Concho Resources Inc. Reports First Quarter 2013 Financial and Operating Results

  Concho Resources Inc. Reports First Quarter 2013 Financial and Operating
  Results

Business Wire

MIDLAND, Texas -- May 1, 2013

Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today reported
financial and operating results for the three months ended March 31, 2013.
Highlights for the three months ended March 31, 2013 include:

  *Production from continuing operations of 7.7 million barrels of oil
    equivalent (“MMBoe”) for the first quarter of 2013, a 19% increase over
    the first quarter of 2012
  *Net income of $30.1 million, or $0.29 per diluted share, for the first
    quarter of 2013, as compared to net income of $31.1 million, or $0.30 per
    diluted share, for the first quarter of 2012
  *Adjusted net income^1 (non-GAAP) of $60.3 million, or $0.58 per diluted
    share, for the first quarter of 2013, as compared to $108.2 million, or
    $1.04 per diluted share, for the first quarter of 2012
  *EBITDAX^2 (non-GAAP) of $340.7 million for the first quarter of 2013

^1 Adjusted net income (non-GAAP) is comparable to securities analyst
estimates. For an explanation of how the Company calculates and uses 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 the Company calculates and uses EBITDAX
(non-GAAP) and a reconciliation of net income (GAAP) to EBITDAX (non-GAAP),
please see "Supplemental Non-GAAP Financial Measures" below.

First Quarter 2013 Financial Results

Production from continuing operations for the first quarter of 2013 totaled
7.7 MMBoe (4.8 million barrels of oil (“MMBbls”) and 17.8 billion cubic feet
of natural gas (“Bcf”)), an increase of 19% as compared to 6.5 MMBoe (3.9
MMBbls and 15.5 Bcf) produced in the first quarter of 2012.

Tim Leach, Concho's Chairman, CEO and President commented, “I am pleased with
the operational performance of our business despite the unprecedented widening
of the Permian oil basis differential during the quarter. Through the first
three months of the year, I believe we are on track to deliver on our annual
production guidance and capital budget. We continue to build upon our
horizontal success in the Delaware Basin, where production increased 10% over
the previous quarter. The Delaware Basin also contributed to overall oil
growth of 3% over the previous quarter and will be a key source of oil growth
for years to come.”

For the first quarter of 2013, the Company reported net income of $30.1
million, or $0.29 per diluted share, as compared to net income of $31.1
million, or $0.30 per diluted share, for the first quarter of 2012. The
Company’s first quarter 2013 results were impacted by several non-cash items
including: (1) a $65.0 million unrealized mark-to-market loss on commodity
derivatives; (2) $4.4 million of leasehold abandonments; and (3) a $20.4
million gain on sale of assets related to estimates of post-closing
adjustments on the December 2012 divestment (included in discontinued
operations). Excluding these items and their tax effects, first quarter 2013
adjusted net income (non-GAAP) was $60.3 million, or $0.58 per diluted share.
Excluding similar non-cash items and their tax impact, adjusted net income
(non-GAAP) for the first quarter of 2012 was $108.2 million, or $1.04 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 $340.7 million in the first quarter of 2013, a decrease of 6% from
$362.1 million reported in the first quarter of 2012. 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 the first quarter of
2013 decreased 0.3% when compared to the first quarter of 2012. This decrease
was attributable to a 16% decrease ($15.61 per barrel) in the Company’s
unhedged realized oil price and a 23% decrease ($1.35 per Mcf) in the
Company’s unhedged realized natural gas price, which was partially offset by a
19% increase in production from continuing operations.

The Company’s realized oil price for the first quarter of 2013 and fourth
quarter of 2012 was adversely affected by the expansion of the
Midland-to-Cushing basis differential. The Midland-to-Cushing Basis
differential was $7.80 per barrel and $3.57 per barrel for the first quarter
of 2013 and fourth quarter of 2012, respectively, compared to $1.48 per barrel
in the first quarter of 2012. The Midland-to-Cushing Basis differential for
April and May of 2013 was $0.38 and $0.17 per barrel, respectively. The
decrease in realized natural gas prices between comparable periods is
primarily due to the decrease in the value of the natural gas liquids included
in the Company’s natural gas revenues despite an increase between comparable
periods in the NYMEX natural gas price.

Oil and natural gas production expense from continuing operations for the
first quarter of 2013, including oil and natural gas taxes, totaled $100.8
million, or $13.05 per barrel of oil equivalent (“Boe”), a 4% increase per Boe
from the first quarter of 2012. This increase was due primarily to higher
lease operating expenses and workover costs, which averaged $7.74 per Boe in
the first quarter of 2013 as compared to $6.58 per Boe in the first quarter of
2012, which was partially offset by lower oil and natural gas taxes, which
averaged $5.31 per Boe in the first quarter of 2013 as compared to $5.96 per
Boe in the first quarter of 2012. The decrease in oil and natural gas taxes
per Boe in the first quarter of 2013 as compared to the first quarter of 2012
was primarily due to lower realized oil and natural gas prices.

Depreciation, depletion and amortization expense from continuing operations
for the first quarter of 2013 totaled $168.4 million, or $21.79 per Boe, an
11% increase per Boe from the first quarter of 2012.

General and administrative expense (“G&A”) from continuing operations for the
first quarter of 2013 totaled $43.3 million, or $5.60 per Boe, as compared to
$28.0 million, or $4.30 per Boe, in the first quarter of 2012. Cash G&A for
the first quarter of 2013 totaled $36.5 million and stock-based compensation
(non-cash) totaled $6.8 million. The increase in per Boe expense for the first
quarter of 2013 over the first quarter of 2012 was primarily due to a 55%
increase in absolute G&A expenses, including in 2013 an adjustment to the
employee bonus accrual for services rendered in 2012 of approximately $5.9
million, or $0.76 per Boe, and was partially offset by a 19% increase in
production from continuing operations.

The Company’s cash flow from operating activities (GAAP) was $219.7 million
for the first three months of 2013, as compared to $345.9 million for the
first three months of 2012, a decrease of 36%. Adjusted cash flows (non-GAAP),
which are cash flows from operating activities (GAAP) adjusted for settlements
paid on or received from derivatives not designated as hedges, were $225.7
million for the first three months of 2013, as compared to $314.0 million for
the first three months of 2012, a decrease of 28%. 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 the first quarter of 2013, the Company collected net cash receipts on
derivatives not designated as hedges of $6.0 million and the non-cash
unrealized mark-to-market loss on derivatives not designated as hedges was
$65.0 million. In comparison, the Company made net cash payments of $31.9
million on derivatives not designated as hedges and reported a $126.2 million
non-cash unrealized mark-to-market loss on derivatives not designated as
hedges in the first quarter of 2012. 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 Price Data” and
“Derivatives Information” tables at the end of this press release.

Operations

For the quarter ended March 31, 2013, the Company commenced the drilling of or
participated in a total of 190 gross wells (143 operated). The company had a
100% success rate on the 164 wells that were completed in the first quarter of
2013.

The table below summarizes the Company’s gross drilling activities by core
area for the first quarter of 2013:


1Q 2013
                   Total Wells   Operated Wells   Completed Wells
                                                        
New Mexico Shelf     64              31                 46
Texas Permian        80              80                 79
Delaware Basin       46              32                 39
Total                190             143                164
                                                        

Currently, the Company is operating 31 drilling rigs; 5 of these rigs are
drilling in the New Mexico Shelf, 14 are drilling in the Texas Permian and 12
are drilling in the Delaware Basin. Of the Company’s 32 operated rigs, 17 are
drilling horizontally, including 3 in the New Mexico shelf, 2 in the Texas
Permian and 12 in the Delaware Basin.

Delaware Basin

Of the 46 wells drilled in the Delaware Basin,  39 were Bone Spring sands
wells, 2 were Avalon shale wells and 5 were Wolfcamp shale wells. The
Company’s net production in the first quarter of 2013 from horizontal Delaware
Basin wells averaged approximately 23,200 Boepd, an 87% increase over the
first quarter of 2012 and an increase of 10% over the fourth quarter of 2012.

Credit Facility

At March 31, 2013, the Company had borrowings outstanding under the credit
facility of $467.4 million, and availability under the credit facility was
approximately $2.0 billion.

Derivative Update

The Company maintains an active crude oil hedging program and recently
initiated hedge positions on natural gas. In addition, Concho has increased
its crude oil basis swaps that limit the Company’s exposure to the
Midland-to-Cushing basis differential. Concho has hedged the crude oil basis
differential from (1) April 2013 to December 2013 at an average price of $1.13
per barrel and (2) January 2014 to June 2014 at an average price of $0.50 per
barrel. Please see the “Derivatives Information” table at the end of this
press release for more detailed information about the Company’s current
derivative positions.

Guidance Update

Assuming (1) natural gas prices for the remainder of 2013 range from $4.00 per
Mcf to $4.75 per Mcf and (2) the value of the natural gas liquids barrel
embedded in the Company’s natural gas revenues remains relatively flat to the
first quarter of 2013, natural gas differential to the NYMEX natural gas price
should range from 120% to 140% compared to previous guidance of 140% to 160%.

Conference Call Information

The Company will host a conference call on Thursday, May 2, 2013 at 9:00 a.m.
Central Time to discuss the first quarter 2013 financial and operating
results. Interested parties may listen to the conference call via the
Company’s website at www.concho.com or by dialing (877) 474-9506 (passcode:
10393063). A replay of the conference call will be available on the Company’s
website or by dialing (888) 286-8010 (passcode: 16568973).

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
timing and estimated proceeds of the closing 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 filing and risks relating to declines in the prices
Concho receives for the Company’s 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 the Company’s capital resources
and liquidity; risks related to the concentration of the Company’s operations
in the Permian Basin; the results of the Company’s hedging program; weather;
litigation; shortages of oilfield equipment, services and qualified personnel
and increases in costs for such equipment, services and personnel;
uncertainties about the Company’s ability to replace reserves and economically
develop the Company’s 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

                                                            
                                                March 31,        December 31,
(in thousands, except share and per share      2013           2012
amounts)
Assets
Current assets:
Cash and cash equivalents                      $ 974            $ 2,880
Accounts receivable, net of allowance for
doubtful accounts:
Oil and natural gas                              195,524          198,053
Joint operations and other                       209,057          202,738
Derivative instruments                           7,201            35,942
Deferred income taxes                            16,420           -
Prepaid costs and other                         17,226         19,269     
Total current assets                            446,402        458,882    
Property and equipment:
Oil and natural gas properties, successful       9,907,856        9,455,599
efforts method
Accumulated depletion and depreciation          (1,729,399 )    (1,565,316 )
Total oil and natural gas properties, net        8,178,457        7,890,283
Other property and equipment, net               103,578        103,141    
Total property and equipment, net               8,282,035      7,993,424  
Deferred loan costs, net                         74,355           77,609
Intangible asset - operating rights, net         29,711           30,076
Inventory                                        20,604           20,611
Noncurrent derivative instruments                2,908            2,769
Other assets                                    7,383          6,066      
Total assets                                   $ 8,863,398     $ 8,589,437  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable:
Trade                                          $ 7,333          $ 31,144
Related parties                                  629              185
Bank overdrafts                                  39,000           24,275
Revenue payable                                  133,389          162,073
Accrued and prepaid drilling costs               371,976          351,919
Derivative instruments                           34,029           1,584
Deferred income taxes                            -                8,566
Other current liabilities                       183,432        160,340    
Total current liabilities                       769,788        740,086    
Long-term debt                                   3,264,626        3,101,103
Deferred income taxes                            1,220,440        1,186,621
Noncurrent derivative instruments                16,035           12,049
Asset retirement obligations and other           87,026           83,382
long-term liabilities
Stockholders’ equity:
Common stock, $0.001 par value; 300,000,000
authorized; 104,848,854 and 104,668,427          105              105
shares issued at March 31, 2013 and December
31, 2012, respectively
Additional paid-in capital                       1,994,817        1,982,714
Retained earnings                                1,520,656        1,490,563
Treasury stock, at cost; 118,591 and 86,861
shares at March 31, 2013 and December 31,       (10,095    )    (7,186     )
2012, respectively
Total stockholders’ equity                      3,505,483      3,466,196  
Total liabilities and stockholders’ equity     $ 8,863,398     $ 8,589,437  
                                                                             


Concho Resources Inc.
Consolidated Statements of Operations
Unaudited

                                                   
                                                     Three Months Ended
                                                     March 31,
(in thousands, except per share amounts)             2013        2012
                                                                 
Operating revenues:
Oil sales                                            $ 393,208     $ 383,963
Natural gas sales                                     78,919      89,821  
Total operating revenues                              472,127     473,784 
Operating costs and expenses:
Oil and natural gas production                         100,845       81,577
Exploration and abandonments                           18,407        5,979
Depreciation, depletion and amortization               168,420       127,263
Accretion of discount on asset retirement              1,394         841
obligations
General and administrative (including non-cash
stock-based compensation of $6,767 and $6,128 for      43,293        27,979
the three months ended March 31, 2013 and 2012,
respectively)
Loss on derivatives not designated as hedges          59,017      158,093 
Total operating costs and expenses                    391,376     401,732 
Income from operations                                80,751      72,052  
Other income (expense):
Interest expense                                       (52,106 )     (35,837 )
Other, net                                            (109    )    (1,268  )
Total other expense                                   (52,215 )    (37,105 )
Income from continuing operations before income        28,536        34,947
taxes
Income tax expense                                    (10,977 )    (13,615 )
Income from continuing operations                      17,559        21,332
Income from discontinued operations, net of tax       12,534      9,785   
Net income                                           $ 30,093     $ 31,117  
Basic earnings per share:
Income from continuing operations                    $ 0.17        $ 0.21
Income from discontinued operations, net of tax       0.12        0.09    
Net income                                           $ 0.29       $ 0.30    
Weighted average shares used in basic earnings per    103,631     102,854 
share
Diluted earnings per share:
Income from continuing operations                    $ 0.17        $ 0.21
Income from discontinued operations, net of tax       0.12        0.09    
Net income                                           $ 0.29       $ 0.30    
Weighted average shares used in diluted earnings      104,345     103,770 
per share
                                                                     


Concho Resources Inc.
Consolidated Statements of Cash Flows
Unaudited
                                                
                                                  Three Months Ended
                                                  March 31,
(in thousands)                                   2013          2012
CASH FLOWS FROM OPERATING ACTIVITIES:                          
Net income                                        $ 30,093       $ 31,117
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization            168,420        127,263
Accretion of discount on asset retirement           1,394          841
obligations
Exploration and abandonments, including dry         4,478          3,102
holes
Non-cash compensation expense                       6,767          6,128
Deferred income taxes                               11,500         12,007
Loss on sale of assets, net                         5              895
Loss on derivatives not designated as hedges        59,017         158,093
Discontinued operations                             (19,754  )     9,315
Other non-cash items                                3,376          2,818
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Accounts receivable                                 12,608         (19,102   )
Prepaid costs and other                             726            (1,494    )
Inventory                                           (21      )     6,328
Accounts payable                                    (27,679  )     (11,727   )
Revenue payable                                     (15,636  )     31,722
Other current liabilities                          (15,623  )    (11,401   )
Net cash provided by operating activities          219,671      345,905   
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on oil and natural gas         (419,766 )     (541,665  )
properties
Additions to other property and equipment           (4,244   )     (20,234   )
Proceeds from the sale of assets                    15,865         669
Funds held in escrow                                -              17,394
Settlements received from (paid on) derivatives    6,016        (31,911   )
not designated as hedges
Net cash used in investing activities              (402,129 )    (575,747  )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                      626,700        1,180,000
Payments of debt                                    (463,300 )     (978,500  )
Exercise of stock options                           2,059          2,996
Excess tax benefit from stock-based                 3,277          6,781
compensation
Payments for loan costs                             -              (10,050   )
Purchase of treasury stock                          (2,909   )     (2,038    )
Bank overdrafts                                    14,725       30,917    
Net cash provided by financing activities          180,552      230,106   
Net increase (decrease) in cash and cash            (1,906   )     264
equivalents
Cash and cash equivalents at beginning of          2,880        342       
period
Cash and cash equivalents at end of period        $ 974         $ 606       
SUPPLEMENTAL CASH FLOWS:
Cash paid for interest and fees                   $ 43,988       $ 51,647
Cash paid for income taxes                        $ 3,145        $ 5,455
                                                                             

                            Concho Resources Inc.
                      Summary Production and Price Data
                                  Unaudited

The following table sets forth summary information from the Company’s
continuing and discontinued operations concerning production and operating
data for the periods indicated:

                                Three Months Ended
                                 March 31,
                              2013                     2012
                                                      
Production and operating
data from continuing and
discontinued operations:
Net production volumes:
      Oil (MBbl)                      4,767                     4,214
      Natural gas (MMcf)              17,798                    16,229
      Total (MBoe)                    7,733                     6,919
                                                           
Average daily production
volumes:
      Oil (Bbl)                       52,967                    46,308
      Natural gas (Mcf)               197,756                   178,341
      Total (Boe)                     85,926                    76,032
                                                           
Average prices:
      Oil, without               $    82.49                $    98.16
      derivatives (Bbl)
      Oil, with derivatives      $    83.75                $    90.52
      (Bbl) (a)
      Natural gas, without       $    4.43                 $    5.80
      derivatives (Mcf)
      Natural gas, with          $    4.43                 $    5.82
      derivatives (Mcf) (a)
      Total, without             $    61.05                $    73.39
      derivatives (Boe)
      Total, with                $    61.83                $    68.78
      derivatives (Boe) (a)
                                                           
Operating costs and
expenses per Boe:
      Lease operating
      expenses and workover      $    7.74                 $    7.28
      costs
      Oil and natural gas        $    5.31                 $    6.04
      taxes
      Depreciation,
      depletion and              $    21.79                $    19.64
      amortization
      General and                $    5.60                 $    3.96
      administrative
                                                      
                                                           
      Includes the effect of cash settlements received from (paid on)
(a)   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 loss on derivatives not
      designated as hedges as reported in the statements of operations:
                                                       
                                 Three Months Ended
                                 March 31,
      (in thousands)            2013                     2012
                                                           
      Loss on derivatives
      not designated as
      hedges:
      Cash receipts from
      (payments on) oil          $    6,016                $    (32,196    )
      derivatives
      Cash receipts from
      natural gas                     -                         285
      derivatives
      Unrealized
      mark-to-market loss            (65,033    )             (126,182   )
      on commodity
      derivatives
      Loss on derivatives
      not designated as          $    (59,017    )         $    (158,093   )
      hedges
                                                       
                                                           
      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.

The following table sets forth summary information from the Company’s
continuing operations concerning production and operating data for the periods
indicated:


                                    Three Months Ended
                                        March 31,
                                  2013                 2012
                                                          
Production and operating data from
continuing operations:
  Net production volumes:
      Oil (MBbl)                            4,767                 3,914
      Natural gas (MMcf)                    17,798                15,539
      Total (MBoe)                          7,733                 6,504
                                                                  
  Average daily production volumes:
      Oil (Bbl)                             52,967                43,011
      Natural gas (Mcf)                     197,756               170,758
      Total (Boe)                           85,926                71,471
                                                                  
  Average prices:
      Oil, without derivatives          $   82.49             $   98.10
      (Bbl)
      Oil, with derivatives (Bbl)       $   83.75             $   89.87
      (a)
      Natural gas, without              $   4.43              $   5.78
      derivatives (Mcf)
      Natural gas, with derivatives     $   4.43              $   5.80
      (Mcf) (a)
      Total, without derivatives        $   61.05             $   72.85
      (Boe)
      Total, with derivatives (Boe)     $   61.83             $   67.94
      (a)
                                                                  
  Operating costs and expenses per
  Boe:
      Lease operating expenses and      $   7.74              $   6.58
      workover costs
      Oil and natural gas taxes         $   5.31              $   5.96
      Depreciation, depletion and       $   21.79             $   19.57
      amortization
      General and administrative        $   5.60              $   4.30
                                                        
                                                                  
      Includes the effect of cash settlements received from (paid on)
  (a) 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 loss on derivatives not
      designated as hedges as reported in the statements of operations:
                                                          
                                        Three Months Ended
                                        March 31,
      (in thousands)                   2013                2012          
                                                                  
      Loss on derivatives not
      designated as hedges:
            Cash receipts from
            (payments on) oil           $   6,016             $   (32,196   )
            derivatives
            Cash receipts from              -                     285
            natural gas derivatives
            Unrealized
            mark-to-market loss on         (65,033   )          (126,182  )
            commodity derivatives
            Loss on derivatives not     $   (59,017   )       $   (158,093  )
            designated as hedges
                                                          
                                                                  
      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.
                   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 three months March 31, 2013 and 2012.

                                                       
                                           Three Months Ended
                                           March 31,
(in thousands, except per share          2013                2012
amounts)
                                                                 
Net income - as reported              $    30,093            $   31,117
                                                                 
Adjustments for certain non-cash
items:
    Unrealized loss on commodity           65,033                126,182
    derivatives
    Leasehold abandonments                 4,387                 120
    Discontinued operations:
             Gain on sale of               (20,363   )           -
             assets
    Tax impact (a)                        (18,887   )          (49,258   )
Adjusted net income                   $    60,263           $   108,161   
                                                                 
Adjusted basic earnings per
share:
    Adjusted net income per           $    0.58              $   1.05
    share
    Weighted average shares used
    in adjusted basic earnings             103,631               102,854
    per share
                                                                 
Adjusted diluted earnings per
share:
    Adjusted net income per           $    0.58              $   1.04
    share
    Weighted average shares used
    in adjusted diluted earnings           104,345               103,770
    per share
                                                         
                                                                 
(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 March 31, 2013 and 2012 were 38.5% and 39.0%,
    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 three months ended
March 31, 2013 and 2012.

                                                          
                                                       Three Months Ended
                                                       March 31,
(in thousands)                                        2013       2012
                                                                     
Cash flows from operating activities                   $ 219,671   $ 345,905
  Settlements received from (paid on) derivatives       6,016      (31,911 )
  not designated as hedges (a)
Adjusted cash flows                                    $ 225,687   $ 313,994 
                                                         
                                                                     
(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.

The Company defines EBITDAX as net income, plus (1) exploration and
abandonments expense, (2) depreciation, depletion and amortization expense,
(3) accretion expense, (4) non-cash stock-based compensation expense, (5)
unrealized (gain) loss on derivatives not designated as hedges, (6) loss on
sale of assets, (7) interest expense, (8) federal and state income taxes on
continuing operations and (9) 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.

The Company’s EBITDAX measure (which includes continuing and discontinued
operations) 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, 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 to EBITDAX for the
three months ended March 31, 2013 and 2012:

                                                                
                                                       Three Months Ended
                                                       March 31,
(in thousands)                                        2013         2012
                                                                       
Net income                                             $ 30,093      $ 31,117
  Exploration and abandonments                           18,407        5,979
  Depreciation, depletion and amortization               168,420       127,263
  Accretion of discount on asset retirement              1,394         841
  obligations
  Non-cash stock-based compensation                      6,767         6,128
  Unrealized loss on derivatives not designated as       65,033        126,182
  hedges
  Loss of sale of assets, net                            5             895
  Interest expense                                       52,106        35,837
  Income tax expense from continuing operations          10,977        13,615
  Discontinued operations                               (12,534 )    14,255
EBITDAX                                                $ 340,668    $ 362,112
                                                                       


Concho Resources Inc.
Costs Incurred
Unaudited

The table below provides the costs incurred for the three months ended March
31, 2013 and 2012.

Costs incurred for oil and natural gas producing activities (a)
                                                          
                                            Three Months Ended
                                            March 31,
(in thousands)                             2013                2012
                                                                     
Property acquisition costs:
    Proved                                  $    1,885           $   160,047
    Unproved                                     27,896              39,356
Exploration                                      266,690             184,483
Development                                     174,722            194,731
    Total costs incurred for oil and        $    471,193         $   578,617
    natural gas properties
                                                             
                                                                     
(a) The costs incurred for oil and natural gas producing activities includes
    the following amounts of asset retirement obligations:
                                                              
                                                                     
                                            Three Months Ended
                                            March 31,
    (in thousands)                         2013                2012
                                                                     
    Proved property acquisition costs       $    161             $   -
    Exploration costs                            734                 2,050
    Development costs                           1,530              798
                Total asset retirement      $    2,425           $   2,848
                obligations
                                                                     


Concho Resources Inc.
Derivatives Information
Unaudited

The table below provides data associated with the Company’s derivatives at May 1, 2013.

               2013                                                                                                
                Second         Third Quarter  Fourth         Total              2014           2015          2016        2017
                Quarter                         Quarter
                                                                                                                              
Oil Swaps: (a)
      Volume      4,191,000       3,963,000       3,608,000       11,762,000       12,262,000       3,316,000     429,000     168,000
      (Bbl)
                                                                                                                              
      Price     $ 95.53         $ 95.17         $ 95.01         $ 95.25          $ 91.33          $ 87.19       $ 88.31     $ 87.00
      (Bbl)
                                                                                                                              
Oil Basis Swaps: (b)
      Volume      3,608,000       3,680,000       3,404,000       10,692,000       1,810,000        -             -           -
      (Bbl)
                                                                                                                              
      Price     $ (1.16     )   $ (1.11     )   $ (1.12     )   $ (1.13      )   $ (0.50      )   $ -           $ -         $ -
      (Bbl)
                                                                                                                              
Natural Gas Swaps: (c)
      Volume      2,280,000       6,992,000       6,992,000       16,264,000       -                -             -           -
      (MMBtu)
                                                                                                                              
      Price     $ 4.25          $ 4.25          $ 4.25          $ 4.25           $ -              $ -           $ -         $ -
      (MMBtu)
                                                                                                                              
Natural Gas Collars: (d)
      Volume      -               -               -               -                21,900,000       -             -           -
      (MMBtu)
                                                                                                                              
      Price     $ -             $ -             $ -             $ -              $ 3.85 –         $ -           $ -         $ -
      (MMBtu)                                                                      4.40
                                                                                                    
                                                                                                                              
(a)   The index prices for the oil contracts are based on the NYMEX – West Texas Intermediate 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 index prices for the natural gas collars are based on the El Paso Permian delivery point.
      

Contact:

Concho Resources Inc.
Price Moncrief, 432-683-7443
Vice President of Capital Markets and Strategy
 
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