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Concho Resources Inc. Reports Operating Results (10-K)

February 25, 2011 | About:
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10qk

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Concho Resources Inc. (CXO) filed Annual Report for the period ended 2010-12-31.

Concho Resources Inc. has a market cap of $11.01 billion; its shares were traded at around $107.53 with a P/E ratio of 41 and P/S ratio of 20.2. Hedge Fund Gurus that owns CXO: Eric Mindich of Eton Park Capital Management, L.P., George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns CXO: RS Investment Management, Ron Baron of Baron Funds, John Keeley of Keeley Fund Management, Jeremy Grantham of GMO LLC, Pioneer Investments, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

In July 2010, we entered into an asset purchase agreement to acquire certain of the oil and natural gas leases, interests, properties and related assets owned by Marbob Energy Corporation and its affiliates (collectively, Marbob) for aggregate consideration of (i) cash in the amount of $1.45 billion, (ii) the issuance to Marbob of a $150 million 8% unsecured senior note due 2018 and (iii) the issuance to Marbob of approximately 1.1 million shares of our common stock, subject to purchase price adjustments, which included downward purchase price adjustments based on the exercise of third parties of contractual preferential purchase rights in properties to be acquired from Marbob (the Marbob Acquisition).

On October 7, 2010, we closed the Marbob Acquisition. At closing, we paid approximately $1.1 billion in cash plus the unsecured senior note and common stock described above for a total purchase price of approximately $1.4 billion. The total purchase price as originally announced was reduced due to third party contractual preferential purchase rights in the Marbob properties. Certain of the third parties contractual preferential purchase rights became subject to litigation, as discussed below.

We funded the cash consideration in the Marbob Acquisition with (a) borrowings under our credit facility and (b) net proceeds of $292.7 million from a private placement of approximately 6.6 million shares of our common stock at a price of $45.30 per share that closed on October 7, 2010.

On July 31, 2008, we closed our acquisition of Henry Petroleum LP and certain entities affiliated with Henry Petroleum LP (which we refer to collectively as the Henry Entities), together with certain 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 (known as along-side interests). The assets acquired in the acquisition of the Henry Entities and the along-side interests (which we refer to as the Henry Properties) contained approximately 30.1 MMBoe of proved reserves at closing. The Henry Properties are primarily located in the Wolfberry play of the Permian Basin. We paid approximately $583.7 million in net cash for the Henry Properties, which was funded with (i) borrowings under our credit facility and (ii) net proceeds of approximately $242.4 million from our private placement of 8.3 million shares of our common stock. The results of operations prior to August 2008 do not include results from the Henry Properties acquisition.

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