Concho Resources Inc. (CXO) filed Quarterly Report for the period ended 2009-09-30.
Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition development exploitation and exploration of oil and natural gas properties. The Company's conventional operations are primarily focused in the Permian Basin of Southeast New Mexico and West Texas. In addition the Company is involved in a number of unconventional emerging resource plays. Concho Resources Inc. has a market cap of $3.54 billion; its shares were traded at around $41.37 with a P/E ratio of 51.7 and P/S ratio of 6.7.
Highlight of Business Operations:
Further demonstrating the continuing volatility, the NYMEX oil price and NYMEX natural gas price reached highs and lows of $81.37 and $69.57 per Bbl and $5.16 and $4.29 per MMBtu, respectively, during the period from October 1, 2009 to November 2, 2009. At November 2, 2009, the NYMEX oil price and NYMEX natural gas price were $78.13 per Bbl and $4.82 per MMBtu, respectively.
Pursuant to the terms of our credit facility, our borrowing base was to be reduced by $0.30 for every dollar of new indebtedness evidenced by unsecured senior notes or unsecured senior subordinated notes that we issue. As a result of this provision, the borrowing base under our credit facility would have been reduced by $90 million due to our issuance and sale of the senior notes. However, we received waivers of this provision from lenders representing approximately 95.4% of our borrowing base, resulting in an actual reduction of approximately $4.1 million in our borrowing base, which reduced our borrowing base to $955.9 million.
In January 2009, in light of the significant drop in commodity prices during the fourth quarter of 2008, we took actions to reduce our activities to a level that would allow us to fund our capital expenditures substantially within our cash flow, which at the time resulted in estimated annual capital expenditures of approximately $300 million for 2009. As a result of improved commodity prices, in particular oil prices, we recently increased our estimated capital expenditures for 2009 to approximately $400 million, which we believe we can substantially fund within our cash flow. We will continue to monitor our capital expenditures, at least on a quarterly basis, in relation to our cash flow and expect to adjust our activity and capital spending level based on changes in commodity prices and the cost of goods and services and other considerations. For clarity purposes we view “our” cash flow as our cash flow from operations before changes in working capital, and we include the cash payments/receipts on our derivatives that are included in our investing activities.
During the first nine months of 2009, we incurred approximately $305.5 million of capital expenditures (excluding the effects of asset retirement obligations and adjustments to the acquisition of the Henry Properties). These costs were in line with our cash flows (as described in the previous paragraph) during the period. For the balance of 2009, we expect to use the remaining approximately $94.5 million of our planned capital expenditures to pursue increased opportunities in our core operating areas along with targeted opportunities in our emerging plays.
On July 31, 2008, we closed the acquisition of Henry Petroleum LP and certain entities affiliated with Henry Petroleum LP (the “Henry Entities”) and additional non-operated interests in oil and natural gas properties from persons affiliated with the Henry Entities. In August 2008 and September 2008, we acquired additional non-operated interests in oil and natural gas properties from persons affiliated with the Henry Entities. The assets acquired in the Henry Entities acquisition, including the additional non-operated interests, are referred to as the “Henry Properties.” We paid $583.7 million in cash for the Henry Properties acquisition, which was funded with borrowings under our credit facility, which was amended and restated on July 31, 2008, and net proceeds of approximately $242.4 million from our private placement of 8,302,894 shares of our common stock.
Oil and natural gas revenues. Revenue from oil and natural gas operations was $153.5 million for the three months ended September 30, 2009, a decrease of $17.0 million (10 percent) from $170.5 million for the three months ended September 30, 2008. This decrease was primarily due to substantial decreases in realized oil and natural gas prices, offset by increased production (i) as a result of the acquisition of the Henry Properties on July 31, 2008 and (ii) due to successful drilling efforts during 2008 and 2009. Specifically, the:
CXO is in the portfolios of Ron Baron of Baron Funds.
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