (a)
Volume (Bbl) 6,169,000 5,579,000 11,748,000 18,059,000 6,288,000
Price per Bbl $ 75.14 $ 75.24 $ 75.19 $ 75.71 $ 64.57
Oil
Basis Swaps: (b) Volume (Bbl) 5,811,000 5,336,000 11,147,000
14,661,000 6,335,000 Price per Bbl $ (2.50) $ (2.47) $ (2.48) $
(2.11) $ (1.51)
Natural Gas Swaps: (c) Volume (MMBtu)
5,980,000 5,980,000 11,960,000 3,660,000 - Price per MMBtu $ 4.16 $
4.16 $ 4.16 $ 3.14 $ -
Natural Gas Basis Swaps: (d)
Volume (MMBtu) 1,380,000 1,380,000 2,760,000 - - Price per MMBtu $
(0.13) $ (0.13) $ (0.13) $ - $ -
(a) The index prices for the oil contracts
are based on the New York Mercantile Exchange (“NYMEX”) – West
Texas Intermediate (“WTI”) monthly average futures price.
(b) The basis differential price is
between Midland – WTI and Cushing – WTI.
(c) The index prices for the natural gas
price swaps are based on the NYMEX – Henry Hub last trading day
futures price.
(d) The basis differential price is
between the El Paso Permian delivery point and NYMEX – Henry Hub
delivery point.
Concho Resources Inc. Supplemental Non-GAAP
Financial Measures Unaudited
The following tables provide information that the Company
believes may be useful to investors who follow the practice of some
industry analysts who adjust reported company net income to exclude
certain non-cash and unusual items and cash flows from operating
activities to adjust for settlements on derivatives not designated
as hedges.
Adjusted Net Income
The following table provides a reconciliation of net income
(loss) (GAAP) to adjusted net income (non-GAAP) for the periods
indicated:
Three Months
Ended Six Months Ended June 30, June 30,
(in thousands, except per share amounts)
2015 2014
2015 2014 Net
income (loss) - as reported $ (120,483 ) $ 11,769 $ (112,971 )
$ 103,076
Adjustments for certain non-cash and unusual
items: Loss on derivatives not designated as hedges 147,399
164,707 32,059 200,322 Cash receipts from (payments on) derivatives
not designated as hedges 112,252 (26,054 ) 279,408 (40,891 )
Leasehold abandonments 1,444 11,193 3,363 15,138 Loss on
extinguishment of debt - 4,316 - 4,316 (Gain) loss on disposition
of assets and other 1,581 9,603 1,620 9,457 Tax impact (a) (94,826
) (61,739 ) (114,238 ) (71,005 ) Change in statutory effective
income tax rates (1,826 ) - (1,826 )
-
Adjusted net income $ 45,541 $
113,795 $ 87,415 $ 220,413
Adjusted
earnings per share: Basic $ 0.38 $ 1.04 $ 0.74 $ 2.06 Diluted $
0.38 $ 1.04 $ 0.74 $ 2.05
Effective tax rates 36.1 %
37.7 % 36.1 % 37.7 %
(a) The tax impact is computed utilizing
the Company's adjusted statutory effective federal and state income
tax rates shown in the table above.
Adjusted Cash Flows
The following table provides a reconciliation of cash flows from
operating activities (GAAP) to adjusted cash flows (non-GAAP) for
the periods indicated:
Six Months Ended
June 30, (in thousands) 2015
2014 Cash flows from operating
activities $ 488,934 $ 854,728 Settlements received from (paid on)
derivatives not designated as hedges (a) 279,408
(40,891) Adjusted cash flows $ 768,342 $ 813,837
(a) Amounts are presented in cash flows from investing
activities for GAAP purposes.
EBITDAX
EBITDAX (as defined below) is presented herein and reconciled
from the United States generally accepted accounting principles
("GAAP") measure of net income (loss) 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.
The Company defines EBITDAX as net income (loss), plus (1)
exploration and abandonments expense, (2) depreciation, depletion
and amortization expense, (3) accretion expense, (4) non-cash
stock-based compensation expense, (5) loss on derivatives not
designated as hedges, (6) cash receipts from (payments on)
derivatives not designated as hedges, (7) (gain) loss on
disposition of assets and other, (8) interest expense, (9) loss on
extinguishment of debt and (10) federal and state income taxes.
EBITDAX is not a measure of net income (loss) or cash flows as
determined by GAAP.
The Company’s EBITDAX measure provides additional information
which may be used to better understand the Company’s operations.
EBITDAX is one of several metrics that the Company uses as a
supplemental financial measurement in the evaluation of its
business and should not be considered as an alternative to, or more
meaningful than, net income (loss) as an indicator of 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 assets, none of which
are components of EBITDAX. EBITDAX, as used by the Company, may not
be comparable to similarly titled measures reported by other
companies. The Company believes that EBITDAX is a widely followed
measure of operating performance and is one of many metrics used by
the Company’s management team and by other users of the Company’s
consolidated financial statements. For example, EBITDAX can be used
to assess the Company’s 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 the Company’s assets and the
Company without regard to capital structure or historical cost
basis.
The following table provides a reconciliation of net income
(loss) (GAAP) to EBITDAX (non-GAAP) for the periods indicated:
Three Months Ended
Six Months Ended June 30, June 30, (in
thousands) 2015 2014
2015 2014 Net income (loss) $
(120,483) $ 11,769 $ (112,971) $ 103,076 Exploration and
abandonments 12,020 28,288 17,775 53,663 Depreciation, depletion
and amortization 304,802 237,445 572,007 458,837 Accretion of
discount on asset retirement obligations 2,047 1,722 4,041 3,393
Non-cash stock-based compensation 15,450 9,775 30,945 21,207 Loss
on derivatives not designated as hedges 147,399 164,707 32,059
200,322 Cash receipts from (payments on) derivatives not designated
as hedges 112,252 (26,054) 279,408 (40,891) (Gain) loss on
disposition of assets and other 1,581 9,603 1,620 9,457 Interest
expense 53,482 55,388 107,051 111,523 Loss on extinguishment of
debt - 4,316 - 4,316 Income tax expense (benefit) (70,708)
7,059 (66,558) 62,390
EBITDAX $ 457,842
$ 504,018 $ 865,377 $ 987,293
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version on businesswire.com: http://www.businesswire.com/news/home/20150729006738/en/
Concho Resources Inc.INVESTOR RELATIONSMegan P. Hays,
432-685-2533Director of Investor RelationsorJere Thompson,
432-221-0383Financial Analyst
Concho Resources (NYSE:CXO)
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