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Independent oil and gas company Concho Resources reported worse than expected second quarter earnings Wednesday. $CXO is the biggest Permian Basin pure-play company in terms of unconventional oil and gas production after its takeover of RSP Permian..

Concho Acerage 2019

Concho Resources Inc NYSE: CXO Reported Earnings After Close Wednesday

$0.69 Missed $0.74 EPS AND $1.13B Beat $1.12 billion Revenue Forecast

Earnings

Concho Resources (CXO) reported EPS of 69 cents on revenue of $1.13 billion. Total production jumped 43.6% to 328,681 barrels of oil equivalent per day. However analysts had expected EPS of 74 cents, with revenue is seen rising 18% to $1.12 billion

Concho Resources Inc NYSE: CXO

Market Reaction After hours $88.25 −9.43 (-9.65%)

Highlights

  • Total production jumped 43.6% to 328,681 barrels of oil equivalent per day.
  • Concho is currently running 18 rigs, down from Q2's average of 26 rigs, which is down from 33 in Q1.
  • The company is currently utilizing seven completion crews, down from eight crews three months ago.
  • CXO's average realized price for oil and natural gas, excluding the effect of commodity derivatives, was $56.02/bbl and $1.16/Mcf, respectively, vs. $60.98/bbl and $3.19/Mcf, respectively, for the year-ago quarter.

Outlook:

"Moderating activity and building an inventory of drilled but uncompleted wells keeps us on track with our full year capital plan, preserves our balance sheet and positions the company for an inflection in free cash flow and momentum heading into 2020," said Chairman and CEO Tim Leach.

  • Due to weak natural gas and natural gas liquids pricing, CXO cuts its full-year natural gas price realization guidance to a range of 60%-80% of Nymex Henry Hub and expects to trend towards the low end of the range in Q3. 
  • With fewer new wells planned to come online, CXO expects to produce 316K-322K boe/day in Q3.
  • CXO also says it is forming a joint venture with Solaris Water Midstream, in which Solaris will manage CXO's produced water gathering, transportation, disposal and recycling for a 1.6M-acre area in New Mexico.

Concho Resources is currently the largest shale producer in the Permian Basin after finalizing its $9.5 billion deal to buy RSP Permian last year

- Acquired and integrated RSP Permian, enhancing the Company’s scale advantage in the Permian Basin. 

About Concho Resources

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 in the United States. Concho Resources has become the biggest Permian Basin pure-play company in terms of unconventional oil and gas production after it completed its takeover of RSP Permian in July. 2018.

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