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

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

Business Wire

MIDLAND, Texas -- August 7, 2013

Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today reported
financial and operating results for the three and six months ended June 30,
2013. Highlights for the three months ended June 30, 2013 include:

  *Production from continuing operations of 8.3 million barrels of oil
    equivalent (“MMBoe”) for the second quarter of 2013, a 30% increase over
    the second quarter of 2012 and a 7% increase over the first quarter of
    2013
  *Net income of $84.7 million, or $0.81 per diluted share, for the second
    quarter of 2013, as compared to net income of $319.3 million, or $3.07 per
    diluted share, for the second quarter of 2012
  *Adjusted net income^1 (non-GAAP) of $102.5 million, or $0.98 per diluted
    share, for the second quarter of 2013, as compared to $80.5 million, or
    $0.78 per diluted share, for the second quarter of 2012
  *EBITDAX^2 (non-GAAP) of $424.8 million for the second quarter of 2013, as
    compared to $327.4 million for the second quarter of 2012

^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.

Second Quarter 2013 Financial Results

Production from continuing operations for the second quarter of 2013 totaled
8.3 MMBoe (5.2 million barrels of oil (“MMBbls”) and 18.6 billion cubic feet
of natural gas (“Bcf”)), an increase of 30% as compared to 6.4 MMBoe (3.9
MMBbls and 14.9 Bcf) produced in the second quarter of 2012 and an increase of
7% as compared to the 7.7 MMBoe (4.8 MMBbls and 17.8 Bcf) produced in the
first quarter of 2013.

“Our performance during the second quarter of 2013 was exceptional and
highlights the quality of our assets across the resource-rich Delaware and
Midland Basins,” commented Tim Leach, Concho’s Chairman, CEO and President.
“Our Delaware Basin asset is now our largest producing core area, a milestone
that took just a little over two years to achieve. Production from our
horizontal Delaware Basin grew 37% over the previous quarter driven by our
industry-leading well results in both the northern and southern Delaware
Basin. We have also drilled some of the industry’s best horizontal wells in
our core Wolfberry position in the Midland Basin and will expand that activity
through the rest of the year.”

For the second quarter of 2013, the Company reported net income of $84.7
million, or $0.81 per diluted share, as compared to net income of $319.3
million, or $3.07 per diluted share, for the second quarter of 2012. The
Company’s second quarter 2013 results were impacted by several non-cash and
unusual items including: (1) a $68.7 million unrealized mark-to-market gain on
commodity derivatives, (2) a $65.4 million impairment of long-lived assets
primarily relating to non-core natural gas New Mexico Shelf properties, (3)
$2.9 million of leasehold abandonments and (4) a $28.6 million loss on the
extinguishment of debt. Excluding these items and their tax effects, second
quarter 2013 adjusted net income (non-GAAP) was $102.5 million, or $0.98 per
diluted share. Excluding similar non-cash and unusual items and their tax
impact, adjusted net income (non-GAAP) for the second quarter of 2012 was
$80.5 million, or $0.78 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 $424.8 million in the second quarter of 2013, an increase of 30%
from $327.4 million reported in the second quarter of 2012 and an increase of
25% from the $340.7 million reported in the first quarter of 2013. 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 second quarter of
2013 increased 40% when compared to the second quarter of 2012. This increase
was attributable to a 5% increase ($4.28 per barrel) in the Company’s unhedged
realized oil price, a 13% increase ($0.59 per Mcf) in the Company’s unhedged
realized natural gas price, and a 30% increase in production from continuing
operations.

Oil and natural gas production expense from continuing operations for the
second quarter of 2013, including oil and natural gas taxes, totaled $107.2
million, or $12.93 per barrel of oil equivalent (“Boe”), a 1% increase per Boe
from the second quarter of 2012. This increase was due primarily to higher oil
and natural gas taxes, which averaged $5.68 per Boe in the second quarter of
2013 as compared to $5.27 in the second quarter of 2012, as a result of higher
oil and natural gas prices. This was partially offset by lower lease operating
expenses and workover costs, which averaged $7.25 per Boe in the second
quarter of 2013 as compared to $7.57 per Boe in the second quarter of 2012.

Depreciation, depletion and amortization (“DD&A”) expense from continuing
operations for the second quarter of 2013 totaled $188.7 million, or $22.75
per Boe, a 9% increase per Boe from the second quarter of 2012. This increase
in the Company’s DD&A rate is primarily driven by higher cost, exploratory
horizontal drilling activity in the Delaware Basin.

In the second quarter of 2013, the Company recognized a $65.4 million
impairment of long-lived assets on non-core, natural gas properties in the New
Mexico Shelf asset. The impairment of these assets was primarily due to
downward adjustments to the economically recoverable proved reserves
associated with declines in well performance and a reduction in estimated
realized natural gas prices.

General and administrative expense (“G&A”) from continuing operations for the
second quarter of 2013 totaled $41.0 million, or $4.94 per Boe, as compared to
$32.5 million, or $5.09 per Boe, in the second quarter of 2012. Cash G&A for
the second quarter of 2013 totaled $32.4 million and stock-based compensation
(non-cash) totaled $8.6 million. The decrease in per Boe expense for the
second quarter of 2013 over the second quarter of 2012 was primarily due to a
30% increase in production from continuing operations, and was partially
offset by a 26% increase in absolute G&A expenses.

In the second quarter of 2013, the Company tendered for and subsequently
redeemed all of the $300 million 8.625% senior notes due 2017 at a premium to
par. In part to finance this tender and redemption, the Company completed the
issuance of an $850 million add-on offering to the Company’s 5.5% senior notes
due in 2023 at 103.75 percent of par (resulting in a 4.884% yield) with the
remaining proceeds used to repay amounts outstanding under its credit
facility. As a result of the tender and redemption, the Company recognized a
loss on the extinguishment of debt of $28.6 million.

The Company’s cash flows from operating activities (GAAP) were $487.1 million
for the first six months of 2013, as compared to $611.0 million for the first
six months of 2012, a decrease of 20%. 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 $494.7 million
for the first six months of 2013, as compared to $587.3 million for the first
six months of 2012, a decrease of 16%. 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 second quarter of 2013, the Company collected net cash receipts on
derivatives not designated as hedges of $1.6 million and the non-cash
unrealized mark-to-market gain on derivatives not designated as hedges was
$68.7 million. In comparison, the Company collected net cash receipts of $8.3
million on derivatives not designated as hedges and reported an $394.8 million
non-cash unrealized mark-to-market gain on derivatives not designated as
hedges in the second 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 June 30, 2013, the Company commenced the drilling of or
participated in a total of 196 gross wells (144 operated). The Company had a
100% success rate on the 245 wells that were completed in the second quarter
of 2013.

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

                  2Q 2013
                   Total Wells   Operated Wells   Completed Wells
                                                      
New Mexico Shelf   74              39                 96
Texas Permian      70              70                 91
Delaware Basin     52              35                 58
Total              196             144                245
                                                      

Currently, the Company is operating 25 drilling rigs; 1 of these rigs is
drilling in the New Mexico Shelf, 11 are drilling in the Texas Permian and 13
are drilling in the Delaware Basin. Of the Company’s 25 operated rigs, 18 are
drilling horizontally, including 1 in the New Mexico Shelf, 4 in the Texas
Permian and 13 in the Delaware Basin.

Delaware Basin

Of the 52 wells drilled in the Delaware Basin, 42 were Bone Spring sands
wells, 2 were Avalon shale wells and 8 were Wolfcamp shale wells. The
Company’s net production in the second quarter of 2013 from horizontal
Delaware Basin wells averaged approximately 31,700 Boepd, a 128% increase over
the second quarter of 2012 and an increase of 37% over the first quarter of
2013.

Credit Facility

At June 30, 2013, the Company had borrowings outstanding under the credit
facility of $76.1 million, and availability under the credit facility was
approximately $2.4 billion.

Derivative Update

The Company maintains an active crude oil and natural gas hedging program and
has continued to add to its derivative positions. 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

The Company is adjusting its full-year 2013 DD&A guidance to reflect increased
capital allocation to its exploratory drilling activity in the Delaware Basin.
The revised guidance range for full-year 2013 DD&A is $22.00 to $24.00 per
Boe.

Conference Call and Presentation Information

The Company will host a conference call on Thursday, August 8, 2013 at 9:00
a.m. Central Time to discuss the second quarter 2013 financial and operating
results, with an accompanying presentation. Interested parties may listen to
the conference call via the Company’s website at www.concho.com or by dialing
(800) 299-8538 (passcode: 42836569). The presentation is available on the
Company’s website. To access the presentation, visit www.concho.com and select
“Investor Relations,” then “Presentations.”

A replay of the conference call will be available on the Company’s website or
by dialing (888) 286-8010 (passcode: 75921452).

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

                                                            
                                             June 30,           December 31,
(in thousands, except share and per share   2013             2012
amounts)
Assets
Current assets:
Cash and cash equivalents                    $ 47               $ 2,880
Accounts receivable, net of allowance for
doubtful accounts:
Oil and natural gas                            224,228            198,053
Joint operations and other                     278,787            202,738
Derivative instruments                         17,359             35,942
Prepaid costs and other                       19,009           19,269     
Total current assets                          539,430          458,882    
Property and equipment:
Oil and natural gas properties, successful     10,422,837         9,455,599
efforts method
Accumulated depletion and depreciation        (1,979,566 )      (1,565,316 )
Total oil and natural gas properties, net      8,443,271          7,890,283
Other property and equipment, net             105,551          103,141    
Total property and equipment, net             8,548,822        7,993,424  
Deferred loan costs, net                       79,687             77,609
Intangible asset - operating rights, net       29,345             30,076
Inventory                                      21,178             20,611
Noncurrent derivative instruments              17,955             2,769
Other assets                                  6,987            6,066      
Total assets                                $ 9,243,404      $ 8,589,437  

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable:
Trade                                        $ 19,982           $ 31,144
Related parties                                455                185
Bank overdrafts                                59,019             24,275
Revenue payable                                161,987            162,073
Accrued and prepaid drilling costs             441,904            351,919
Derivative instruments                         6,186              1,584
Deferred income taxes                          210                8,566
Other current liabilities                     153,366          160,340    
Total current liabilities                     843,109          740,086    
Long-term debt                                 3,457,770          3,101,103
Deferred income taxes                          1,248,508          1,186,621
Noncurrent derivative instruments              334                12,049
Asset retirement obligations and other         94,417             83,382
long-term liabilities
Stockholders’ equity:
Common stock, $0.001 par value;
300,000,000 authorized; 105,121,742 and        105                105
104,668,427 shares issued at June 30, 2013
and December 31, 2012, respectively
Additional paid-in capital                     2,004,300          1,982,714
Retained earnings                              1,605,356          1,490,563
Treasury stock, at cost; 123,350 and
86,861 shares at June 30, 2013 and            (10,495    )      (7,186     )
December 31, 2012, respectively
Total stockholders’ equity                    3,599,266        3,466,196  
Total liabilities and stockholders’ equity   $ 9,243,404       $ 8,589,437  
                                                                             


Concho Resources Inc.
Consolidated Statements of Operations
Unaudited
                                                          
                                                             
                 Three Months Ended                 Six Months Ended
                 June 30,                           June 30,
(in thousands,
except per      2013          2012            2013            2012
share amounts)
                                                                      
Operating
revenues:
Oil sales        $ 466,611       $ 335,095          $ 859,819         $ 719,058
Natural gas       96,175        68,066           175,094         157,887  
sales
Total
operating         562,786       403,161          1,034,913       876,945  
revenues
Operating
costs and
expenses:
Oil and
natural gas        107,219         82,100             208,064           163,677
production
Exploration
and                8,398           14,398             26,805            20,377
abandonments
Depreciation,
depletion and      188,730         133,267            357,150           260,530
amortization
Accretion of
discount on
asset              1,442           901                2,836             1,742
retirement
obligations
Impairments of
long-lived         65,375          -                  65,375            -
assets
General and
administrative
(including
non-cash
stock-based
compensation
of $8,588 and
$7,347 for the
three months
ended June 30,     40,991          32,523             84,284            60,502
2013 and 2012,
respectively,
and $15,355
and $13,475
for the six
months ended
June 30, 2013
and 2012,
respectively)
Gain on
derivatives       (70,324 )      (403,050 )        (11,307   )      (244,957 )
not designated
as hedges
Total
operating         341,831       (139,861 )        733,207         261,871  
costs and
expenses
Income from       220,955       543,022          301,706         615,074  
operations
Other income
(expense):
Interest           (54,079 )       (41,899  )         (106,185  )       (77,736  )
expense
Loss on
extinguishment     (28,616 )       -                  (28,616   )       -
of debt
Other, net        244           (535     )        135             (1,803   )
Total other       (82,451 )      (42,434  )        (134,666  )      (79,539  )
expense
Income from
continuing
operations         138,504         500,588            167,040           535,535
before income
taxes
Income tax        (53,351 )      (191,707 )        (64,328   )      (205,322 )
expense
Income from
continuing         85,153          308,881            102,712           330,213
operations
Income (loss)
from
discontinued      (453    )      10,416           12,081          20,201   
operations,
net of tax
Net income       $ 84,700       $ 319,297         $ 114,793        $ 350,414  
Basic earnings
per share:
Income from
continuing       $ 0.81          $ 3.00             $ 0.98            $ 3.20
operations
Income (loss)
from
discontinued      -             0.10             0.12            0.20     
operations,
net of tax
Net income       $ 0.81         $ 3.10            $ 1.10           $ 3.40     
Diluted
earnings per
share:
Income from
continuing       $ 0.81          $ 2.97             $ 0.98            $ 3.18
operations
Income (loss)
from
discontinued      -             0.10             0.11            0.20     
operations,
net of tax
Net income       $ 0.81         $ 3.07            $ 1.09           $ 3.38     
                                                                                 


Concho Resources Inc.
Consolidated Statements of Cash Flows
Unaudited
                                                            
                                             Six Months Ended
                                             June 30,
(in thousands)                              2013             2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                   $ 114,793          $ 350,414
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization       357,150            260,530
Accretion of discount on asset retirement      2,836              1,742
obligations
Impairments of long-lived assets               65,375             -
Exploration and abandonments, including        5,412              11,539
dry holes
Non-cash stock-based compensation expense      15,355             13,475
Deferred income taxes                          50,346             201,398
(Gain) loss on sale of assets, net             (132       )       68
Gain on derivatives not designated as          (11,307    )       (244,957   )
hedges
Discontinued operations                        (12,250    )       18,243
Other non-cash items                           14,330             5,837
Changes in operating assets and
liabilities, net of acquisitions and
dispositions:
Accounts receivable                            (55,577    )       7,425
Prepaid costs and other                        (661       )       (3,160     )
Inventory                                      (647       )       (6,385     )
Accounts payable                               (11,972    )       6,549
Revenue payable                                12,962             (12,253    )
Other current liabilities                     (58,884    )      500        
Net cash provided by operating activities     487,129          610,965    
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on oil and natural        (880,653   )       (949,059   )
gas properties
Additions to other property and equipment      (9,900     )       (45,701    )
Proceeds from the sale of assets               15,434             4,419
Funds held in escrow                           -                  (32,606    )
Settlements received from (paid on)           7,591            (23,624    )
derivatives not designated as hedges
Net cash used in investing activities         (867,528   )      (1,046,571 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                 2,548,475          1,776,500
Payments of debt                               (2,194,500 )       (1,333,500 )
Exercise of stock options                      2,068              3,110
Excess tax benefit from stock-based            4,163              10,393
compensation
Payments for loan costs                        (14,075    )       (12,250    )
Purchase of treasury stock                     (3,309     )       (2,566     )
Bank overdrafts                               34,744           (5,713     )
Net cash provided by financing activities     377,566          435,974    
Net increase (decrease) in cash and cash       (2,833     )       368
equivalents
Cash and cash equivalents at beginning of     2,880            342        
period
Cash and cash equivalents at end of period   $ 47              $ 710        
                                                                             

                                                 
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            Six Months Ended
                             June 30,                      June 30,
                     2013        2012         2013        2012
                                                                    
Production and operating data from continuing and discontinued operations:
  Net production
  volumes:
        Oil (MBbl)             5,192         4,220           9,959         8,434
        Natural gas            18,615        15,619          36,413        31,848
        (MMcf)
        Total (MBoe)           8,295         6,823           16,028        13,742
                                                                         
  Average daily
  production volumes:
        Oil (Bbl)              57,055        46,374          55,022        46,341
        Natural gas            204,560       171,637         201,177       174,989
        (Mcf)
        Total (Boe)            91,148        74,980          88,552        75,506
                                                                         
  Average prices:
        Oil, without
        derivatives          $ 89.87       $ 85.62         $ 86.34       $ 91.89
        (Bbl)
        Oil, with
        derivatives          $ 90.13       $ 87.51         $ 87.07       $ 89.01
        (Bbl) (a)
        Natural gas,
        without              $ 5.17        $ 4.58          $ 4.81        $ 5.20
        derivatives
        (Mcf)
        Natural gas,
        with derivatives     $ 5.18        $ 4.60          $ 4.82        $ 5.22
        (Mcf) (a)
        Total, without
        derivatives          $ 67.85       $ 63.43         $ 64.57       $ 68.45
        (Boe)
        Total, with
        derivatives          $ 68.04       $ 64.65         $ 65.04       $ 66.73
        (Boe) (a)
                                                                         
  Operating costs and
  expenses per Boe:
        Lease operating
        expenses and         $ 7.25        $ 7.52          $ 7.48        $ 7.40
        workover costs
        Oil and natural      $ 5.68        $ 5.33          $ 5.50        $ 5.68
        gas taxes
        Depreciation,
        depletion and        $ 22.75       $ 20.73         $ 22.29       $ 20.19
        amortization
        General and          $ 4.94        $ 4.69          $ 5.26        $ 4.32
        administrative
                                                       
                                                                         
        Includes the effect of cash settlements received from (paid on) commodity
  (a)   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 on derivatives not designated as hedges as reported in
        the statements of operations:
                                                          
                             Three Months Ended            Six Months Ended
                             June 30,                      June 30,
        (in thousands)     2013        2012         2013        2012
                                                                         
        Gain on
        derivatives not
        designated as
        hedges:
          Cash receipts
          from (payments     $ 1,320       $ 7,963         $ 7,336       $ (24,233 )
          on) oil
          derivatives
          Cash receipts
          from natural         255           324             255           609
          gas
          derivatives
          Unrealized
          mark-to-market
          gain on             68,749       394,763        3,716        268,581 
          commodity
          derivatives
          Gain on
          derivatives        $ 70,324      $ 403,050       $ 11,307      $ 244,957 
          not 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 gain 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            Six Months Ended
                             June 30,                      June 30,
                     2013        2012         2013        2012
                                                                    
Production and operating data from
continuing operations:
  Net production
  volumes:
        Oil (MBbl)             5,192         3,915           9,959         7,829
        Natural gas            18,615        14,872          36,413        30,411
        (MMcf)
        Total (MBoe)           8,295         6,394           16,028        12,898
                                                                         
  Average daily
  production volumes:
        Oil (Bbl)              57,055        43,022          55,022        43,016
        Natural gas            204,560       163,429         201,177       167,093
        (Mcf)
        Total (Boe)            91,148        70,260          88,552        70,865
                                                                         
  Average prices:
        Oil, without
        derivatives          $ 89.87       $ 85.59         $ 86.34       $ 91.85
        (Bbl)
        Oil, with
        derivatives          $ 90.13       $ 87.63         $ 87.07       $ 88.75
        (Bbl) (a)
        Natural gas,
        without              $ 5.17        $ 4.58          $ 4.81        $ 5.19
        derivatives
        (Mcf)
        Natural gas,
        with derivatives     $ 5.18        $ 4.60          $ 4.82        $ 5.21
        (Mcf) (a)
        Total, without
        derivatives          $ 67.85       $ 63.05         $ 64.57       $ 67.99
        (Boe)
        Total, with
        derivatives          $ 68.04       $ 64.35         $ 65.04       $ 66.16
        (Boe) (a)
                                                                         
  Operating costs and
  expenses per Boe:
        Lease operating
        expenses and         $ 7.25        $ 7.57          $ 7.48        $ 7.07
        workover costs
        Oil and natural      $ 5.68        $ 5.27          $ 5.50        $ 5.62
        gas taxes
        Depreciation,
        depletion and        $ 22.75       $ 20.85         $ 22.29       $ 20.20
        amortization
        General and          $ 4.94        $ 5.09          $ 5.26        $ 4.68
        administrative
                                                       
                                                                         
        Includes the effect of cash settlements received from (paid on) commodity
  (a)   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 on derivatives not designated as hedges as reported in
        the statements of operations:
                                                          
                             Three Months Ended            Six Months Ended
                             June 30,                      June 30,
        (in thousands)     2013        2012         2013        2012
                                                                         
        Gain on
        derivatives not
        designated as
        hedges:
          Cash receipts
          from (payments     $ 1,320       $ 7,963         $ 7,336       $ (24,233 )
          on) oil
          derivatives
          Cash receipts
          from natural         255           324             255           609
          gas
          derivatives
          Unrealized
          mark-to-market
          gain on             68,749       394,763        3,716        268,581 
          commodity
          derivatives
          Gain on
          derivatives        $ 70,324      $ 403,050       $ 11,307      $ 244,957 
          not 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 gain 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 and unusual 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                 Six Months Ended
                         June 30,                           June 30,
(in thousands,
except per share       2013          2012            2013          2012
amounts)
                                                                            
Net income - as          $ 84,700        $ 319,297          $ 114,793       $ 350,414
reported
                                                                            
Adjustments for
certain non-cash and
unusual items:
      Unrealized
      gain on              (68,749 )       (394,763 )         (3,716  )       (268,581 )
      commodity
      derivatives
      Impairments of
      long-lived           65,375          -                  65,375          -
      assets
      Leasehold            2,940           8,437              7,327           8,557
      abandonments
      Loss on
      extinguishment       28,616          -                  28,616          -
      of debt
      Discontinued
      operations:
           (Gain)
           loss on         764             -                  (19,599 )       -
           sale of
           assets
      Tax impact (a)      (11,144 )      147,577          (30,031 )      99,329   
Adjusted net income      $ 102,502      $ 80,548          $ 162,765      $ 189,719  
                                                                            
Adjusted earnings per
share:
      Basic              $ 0.98          $ 0.78             $ 1.55          $ 1.84
      Diluted            $ 0.98          $ 0.78             $ 1.55          $ 1.83
                                                            
                                                                            
      The tax impact is computed utilizing the Company's adjusted statutory effective
(a)   federal and state income tax rates. The income tax rates for the three and six
      months ended June 30, 2013 and 2012 were 38.5%, 38.2%, 38.5% and 38.2%,
      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:

                                                              
                                                     Six Months Ended
                                                     June 30,
(in thousands)                                     2013        2012
                                                                   
Cash flows from operating activities                 $ 487,129     $ 610,965
Settlements received from (paid on) derivatives       7,591        (23,624 )
not designated as hedges (a)
Adjusted cash flows                                  $ 494,720     $ 587,341 
                                                             
                                                                   
(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) impairment of long-lived assets (5) non-cash
stock-based compensation expense, (6) unrealized (gain) loss on derivatives
not designated as hedges, (7) (gain) loss on sale of assets, (8) interest
expense, (9) loss on extinguishment of debt, (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.

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
periods indicated:

                                                                         
                   Three
                   Months          Three Months Ended               Six Months Ended
                   Ended
                   March 31,       June 30,                         June 30,
(in thousands)   2013          2013          2012           2013          2012
                                                                                    
Net income         $ 30,093        $ 84,700        $ 319,297        $ 114,793       $ 350,414
Exploration
and                  18,407          8,398           14,398           26,805          20,377
abandonments
Depreciation,
depletion and        168,420         188,730         133,267          357,150         260,530
amortization
Accretion of
discount on
asset                1,394           1,442           901              2,836           1,742
retirement
obligations
Impairments of
long-lived           -               65,375          -                65,375          -
assets
Non-cash
stock-based          6,767           8,588           7,347            15,355          13,475
compensation
Unrealized
gain on
derivatives          65,033          (68,749 )       (394,763 )       (3,716  )       (268,581 )
not designated
as hedges
(Gain) loss of
sale of              5               (137    )       (827     )       (132    )       68
assets, net
Interest             52,106          54,079          41,899           106,185         77,736
expense
Loss on
extinguishment       -               28,616          -                28,616          -
of debt
Income tax
expense from         10,977          53,351          191,707          64,328          205,322
continuing
operations
Discontinued        (12,534 )      453           14,185         (12,081 )      28,440   
operations
EBITDAX            $ 340,668      $ 424,846      $ 327,411       $ 765,514      $ 689,523  
                                                                                               

                                                          
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            Six Months Ended
                         June 30,                      June 30,
(in thousands)          2013        2012         2013        2012
                                                                     
Property acquisition
costs:
      Proved             $ 652         $ 5,568         $ 2,537       $ 165,615
      Unproved             16,945        21,851          44,841        61,207
Exploration                283,254       159,013         549,944       343,496
Development               220,588      192,051        395,310      386,782
      Total costs
      incurred for       $ 521,439     $ 378,483       $ 992,632     $ 957,100
      oil and 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            Six Months Ended
                         June 30,                      June 30,
      (in thousands)    2013        2012         2013        2012
                                                                     
      Exploration        $ 820         $ 469           $ 1,554       $ 1,267
      costs
      Development         5,832        3,239          7,362        3,283
      costs
         Total asset
         retirement      $ 6,652       $ 3,708         $ 8,916       $ 4,550
         obligations
                                                                       


Concho Resources Inc.
Derivatives Information
Unaudited

The table below provides data associated with the Company’s derivatives at August 7, 2013:
               
                 2013                                                                                            
                  Third Quarter   Fourth          Total              2014               2015             2016          2017
                                    Quarter           Remaining
                                                                                                                           
Oil Swaps:
(a)
      Volume        4,537,000         4,214,000         8,751,000          13,603,000         10,948,000       429,000       168,000
      (Bbl)
      Price       $ 95.52           $ 95.28           $ 95.40            $ 91.30            $ 86.62          $ 88.31       $ 87.00
      (Bbl)
                                                                                                                           
Oil Basis
Swaps: (b)
      Volume        3,680,000         3,404,000         7,084,000          3,635,000          -                -             -
      (Bbl)
      Price       $ (1.11     )     $ (1.12     )     $ (1.12      )     $ (0.55      )     $ -              $ -           $ -
      (Bbl)
                                                                                                                           
Natural Gas
Swaps: (c)
      Volume        6,992,000         6,992,000         13,984,000         -                  -                -             -
      (MMBtu)
      Price       $ 4.25            $ 4.25            $ 4.25             $ -                $ -              $ -           $ -
      (MMBtu)
                                                                                                                           
Natural Gas
Collars: (d)
      Volume        -                 -                 -                  21,900,000         -                -             -
      (MMBtu)
      Price       $ -               $ -               $ -                $ 3.85 -           $ -              $ -           $ -
      (MMBtu)                                                              4.40
                                                                                                                           
Natural Gas
Basis Swaps:
(e)
      Volume        6,440,000         6,440,000         12,880,000         -                  -                -             -
      (MMBtu)
      Price       $ (0.15     )     $ (0.15     )     $ (0.15      )     $ -                $ -              $ -           $ -
      (MMBtu)
                                                                                                    
                                                                                                                           
(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 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.
(e)   The basis differential price is between the El Paso Permian delivery point and NYMEX-Henry Hub delivery point.

Contact:

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