UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): February
20, 2013
Concho
Resources Inc.
(Exact Name of Registrant as Specified in
Its Charter)
Delaware
(State or Other Jurisdiction of
Incorporation)
001-33615 | 76-0818600 | |
(Commission File Number) | (I.R.S. Employer Identification No.) | |
One Concho Center 600 West Illinois Avenue Midland, Texas |
79701 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (432) 683-7443
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 2.02 Results of Operations and Financial Condition
Item 9.01
Financial Statements and Exhibits
SIGNATURES
EXHIBIT INDEX
EX-99.1
Item 2.02 Results of Operations and Financial Condition.
On February 20, 2013, Concho Resources Inc. (the “Company”) announced its results for the quarter and year ended December 31, 2012. A copy of the Company’s press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description of Exhibit | |
99.1 | Press release dated February 20, 2013, announcing financial and operating results for the quarter and year ended December 31, 2012. |
THE INFORMATION CONTAINED IN THIS CURRENT REPORT, INCLUDING THE EXHIBIT ATTACHED HERETO, SHALL NOT BE DEEMED “FILED” FOR THE PURPOSES OF SECTION 18 OF THE SECURITIES AND EXCHANGE ACT OF 1934, NOR SHALL IT BE DEEMED INCORPORATED BY REFERENCE INTO ANY REGISTRATION STATEMENT OR OTHER FILING PURSUANT TO THE SECURITIES ACT OF 1933, EXCEPT AS OTHERWISE EXPRESSLY STATED IN SUCH FILING.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CONCHO RESOURCES INC. | ||||
Date: February 20, 2013 |
By: |
/s/ C. WILLIAM GIRAUD |
||
Name: |
C. William Giraud |
|||
Title: |
Senior Vice President and General Counsel |
EXHIBIT INDEX
Exhibit No. | Description of Exhibit | |
99.1 |
Press release dated February 20, 2013, announcing financial and operating results for the quarter and year ended December 31, 2012. |
Exhibit 99.1
Concho Resources Inc. Reports Fourth Quarter 2012 and Year End Financial and Operating Results
MIDLAND, Texas--(BUSINESS WIRE)--February 20, 2013--Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today reported financial and operating results for the three months and year ended December 31, 2012. Highlights for the year ended December 31, 2012 include:
1 Adjusted net income (non-GAAP) is comparable to securities analyst estimates. For an explanation of how we calculate adjusted net income (non-GAAP) and a reconciliation of net income (GAAP) to adjusted net income (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
2 For an explanation of how we calculate and use EBITDAX (non-GAAP) and a reconciliation of net income (GAAP) to EBITDAX (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below.
Year End 2012 Financial Results
Production for 2012 totaled 29.8 MMBoe (18.0 million barrels of oil (“MMBbls”) and 70.6 billion cubic feet of natural gas (“Bcf”)), an increase of 26% as compared to 23.6 MMBoe (14.7 MMBbls and 53.7 Bcf) produced in 2011.
Tim Leach, Concho's Chairman, CEO and President, commented, “In 2012, Concho was able to execute our $1.5 billion capital program and grow production in excess of 20% organically. In addition, we positioned the Company for future growth in emerging areas such as the Delaware Basin through the acquisition of Three Rivers and internally identified drilling locations. Today, our opportunity set is deeper than at any time in the Company’s history and we look forward to executing on our inventory of high rate of return projects.”
For 2012, the Company reported net income of $431.7 million, or $4.15 per diluted share, as compared to net income of $548.1 million, or $5.28 per diluted share, for 2011. The Company’s 2012 results were impacted by several non-cash items including: (1) a $103.9 million unrealized mark-to-market gain on commodity derivatives, (2) $12.4 million of leasehold abandonments, (3) $3.2 million of other settlements and (4) an $18.7 million loss related to the sale of non-core assets included in discontinued operations. Excluding these items and their tax effects, the 2012 adjusted net income (non-GAAP) was $388.6 million, or $3.74 per diluted share. Excluding similar non-cash items and their tax impact, adjusted net income (non-GAAP) for 2011 was $430.1 million, or $4.15 per diluted share. For a description and a reconciliation of net income (GAAP) to adjusted net income (non-GAAP), please see “Supplemental Non-GAAP Financial Measures” below.
EBITDAX was $1,475.6 million in 2012, an increase of 16% from $1,275.2 million in 2011. For a description and a reconciliation of net income (GAAP) to EBITDAX (non-GAAP), please see “Supplemental Non-GAAP Financial Measures” below.
Oil and natural gas sales from continuing operations for 2012 increased 12% when compared to 2011. This increase was attributable to a 27% increase in production from continuing operations in 2012 compared to 2011, which was partially offset by a 34% decrease in the Company’s unhedged realized natural gas price and a 4% decrease in the Company’s unhedged realized oil price. Oil and natural gas production expense from continuing operations for 2012, including oil and natural gas taxes, totaled $343.7 million, or $12.29 per barrel of oil equivalent (“Boe”), a 3% decrease per Boe from 2011. This decrease was due primarily to lower oil and natural gas taxes, which averaged $5.39 per Boe in 2012 as compared to $5.96 per Boe in 2011. The decrease in oil and natural gas taxes per Boe over 2011 was primarily due to lower realized oil and natural gas prices.
Depreciation, depletion and amortization expense (“DD&A”) from continuing operations for 2012 totaled $575.1 million, or $20.56 per Boe, a 13% increase per Boe from 2011.
General and administrative expense (“G&A”) from continuing operations for 2012 totaled $133.8 million, or $4.79 per Boe, as compared to $98.5 million, or $4.48 per Boe, in 2011. Cash G&A for 2012 totaled $103.9 million and stock-based compensation (non-cash) totaled $29.9 million. The increase in per Boe expense for 2012 over 2011 was primarily due to a 36% increase in absolute G&A expenses reflecting increased staffing across the Company, and was partially offset by a 27% increase in production from continuing operations.
The Company’s cash flow from operating activities (GAAP) was $1,237.5 million for 2012, as compared to $1,199.5 million for 2011, an increase of 3%. Adjusted cash flows (non-GAAP), which are cash flows from operating activities (GAAP) adjusted for settlements on derivatives not designated as hedges, were $1,261.0 million for 2012, as compared to $1,114.6 million for 2011, an increase of 13%. For a description of the use of adjusted cash flows (non-GAAP) and for a reconciliation of cash flows from operating activities (GAAP) to adjusted cash flows (non-GAAP), please see “Supplemental Non-GAAP Financial Measures” below.
In 2012, the Company collected net cash receipts on derivatives not designated as hedges of $23.5 million and the non-cash unrealized mark-to-market gain on derivatives not designated as hedges was $103.9 million. In comparison, the Company made net cash payments of $84.9 million on derivatives not designated as hedges and reported a $61.5 million non-cash unrealized mark-to-market gain on derivatives not designated as hedges in 2011. To better understand the impact of the Company’s derivative positions and their impact on the statements of operations, please see the “Summary Production and Operating Data” and “Derivatives Information” tables at the end of this press release.
Operations
For 2012, the Company commenced drilling or participated in a total of 840 gross wells (657 operated), 5 of which were plugged and abandoned, and completed 798 wells as producers.
The table below summarizes the Company’s gross drilling activities by core area for the fourth quarter and full year 2012:
Total Wells1 | Operated Wells | Completed Wells | |||||||||||||
4Q 2012 | FY 2012 | 4Q 2012 | FY 2012 | 4Q 2012 | FY 2012 | ||||||||||
New Mexico Shelf | 73 | 360 | 29 | 251 | 85 | 348 | |||||||||
Delaware Basin | 45 | 154 | 29 | 87 | 47 | 134 | |||||||||
Texas Permian | 78 | 326 | 77 | 319 | 78 | 316 | |||||||||
Total | 196 | 840 | 135 | 657 | 210 | 798 |
1 Includes 5 wells that were plugged and abandoned in 2012.
Currently, the Company is operating 31 drilling rigs; 5 of these rigs are drilling Yeso wells in the New Mexico Shelf, 14 are drilling in the Texas Permian and 12 are drilling in the Delaware Basin. Of the 31 operated rigs, the Company is currently running 16 horizontal drilling rigs, including 12 in the Delaware Basin, 1 in the Texas Permian and 3 in the New Mexico Shelf.
New Mexico Shelf
At year-end 2012, the Company had identified 2,083 locations on the New Mexico Shelf, with proved reserves attributed to 616 of such locations. Of these 2,083 drilling locations, 1,044 locations target the Yeso formation vertically and 676 locations targeting the Yeso formation horizontally.
Delaware Basin
At year-end 2012, the Company had identified 4,212 drilling locations in the northern Delaware Basin, an increase of over 2,300 drilling locations since year-end 2011, with proved reserves attributed to 246 of such locations. These locations include 2,462 targeting the Bone Spring sands, 1,016 targeting the Avalon shale and 734 targeting other formations. Concho has not included any potential drilling locations across its approximately 147,000 gross (128,000 net) acres in the southern Delaware Basin.
The Company’s net production in the fourth quarter of 2012 from horizontal Delaware Basin wells averaged approximately 21,100 barrels of oil equivalent per day (“Boepd”) an increase of 92% over the fourth quarter of 2011 and an increase of 32% over the third quarter of 2012.
Texas Permian
At year-end 2012, the Company had identified 5,974 drilling locations, with proved reserves associated with 1,464 of such locations. Of these 5,974 drilling locations, 1,955 target the Wolfberry play on 40-acre spacing, 2,486 target the Wolfberry play on 20-acre spacing, 1,410 target the shallow Wolfcamp vertically and the remaining drilling locations target other objectives.
Derivative Update
The Company maintains an active hedging program and has added to its derivative positions. In addition to the incremental crude oil swaps, Concho has added basis swaps that limit the Company’s exposure to the Midland-to-Cushing differential. Concho has hedged 9.0 MMBbls of the basis differential at an average price of ($1.23) per Bbl from April 2013 to December 2013. Please see the “Derivatives Information” table at the end of this press release for more detailed information about the Company’s current derivative positions.
Credit Facility
At December 31, 2012, the Company had borrowings outstanding under its credit facility of $304.0 million, and the availability under the credit facility was approximately $2.2 billion.
Conference Call Information
The Company will host a conference call on Thursday, February 21, 2013 at 9:00 a.m. Central Time to discuss the fourth quarter 2012 and year-end financial and operating results. Interested parties may listen to the conference call via the Company’s website at www.concho.com or by dialing (866) 271-5140 (passcode: 10112096). A replay of the conference call will be available on the Company’s website or by dialing (888) 286-8010 (passcode: 61682005).
About 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 focused in the Permian Basin of Southeast New Mexico and West Texas. For more information, visit Concho’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 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 of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company's future financial position, operations, performance, production growth, returns, divestitures, capital expenditure budget, the proceeds of the sale of the non-core properties, oil and natural gas reserves, number of identified drilling locations, drilling program, derivative activities, costs and other guidance. These statements are based on certain assumptions 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 Form 10-K and 10-Q filings and risks relating to declines in the prices we receive for our oil and natural gas; uncertainties about the estimated quantities of reserves; risks related to the integration of acquired assets; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing; drilling and operating risks; the adequacy of our capital resources and liquidity; risks related to the concentration of our operations in the Permian Basin; the results of our hedging program; weather; litigation; shortages of oilfield equipment, services and qualified personnel and increases in costs for such equipment, services and personnel; uncertainties about our ability to replace reserves and economically develop our current reserves; competition in the oil and natural gas industry; 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 | ||||||||||
December 31, | ||||||||||
(in thousands, except share and per share amounts) |
2012 | 2011 | ||||||||
Assets | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 2,880 | $ | 342 | ||||||
Accounts receivable, net of allowance for doubtful accounts: | ||||||||||
Oil and natural gas | 198,053 | 213,921 | ||||||||
Joint operations and other | 202,738 | 153,746 | ||||||||
Derivative instruments | 35,942 | 1,698 | ||||||||
Deferred income taxes | - | 28,793 | ||||||||
Prepaid costs and other | 19,269 | 12,523 | ||||||||
Total current assets | 458,882 | 411,023 | ||||||||
Property and equipment: | ||||||||||
Oil and natural gas properties, successful efforts method | 9,455,599 | 7,347,460 | ||||||||
Accumulated depletion and depreciation | (1,565,316 | ) | (1,116,545 | ) | ||||||
Total oil and natural gas properties, net | 7,890,283 | 6,230,915 | ||||||||
Other property and equipment, net | 103,141 | 59,203 | ||||||||
Total property and equipment, net | 7,993,424 | 6,290,118 | ||||||||
Funds held in escrow | - | 17,394 | ||||||||
Deferred loan costs, net | 77,609 | 65,641 | ||||||||
Intangible asset - operating rights, net | 30,076 | 33,425 | ||||||||
Inventory | 20,611 | 19,419 | ||||||||
Noncurrent derivative instruments | 2,769 | 7,944 | ||||||||
Other assets | 6,066 | 4,612 | ||||||||
Total assets | $ | 8,589,437 | $ | 6,849,576 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current liabilities: | ||||||||||
Accounts payable: | ||||||||||
Trade | $ | 31,144 | $ | 23,198 | ||||||
Related parties | 185 | 154 | ||||||||
Bank overdrafts | 24,275 | 39,241 | ||||||||
Revenue payable | 162,073 | 146,061 | ||||||||
Accrued and prepaid drilling costs | 351,919 | 293,919 | ||||||||
Derivative instruments | 1,584 | 56,218 | ||||||||
Deferred income taxes | 8,566 | - | ||||||||
Other current liabilities | 160,340 | 142,686 | ||||||||
Total current liabilities | 740,086 | 701,477 | ||||||||
Long-term debt | 3,101,103 | 2,080,141 | ||||||||
Deferred income taxes | 1,186,621 | 1,002,295 | ||||||||
Noncurrent derivative instruments | 12,049 | 32,254 | ||||||||
Asset retirement obligations and other long-term liabilities | 83,382 | 52,670 | ||||||||
Commitments and contingencies | ||||||||||
Stockholders’ equity: | ||||||||||
Common stock, $0.001 par value; 300,000,000 authorized; 104,668,427 and 103,756,222 | ||||||||||
shares issued at December 31, 2012 and 2011, respectively | 105 | 104 | ||||||||
Additional paid-in capital | 1,982,714 | 1,925,757 | ||||||||
Retained earnings | 1,490,563 | 1,058,874 | ||||||||
Treasury stock, at cost; 86,861 and 55,990 shares at December 31, 2012 and 2011, | ||||||||||
respectively | (7,186 | ) | (3,996 | ) | ||||||
Total stockholders’ equity | 3,466,196 | 2,980,739 | ||||||||
Total liabilities and stockholders’ equity | $ | 8,589,437 | $ | 6,849,576 |
Concho Resources Inc. | ||||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
(in thousands, except per share amounts) | 2012 | 2011 (a) | 2012 | 2011 (a) | ||||||||||||||||
Operating revenues: | ||||||||||||||||||||
Oil sales | $ | 383,494 | $ | 344,005 | $ | 1,482,998 | $ | 1,228,167 | ||||||||||||
Natural gas sales | 94,032 | 100,337 | 336,816 | 389,604 | ||||||||||||||||
Total operating revenues | 477,526 | 444,342 | 1,819,814 | 1,617,771 | ||||||||||||||||
Operating costs and expenses: | ||||||||||||||||||||
Oil and natural gas production | 92,102 | 82,148 | 343,743 | 277,929 | ||||||||||||||||
Exploration and abandonments | 12,505 | 6,770 | 39,840 | 11,394 | ||||||||||||||||
Depreciation, depletion and amortization | 166,453 | 115,249 | 575,128 | 400,022 | ||||||||||||||||
Accretion of discount on asset retirement obligations | 1,361 | 669 | 4,187 | 2,444 | ||||||||||||||||
Impairments of long-lived assets | - | 363 | - | 439 | ||||||||||||||||
General and administrative (including non-cash stock-based compensation of | ||||||||||||||||||||
$8,438 and $5,405 for the three months ended December 31, 2012 and | ||||||||||||||||||||
2011, respectively, and $29,872 and $19,271 for the years ended | ||||||||||||||||||||
December 31, 2012 and 2011, respectively) | 37,802 | 29,960 | 133,796 | 98,525 | ||||||||||||||||
(Gain) loss on derivatives not designated as hedges | (17,901 | ) | 320,312 | (127,443 | ) | 23,350 | ||||||||||||||
Total operating costs and expenses | 292,322 | 555,471 | 969,251 | 814,103 | ||||||||||||||||
Income (loss) from operations | 185,204 | (111,129 | ) | 850,563 | 803,668 | |||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (53,632 | ) | (34,159 | ) | (182,705 | ) | (118,360 | ) | ||||||||||||
Other, net | (3,670 | ) | 616 | (8,587 | ) | (3,974 | ) | |||||||||||||
Total other expense | (57,302 | ) | (33,543 | ) | (191,292 | ) | (122,334 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | 127,902 | (144,672 | ) | 659,271 | 681,334 | |||||||||||||||
Income tax (expense) benefit | (46,714 | ) | 54,559 | (251,041 | ) | (261,800 | ) | |||||||||||||
Income (loss) from continuing operations | 81,188 | (90,113 | ) | 408,230 | 419,534 | |||||||||||||||
Income (loss) from discontinued operations, net of tax | (5,901 | ) | 7,288 | 23,459 | 128,603 | |||||||||||||||
Net income (loss) | $ | 75,287 | $ | (82,825 | ) | $ | 431,689 | $ | 548,137 | |||||||||||
Basic earnings per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.78 | $ | (0.88 | ) | $ | 3.96 | $ | 4.09 | |||||||||||
Income (loss) from discontinued operations, net of tax | (0.05 | ) | 0.07 | 0.22 | 1.25 | |||||||||||||||
Net income (loss) | $ | 0.73 | $ | (0.81 | ) | $ | 4.18 | $ | 5.34 | |||||||||||
Weighted average shares used in basic earnings per share | 103,494 | 102,771 | 103,190 | 102,581 | ||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||||
Income (loss) from continuing operations | $ | 0.78 | $ | (0.88 | ) | $ | 3.93 | $ | 4.05 | |||||||||||
Income (loss) from discontinued operations, net of tax | (0.06 | ) | 0.07 | 0.22 | 1.23 | |||||||||||||||
Net income (loss) | $ | 0.72 | $ | (0.81 | ) | $ | 4.15 | $ | 5.28 | |||||||||||
Weighted average shares used in diluted earnings per share | 104,194 | 102,771 | 103,972 | 103,653 | ||||||||||||||||
(a) Retrospectively adjusted for presentation of discontinued operations. |
Concho Resources Inc. | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
Unaudited | ||||||||||
Years Ended December 31, | ||||||||||
(in thousands) | 2012 | 2011 (a) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net income | $ | 431,689 | $ | 548,137 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Depreciation, depletion and amortization | 575,128 | 400,022 | ||||||||
Impairments of long-lived assets | - | 439 | ||||||||
Accretion of discount on asset retirement obligations | 4,187 | 2,444 | ||||||||
Exploration and abandonments, including dry holes | 19,913 | 6,417 | ||||||||
Non-cash compensation expense | 29,872 | 19,271 | ||||||||
Deferred income taxes | 241,819 | 249,883 | ||||||||
Loss on sale of assets, net | 372 | 1,139 | ||||||||
(Gain) loss on derivatives not designated as hedges | (127,443 | ) | 23,350 | |||||||
Discontinued operations | 49,011 | (35,084 | ) | |||||||
Other non-cash items | 12,420 | 3,075 | ||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||
Accounts receivable | (23,091 | ) | (117,561 | ) | ||||||
Prepaid costs and other | (8,200 | ) | (1,730 | ) | ||||||
Inventory | (1,587 | ) | 7,749 | |||||||
Accounts payable | 4,165 | (25,381 | ) | |||||||
Revenue payable | 16,012 | 84,850 | ||||||||
Other current liabilities | 13,211 | 32,438 | ||||||||
Net cash provided by operating activities | 1,237,478 | 1,199,458 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Capital expenditures on oil and natural gas properties | (2,717,283 | ) | (1,707,939 | ) | ||||||
Additions to other property and equipment | (56,588 | ) | (37,651 | ) | ||||||
Proceeds from the sale of assets | 492,497 | 196,420 | ||||||||
Funds held in escrow | 17,394 | (17,394 | ) | |||||||
Settlements received from (paid on) derivatives not designated as hedges | 23,536 | (84,854 | ) | |||||||
Net cash used in investing activities | (2,240,444 | ) | (1,651,418 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Proceeds from issuance of debt | 4,262,000 | 2,809,300 | ||||||||
Payments of debt | (3,241,500 | ) | (2,389,300 | ) | ||||||
Exercise of stock options | 8,123 | 7,801 | ||||||||
Excess tax benefit from stock-based compensation | 18,963 | 24,037 | ||||||||
Payments for loan costs | (23,926 | ) | (24,466 | ) | ||||||
Purchase of treasury stock | (3,190 | ) | (2,381 | ) | ||||||
Bank overdrafts | (14,966 | ) | 26,927 | |||||||
Net cash provided by financing activities | 1,005,504 | 451,918 | ||||||||
Net increase (decrease) in cash and cash equivalents | 2,538 | (42 | ) | |||||||
Cash and cash equivalents at beginning of period | 342 | 384 | ||||||||
Cash and cash equivalents at end of period | $ | 2,880 | $ | 342 | ||||||
SUPPLEMENTAL CASH FLOWS: | ||||||||||
Cash paid for interest and fees, net of $73 capitalized interest in 2011 | $ | 158,715 | $ | 77,921 | ||||||
Cash paid for income taxes | $ | 19,674 | $ | 22,768 | ||||||
(a) Retrospectively adjusted for presentation of discontinued operations. | ||||||||||
Concho Resources Inc.
Summary Production and Price Data
Unaudited
The following table sets forth summary information from our continuing and discontinued operations concerning our production and operating data for the periods indicated:
Three Months Ended | Years Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||
Production and operating data: | |||||||||||||||||||||||
Net production volumes: | |||||||||||||||||||||||
Oil (MBbl) | 4,950 | 4,074 | 18,003 | 14,692 | |||||||||||||||||||
Natural gas (MMcf) | 19,621 | 14,748 | 70,591 | 53,714 | |||||||||||||||||||
Total (MBoe) | 8,220 | 6,532 | 29,768 | 23,644 | |||||||||||||||||||
Average daily production volumes: | |||||||||||||||||||||||
Oil (Bbl) | 53,804 | 44,283 | 49,189 | 40,252 | |||||||||||||||||||
Natural gas (Mcf) | 213,272 | 160,304 | 192,872 | 147,162 | |||||||||||||||||||
Total (Boe) | 89,350 | 71,000 | 81,334 | 64,779 | |||||||||||||||||||
Average prices: | |||||||||||||||||||||||
Oil, without derivatives (Bbl) | $ | 81.28 | $ | 91.50 | $ | 88.01 | $ | 91.21 | |||||||||||||||
Oil, with derivatives (Bbl) (a) | $ | 87.50 | $ | 87.75 | $ | 89.25 | $ | 84.13 | |||||||||||||||
Natural gas, without derivatives (Mcf) | $ | 5.06 | $ | 7.16 | $ | 5.03 | $ | 7.62 | |||||||||||||||
Natural gas, with derivatives (Mcf) (a) | $ | 5.07 | $ | 7.73 | $ | 5.05 | $ | 8.10 | |||||||||||||||
Total, without derivatives (Boe) | $ | 61.02 | $ | 73.24 | $ | 65.16 | $ | 73.99 | |||||||||||||||
Total, with derivatives (Boe) (a) | $ | 64.80 | $ | 72.17 | $ | 65.95 | $ | 70.68 | |||||||||||||||
Operating costs and expenses per Boe: | |||||||||||||||||||||||
Lease operating expenses and workover costs | $ | 7.17 | $ | 8.03 | $ | 7.27 | $ | 7.07 | |||||||||||||||
Oil and natural gas taxes | $ | 5.19 | $ | 5.86 | $ | 5.43 | $ | 6.03 | |||||||||||||||
Depreciation, depletion and amortization | $ | 20.73 | $ | 18.91 | $ | 20.34 | $ | 18.21 | |||||||||||||||
General and administrative | $ | 4.51 | $ | 4.50 | $ | 4.40 | $ | 4.07 | |||||||||||||||
(a) |
Includes the effect of cash settlements received from (paid on) commodity derivatives not designated as hedges and reported in operating costs and expenses. The following table reflects the amounts of cash settlements received from (paid on) commodity derivatives not designated as hedges that were included in computing average prices with derivatives and reconciles to the amount in (gain) loss on derivatives not designated as hedges as reported in the statements of operations: | ||||||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Gain (loss) on derivatives not designated as hedges: | |||||||||||||||||||||||
Cash receipts from (payments on) oil derivatives | $ | 30,785 | $ | (15,290 | ) | $ | 22,411 | $ | (103,969 | ) | |||||||||||||
Cash receipts from natural gas derivatives | 236 | 8,271 | 1,125 | 25,739 | |||||||||||||||||||
Cash payments on interest rate derivatives | - | - | - | (6,624 | ) | ||||||||||||||||||
Unrealized mark-to-market gain (loss) on commodity and | |||||||||||||||||||||||
interest rate derivatives | (13,120 | ) | (313,293 | ) | 103,907 | 61,504 | |||||||||||||||||
Gain (loss) on derivatives not designated as hedges | $ | 17,901 | $ | (320,312 | ) | $ | 127,443 | $ | (23,350 | ) | |||||||||||||
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 gain (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. | |||||||||||||||||||||||
The following table sets forth summary information from our continuing operations concerning production and operating data for the periods indicated:
Three Months Ended | Years Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||||
Production and operating data: | |||||||||||||||||||||||
Net production volumes: | |||||||||||||||||||||||
Oil (MBbl) | 4,718 | 3,754 | 16,859 | 13,446 | |||||||||||||||||||
Natural gas (MMcf) | 18,462 | 14,041 | 66,613 | 51,118 | |||||||||||||||||||
Total (MBoe) | 7,795 | 6,094 | 27,961 | 21,966 | |||||||||||||||||||
Average daily production volumes: | |||||||||||||||||||||||
Oil (Bbl) | 51,283 | 40,804 | 46,063 | 36,838 | |||||||||||||||||||
Natural gas (Mcf) | 200,674 | 152,620 | 182,003 | 140,049 | |||||||||||||||||||
Total (Boe) | 84,728 | 66,241 | 76,397 | 60,180 | |||||||||||||||||||
Average prices: | |||||||||||||||||||||||
Oil, without derivatives (Bbl) | $ | 81.28 | $ | 91.64 | $ | 87.96 | $ | 91.34 | |||||||||||||||
Oil, with derivatives (Bbl) (a) | $ | 87.81 | $ | 87.56 | $ | 89.29 | $ | 83.61 | |||||||||||||||
Natural gas, without derivatives (Mcf) | $ | 5.09 | $ | 7.15 | $ | 5.06 | $ | 7.62 | |||||||||||||||
Natural gas, with derivatives (Mcf) (a) | $ | 5.11 | $ | 7.74 | $ | 5.07 | $ | 8.13 | |||||||||||||||
Total, without derivatives (Boe) | $ | 61.26 | $ | 72.91 | $ | 65.08 | $ | 73.65 | |||||||||||||||
Total, with derivatives (Boe) (a) | $ | 65.24 | $ | 71.76 | $ | 65.93 | $ | 70.09 | |||||||||||||||
Operating costs and expenses per Boe: | |||||||||||||||||||||||
Lease operating expenses and workover costs | $ | 6.64 | $ | 7.68 | $ | 6.90 | $ | 6.69 | |||||||||||||||
Oil and natural gas taxes | $ | 5.17 | $ | 5.80 | $ | 5.39 | $ | 5.96 | |||||||||||||||
Depreciation, depletion and amortization | $ | 21.35 | $ | 18.91 | $ | 20.56 | $ | 18.21 | |||||||||||||||
General and administrative | $ | 4.85 | $ | 4.92 | $ | 4.79 | $ | 4.48 | |||||||||||||||
(a) |
Includes the effect of cash settlements received from (paid on) commodity derivatives not designated as hedges and reported in operating costs and expenses. The following table reflects the amounts of cash settlements received from (paid on) commodity derivatives not designated as hedges that were included in computing average prices with derivatives and reconciles to the amount in (gain) loss on derivatives not designated as hedges as reported in the statements of operations: | ||||||||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||
Gain (loss) on derivatives not designated as hedges: | |||||||||||||||||||||||
Cash receipts from (payments on) oil derivatives | $ | 30,785 | $ | (15,290 | ) | $ | 22,411 | $ | (103,969 | ) | |||||||||||||
Cash receipts from natural gas derivatives | 236 | 8,271 | 1,125 | 25,739 | |||||||||||||||||||
Cash payments on interest rate derivatives | - | - | - | (6,624 | ) | ||||||||||||||||||
Unrealized mark-to-market gain (loss) on commodity and | |||||||||||||||||||||||
interest rate derivatives | (13,120 | ) | (313,293 | ) | 103,907 | 61,504 | |||||||||||||||||
Gain (loss) on derivatives not designated as hedges | $ | 17,901 | $ | (320,312 | ) | $ | 127,443 | $ | (23,350 | ) | |||||||||||||
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 gain (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.
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 and cash flows from operating activities to exclude certain non-cash items.
Adjusted Net Income
The following table provides a reconciliation of net income (GAAP) to adjusted net income (non-GAAP) for the periods indicated:
Three Months Ended | Years Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
(in thousands, except per share amounts) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||
Net income (loss) - as reported | $ | 75,287 | $ | (82,825 | ) | $ | 431,689 | $ | 548,137 | ||||||||||||
Adjustments for certain non-cash and unusual items: | |||||||||||||||||||||
Unrealized (gain) loss on commodity and interest rate derivatives | 13,120 | 313,293 | (103,907 | ) | (61,504 | ) | |||||||||||||||
Impairments of long-lived assets | - | 363 | - | 439 | |||||||||||||||||
Leasehold abandonments | 3,161 | 4,555 | 12,395 | 5,350 | |||||||||||||||||
Other settlements | 3,242 | - | 3,242 | - | |||||||||||||||||
Discontinued operations: | |||||||||||||||||||||
Leasehold abandonments | - | 385 | - | 385 | |||||||||||||||||
(Gain) loss on sale of assets | 18,704 | 6,007 | 18,704 | (135,943 | ) | ||||||||||||||||
Tax impact (a) | (13,953 | ) | (122,700 | ) | 26,505 | 73,258 | |||||||||||||||
Adjusted net income | $ | 99,561 | $ | 119,078 | $ | 388,628 | $ | 430,122 | |||||||||||||
Adjusted basic earnings per share: | |||||||||||||||||||||
Adjusted net income per share | $ | 0.96 | $ | 1.16 | $ | 3.77 | $ | 4.19 | |||||||||||||
Weighted average shares used in adjusted basic earnings per share | 103,494 | 102,771 | 103,190 | 102,581 | |||||||||||||||||
Adjusted diluted earnings per share: | |||||||||||||||||||||
Adjusted net income per share | $ | 0.96 | $ | 1.15 | $ | 3.74 | $ | 4.15 | |||||||||||||
Weighted average shares used in adjusted diluted earnings per share | 104,194 | 103,770 | 103,972 | 103,653 | |||||||||||||||||
(a) |
The tax impact is computed utilizing the Company's adjusted statutory effective federal and state income tax rates. The income tax rates for the three months ended December 31, 2012 and 2011 were approximately 36.5% and 37.8%, respectively, and 38.1% and 38.3% for the years ended December 31, 2012 and 2011, respectively. | ||||||||||||||||||||
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:
Years Ended December 31, | |||||||||
(in thousands) | 2012 | 2011 | |||||||
Cash flows from operating activities | $ | 1,237,478 | $ | 1,199,458 | |||||
Settlements received from (paid on) derivatives not designated as hedges (a) | 23,536 | (84,854 | ) | ||||||
Adjusted cash flows | $ | 1,261,014 | $ | 1,114,604 | |||||
(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 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, 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) bad debt expense, (7) unrealized gain on derivatives not designated as hedges, (8) (gain) loss on sale of assets, net, (9) interest expense, (10) federal and state income taxes on continuing operations and (11) similar items listed above that are presented in discontinued operations. EBITDAX is not a measure of net income or cash flows as determined by GAAP.
Our EBITDAX measure (which includes continuing and discontinued operations) provides additional information which may be used to better understand our operations. EBITDAX is one of several metrics 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 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. 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 to EBITDAX for the periods indicated:
Three Months Ended | Years Ended | ||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||||
Net income (loss) | $ | 75,287 | $ | (82,825 | ) | $ | 431,689 | $ | 548,137 | ||||||||||
Exploration and abandonments | 12,505 | 6,770 | 39,840 | 11,394 | |||||||||||||||
Depreciation, depletion and amortization | 166,453 | 115,249 | 575,128 | 400,022 | |||||||||||||||
Accretion of discount on asset retirement obligations | 1,361 | 669 | 4,187 | 2,444 | |||||||||||||||
Impairments of long-lived assets | - | 363 | - | 439 | |||||||||||||||
Non-cash stock-based compensation | 8,438 | 5,405 | 29,872 | 19,271 | |||||||||||||||
Unrealized (gain) loss on derivatives not designated as hedges | 13,120 | 313,293 | (103,907 | ) | (61,504 | ) | |||||||||||||
(Gain) loss on sale of assets, net | 87 | (1,990 | ) | 372 | 1,139 | ||||||||||||||
Interest expense | 53,632 | 34,159 | 182,705 | 118,360 | |||||||||||||||
Income tax expense (benefit) on continuing operations | 46,714 | (54,559 | ) | 251,041 | 261,800 | ||||||||||||||
Discontinued operations | 21,299 | 18,801 | 64,701 | (26,343 | ) | ||||||||||||||
EBITDAX | $ | 398,896 | $ | 355,335 | $ | 1,475,628 | $ | 1,275,159 | |||||||||||
Concho Resources Inc. | |||||||||||||||||
Costs Incurred | |||||||||||||||||
Unaudited | |||||||||||||||||
The table below provides the costs incurred for the periods indicated: |
|||||||||||||||||
Costs incurred for oil and natural gas producing activities (a) |
|||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||
Property acquisition costs: | |||||||||||||||||
Proved | $ | 2,103 | $ | 94,510 | $ | 857,836 | $ | 163,658 | |||||||||
Unproved | 29,932 | 243,549 | 441,042 | 361,321 | |||||||||||||
Exploration | 214,109 | 152,590 | 781,174 | 562,679 | |||||||||||||
Development | 166,665 | 176,934 | 741,206 | 744,481 | |||||||||||||
Total costs incurred for oil and natural gas properties | $ | 412,809 | $ | 667,583 | $ | 2,821,258 | $ | 1,832,139 | |||||||||
(a) | The costs incurred for oil and natural gas producing activities includes the following amounts of asset retirement obligations: | ||||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||||
Proved property acquisition costs | $ | - | $ | 379 | $ | 29,113 | $ | 527 | |||||||||
Exploration costs | 159 | 1,346 | 2,611 | 2,184 | |||||||||||||
Development costs | 7,234 | 9,730 | 15,536 | 11,824 | |||||||||||||
Total asset retirement obligations | $ | 7,393 | $ | 11,455 | $ | 47,260 | $ | 14,535 | |||||||||
Concho Resources Inc. | |||||||||||||||||||||||||
Derivatives Information | |||||||||||||||||||||||||
Unaudited | |||||||||||||||||||||||||
The tables below provide data associated with the Company’s derivatives at February 20, 2013 for the periods indicated: |
|||||||||||||||||||||||||
2013 | |||||||||||||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||||||||||||||||||
Oil Swaps: | |||||||||||||||||||||||||
Volume (Bbl) | 4,116,000 | 3,801,000 | 3,446,000 | 3,188,000 | 14,551,000 | ||||||||||||||||||||
NYMEX price (Bbl) (a) | $ | 95.84 | $ | 95.84 | $ | 95.57 | $ | 95.34 | $ | 95.67 | |||||||||||||||
Basis Swap (b): | |||||||||||||||||||||||||
Volume (Bbl) | - | 3,003,000 | 3,036,000 | 2,944,000 | 8,983,000 | ||||||||||||||||||||
Price (Bbl) | $ | - | $ | (1.23 | ) | $ | (1.22 | ) | $ | (1.23 | ) | $ | (1.23 | ) | |||||||||||
2014 | 2015 | 2016 | 2017 | ||||||||||||||||||||||
Oil Swaps: | |||||||||||||||||||||||||
Volume (Bbl) | 10,928,000 | 1,076,000 | 429,000 | 168,000 | |||||||||||||||||||||
NYMEX price (Bbl) (a) | $ | 91.57 | $ | 86.69 | $ | 88.31 | $ | 87.00 | |||||||||||||||||
(a) | The index prices for the oil contracts are based on the NYMEX – West Texas Intermediate (“WTI”) monthly average futures price. | ||||||||||||||||||||||||
(b) | The basis differential price is between the Midland – WTI and the Cushing – WTI. |
CONTACT:
Concho Resources Inc.
Price Moncrief, 432-683-7443
Vice
President of Capital Markets and Strategy