Concho Resources Inc. Reports First Quarter 2014 Financial and Operating Results; Announces Midstream Joint Venture in the

  Concho Resources Inc. Reports First Quarter 2014 Financial and Operating
  Results; Announces Midstream Joint Venture in the Northern Delaware Basin

Business Wire

MIDLAND, Texas -- May 12, 2014

Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”) today reported
financial and operating results for the three months ended March 31, 2014.
Highlights include:

  *Average production of 101.6 thousand barrels of oil equivalent per day
    (“MBoepd”) for the first quarter of 2014, above the high end of its
    previous quarterly guidance range of 98.0 to 101.0 MBoepd
  *Added 39 new wells in the northern Delaware Basin with record high average
    30-day and 24-hour peak rates of 909 and 1,488 Boepd, respectively
  *Net income of $91.3 million, or $0.87 per diluted share, for the first
    quarter of 2014, as compared to net income of $30.1 million, or $0.29 per
    diluted share, in the first quarter of 2013
  *Adjusted net income^1 (non-GAAP) of $106.6 million, or $1.01 per diluted
    share, for the first quarter of 2014, as compared to $60.3 million, or
    $0.58 per diluted share, for the first quarter of 2013
  *EBITDAX^2 (non-GAAP) of $483.3 million for the first quarter of 2014, a
    42% increase over the first quarter of 2013
  *Increased 2014 production guidance range to 20% - 24% growth over 2013
  *Announced the formation of a midstream joint venture to construct a crude
    oil transportation system in the northern Delaware Basin

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

First Quarter 2014 Financial Results

Production for the first quarter of 2014 totaled 9.1 million barrels of oil
equivalent (“MMBoe”) (5.8 million barrels of oil (“MMBbls”) and 19.8 billion
cubic feet of natural gas (“Bcf”)), an increase of 18% as compared to 7.7
MMBoe (4.8 MMBbls of crude oil and 17.8 Bcf of natural gas) produced in the
first quarter of 2013. Sequentially, Concho’s average daily production in the
first quarter of 2014 increased 5% as compared to the previous quarter of 97.0
MBoepd.

“We are off to a great start executing our Two-by-Three Growth Plan,”
commented Tim Leach, Chairman, Chief Executive Officer and President.
“Production during the first quarter exceeded our expectations driven by
improved operational efficiencies and strong well performance. Our assets in
the Delaware Basin continue to deliver consistently strong results,
reaffirming this region as one of the most prolific oil basins in the U.S. At
the same time, we are realizing improved drill times which are enabling us to
expand our budgeted drilling activity as we proceed through 2014.”

For the first quarter of 2014, the Company reported net income of $91.3
million, or $0.87 per diluted share, as compared to net income of $30.1
million, or $0.29 per diluted share, for the first quarter of 2013. The
Company’s first quarter 2014 results were impacted by several non-cash and
unusual items including: (1) a $35.6 million loss on derivatives not
designated as hedges, (2) $14.8 million in cash payments on commodity
derivatives, (3) $3.9 million of leasehold abandonments and (4) a $0.1 million
net gain on disposition of assets. Excluding these items and their tax
effects, first quarter 2014 adjusted net income (non-GAAP) was $106.6 million,
or $1.01 per diluted share. Excluding similar non-cash and unusual items and
their tax effects, adjusted net income (non-GAAP) for the first quarter of
2013 was $60.3 million, or $0.58 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 (non-GAAP) was $483.3 million in the first quarter of 2014, an
increase of 42% from $340.7 million 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 for the first quarter of 2014 increased 40% when
compared to the first quarter of 2013. This increase was attributable to an
18% increase in production in the first quarter of 2014 compared to the first
quarter of 2013, a 12% increase in the Company’s unhedged realized oil price
in the first quarter of 2014 compared to the first quarter of 2013 and a 38%
increase in the Company’s unhedged realized gas price in the first quarter of
2014 compared to the first quarter of 2013.

Oil and natural gas production expense for the first quarter of 2014,
including oil and natural gas taxes, totaled $126.9 million, or $13.87 per
barrel of oil equivalent (“Boe”), a 6% increase per Boe from the first quarter
of 2013. This increase was due primarily to higher lease operating expenses
(“LOE”) and workover costs, which averaged $8.07 per Boe in the first quarter
of 2014 as compared to $7.74 per Boe in the first quarter of 2013.

Depreciation, depletion and amortization expense (“DD&A”) for the first
quarter of 2014 totaled $221.4 million, or $24.21 per Boe, an 11% increase per
Boe from the first quarter of 2013.

General and administrative expense (“G&A”) for the first quarter of 2014
totaled $47.8 million, or $5.22 per Boe, as compared to $43.3 million, or
$5.60 per Boe, in the first quarter of 2013. Cash G&A expenses for the first
quarter of 2014 totaled $36.4 million and stock-based compensation (non-cash)
totaled $11.4 million. The decrease in per Boe expense for the first quarter
of 2014 over the first quarter of 2013 was primarily due to an 18% increase in
production.

The Company’s cash flow from operating activities (GAAP) was $476.0 million
for the first quarter of 2014, as compared to $219.7 million for the first
quarter of 2013, an increase of 117%. Adjusted cash flows (non-GAAP), which
are cash flows from operating activities (GAAP) adjusted for settlements on
derivatives not designated as hedges, were $461.1 million for the first
quarter of 2014, as compared to $225.7 million for the first quarter of 2013,
an increase of 104%. 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.

Operations

For the quarter ended March 31, 2014, the Company commenced drilling or
participated in a total of 127 gross wells (95 operated, 67% horizontal) and
completed 123 wells as producers. The table below summarizes the Company’s
gross drilling activities by core area for the first quarter of 2014:

                   
                       1Q 2014
                       Total Wells   Operated Wells   Completed Wells
Delaware Basin         55              49                 53
New Mexico Shelf       30              12                 31
Texas Permian          42              34                 39
Total                  127             95                 123
                                                          

Currently, the Company is operating 33 drilling rigs; 2 of these rigs are
drilling Yeso wells in the New Mexico Shelf, 9 are drilling in the Texas
Permian and 22 are drilling in the Delaware Basin. Of the Company’s 33
operated rigs, 29 are drilling horizontally, including 2 in the New Mexico
Shelf, 5 in the Texas Permian and 22 in the Delaware Basin.

Delaware Basin

Of the 55 wells drilled in the Delaware Basin, 41 were Bone Spring sands
wells, 11 were Wolfcamp shale wells, 2 were Brushy Canyon wells and 1 was an
Avalon shale well. The Company’s net production in the first quarter of 2014
from horizontal Delaware Basin wells averaged approximately 42.3 MBoepd, an
82% increase over the first quarter of 2013 and an increase of 18% over the
fourth quarter of 2013.

In the northern Delaware Basin, 39 new wells had at least 30 days of
production by the end of the first quarter of 2014 and set new average
production-rate records with an average 30-day rate of 909 Boepd (74% oil) and
an average 24-hour peak rate of 1,488 Boepd from an average lateral length of
4,535 feet.

In the southern Delaware Basin, 7 new wells had at least 30 days of production
by the end of the first quarter of 2014, with an average 30-day rate of 1,104
Boepd (77% oil) and an average 24-hour peak rate of 1,453 Boepd from an
average lateral length of 4,385 feet.

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.

New Credit Facility

On May 9, 2014, the Company entered into a new five-year revolving credit
facility. The borrowing base under the new facility increased to $3.25 billion
and commitments were maintained at $2.5 billion. Additionally, the new
facility provides for a 25 basis point reduction in the drawn spread and
further interest rate reductions on the undrawn spread.

At March 31, 2014, the Company had borrowings outstanding under its credit
facility of $294.7 million, and the availability under the credit facility was
approximately $2.2 billion.

Midstream Joint Venture

The Company has formed a midstream joint venture with a private entity to
construct a crude oil transportation system in the northern Delaware Basin.
This aligns with the Company’s midstream strategic objectives of improving
price realizations and securing transportation for its crude oil volume. The
joint venture will connect a substantial portion of the Company’s crude oil
production in the northern Delaware Basin and increase optionality by
providing multiple delivery points. Current expectations are for the system to
be operational in the second half of 2015.

Updated Guidance

Concho’s upstream capital budget increased to $2.6 billion, excluding
acquisitions, as operational efficiencies continue to improve. The Company
expects it will drill approximately 40 additional net wells with the
incremental capital before the end of 2014. Additionally, the Company’s
recently announced midstream joint venture and previously announced acreage
acquisitions in the southern Delaware Basin are expected to add approximately
$100 million to the overall 2014 capital budget.

In light of its first quarter production results and planned activity increase
in the second half of 2014, the Company raised its 2014 annual production
guidance range to 20% - 24% growth over 2013. For the second quarter of 2014,
the Company expects production to average between 104 - 108 MBoepd.

The Company’s LOE guidance range for 2014 increased to $8.00 - $8.50 per Boe
as a result of the rapid increase in activity across the Permian Basin and
certain related infrastructure challenges.

Crude Oil Realizations

In the first quarter of 2014, the average discount on the Midland-to-Cushing
WTI oil basis differential was approximately $3.53 per Bbl. The average
discount for the months of April and May was $8.68 and $8.89 per Bbl,
respectively. The Company’s unhedged crude oil realization during the second
quarter of 2014 is expected to be 88% - 92% of NYMEX crude oil. However, the
Company’s full-year 2014 unhedged crude oil realization is expected to remain
within the annual guidance range of 93% - 95% of NYMEX crude oil.

Conference Call and Presentation Information

The Company will host a conference call with an accompanying presentation on
Monday, May 12, 2014, at 9 a.m. CST to further discuss information regarding
first quarter 2014 financial and operating results. Interested parties may
listen to the conference call via the Company’s website at www.concho.com or
by dialing (800) 237-9752 (passcode: 78320382). The presentation is also
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: 54056975).

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
proceeds 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 and 10-Q
filings and risks relating to declines in the prices we receive for our 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 our capital resources and liquidity; risks related to the
concentration of our operations in the Permian Basin; the results of our
hedging program; weather; litigation; shortages of oilfield equipment,
services and qualified personnel and increases in costs for such equipment,
services and personnel; uncertainties about our ability to replace reserves
and economically develop our 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.

We may use the terms “unproved reserves,” “resource potential,” “EUR” per well
and “upside potential” to describe estimates of potentially recoverable
hydrocarbons that the U.S. Securities and Exchange Commission (“SEC”) rules
prohibit from being included in filings with the SEC. These are based on
analogy to the Company’s existing models applied to additional acres,
additional zones and tighter spacing and are the Company’s internal estimates
of hydrocarbon quantities that may be potentially discovered through
exploratory drilling or recovered with additional drilling or recovery
techniques. These quantities may not constitute “reserves” within the meaning
of the Society of Petroleum Engineer’s Petroleum Resource Management System or
SEC rules. EUR estimates, resource potential and drilling locations have not
been fully risked by Company management and are inherently more speculative
than proved reserves estimates. Actual locations drilled and quantities that
may be ultimately recovered from the Company’s interests could differ
substantially. There is no commitment by the Company to drill all of the
drilling locations which have been attributed to these quantities. Factors
affecting ultimate recovery include the scope of our ongoing drilling program,
which will be directly affected by the availability of capital, drilling and
production costs, availability of drilling services and equipment, drilling
results, lease expirations, transportation constraints, regulatory approvals
and other factors; and actual drilling results, including geological and
mechanical factors affecting recovery rates. Estimates of unproved reserves,
resource potential, per well EUR and upside potential may change significantly
as development of the Company’s oil and natural gas assets provide additional
data. Our production forecasts and expectations for future periods are
dependent upon many assumptions, including estimates of production decline
rates from existing wells and the undertaking and outcome of future drilling
activity, which may be affected by significant commodity price declines or
drilling cost increases.

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         2014            2013
share amounts)
Assets
Current assets:
Cash and cash equivalents                    $ 21               $ 21
Accounts receivable, net of allowance
for doubtful accounts:
Oil and natural gas                            266,489            223,790
Joint operations and other                     249,568            247,945
Derivative instruments                         1,358              590
Deferred income taxes                          40,039             30,069
Prepaid costs and other                       17,956           18,460     
Total current assets                          575,431          520,875    
Property and equipment:
Oil and natural gas properties,                11,768,415         11,215,373
successful efforts method
Accumulated depletion and depreciation        (2,600,913 )      (2,384,108 )
Total oil and natural gas properties,          9,167,502          8,831,265
net
Other property and equipment, net             116,159          114,783    
Total property and equipment, net             9,283,661        8,946,048  
Deferred loan costs, net                       69,701             73,048
Intangible asset - operating rights, net       28,250             28,615
Inventory                                      18,674             19,682
Noncurrent derivative instruments              269                966
Other assets                                  2,182            1,930      
Total assets                                 $ 9,978,168       $ 9,591,164  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade                     $ 34,071           $ 13,936
Bank overdrafts                                90,285             36,718
Revenue payable                                199,292            177,617
Accrued and prepaid drilling costs             372,896            318,296
Derivative instruments                         70,824             53,701
Other current liabilities                     171,236          156,600    
Total current liabilities                     938,604          756,868    
Long-term debt                                 3,674,434          3,630,421
Deferred income taxes                          1,386,577          1,334,653
Noncurrent derivative instruments              17,814             14,088
Asset retirement obligations and other         99,552             97,185
long-term liabilities
Stockholders’ equity:
Common stock, $0.001 par value;
300,000,000 authorized; 105,397,895 and        105                105
105,222,765 shares issued at March 31,
2014 and December 31, 2013, respectively
Additional paid-in capital                     2,042,841          2,027,162
Retained earnings                              1,832,873          1,741,566
Treasury stock, at cost; 160,597 and
127,305 shares at March 31, 2014 and           (14,632    )       (10,884    )
December 31, 2013, respectively
Total stockholders’ equity                    3,861,187        3,757,949  
Total liabilities and stockholders’          $ 9,978,168       $ 9,591,164  
equity
                                                                   
                                                                             


Concho Resources Inc.
Consolidated Statements of Operations
Unaudited

                                                Three Months Ended
                                                   March 31,
(in thousands, except per share amounts)        2014          2013
                                                                
Operating revenues:
Oil sales                                          $ 539,857       $ 393,208
Natural gas sales                                   121,102       78,919  
Total operating revenues                            660,959       472,127 
Operating costs and expenses:
Oil and natural gas production                       126,924         100,845
Exploration and abandonments                         25,375          18,407
Depreciation, depletion and amortization             221,392         168,420
Accretion of discount on asset retirement            1,671           1,394
obligations
General and administrative (including
non-cash stock-based compensation of $11,432         47,750          43,293
and $6,767 for the three months ended March
31, 2014 and 2013, respectively)
Loss on derivatives not designated as hedges        35,615        59,017  
Total operating costs and expenses                  458,727       391,376 
Income from operations                              202,232       80,751  
Other income (expense):
Interest expense                                     (56,135 )       (52,106 )
Other, net                                          541           (109    )
Total other expense                                 (55,594 )      (52,215 )
Income from continuing operations before             146,638         28,536
income taxes
Income tax expense                                  (55,331 )      (10,977 )
Income from continuing operations                    91,307          17,559
Income from discontinued operations, net of         -             12,534  
tax
Net income                                         $ 91,307       $ 30,093  
Basic earnings per share:
Income from continuing operations                  $ 0.87          $ 0.17
Income from discontinued operations, net of         -             0.12    
tax
Net income                                         $ 0.87         $ 0.29    
Diluted earnings per share:
Income from continuing operations                  $ 0.87          $ 0.17
Income from discontinued operations, net of         -             0.12    
tax
Net income                                         $ 0.87         $ 0.29    
                                                                  
                                                                             


Concho Resources Inc.
Consolidated Statements of Cash Flows
Unaudited

                                              Three Months Ended
                                                 March 31,
(in thousands)                                2014           2013
CASH FLOWS FROM OPERATING ACTIVITIES:                          
Net income                                       $ 91,307         $ 30,093
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization           221,392          168,420
Accretion of discount on asset retirement          1,671            1,394
obligations
Exploration and abandonments, including            23,759           4,478
dry holes
Non-cash stock-based compensation expense          11,432           6,767
Deferred income taxes                              41,954           11,500
(Gain) loss on disposition of assets, net          (146     )       5
Loss on derivatives not designated as              35,615           59,017
hedges
Discontinued operations                            -                (19,754  )
Other non-cash items                               2,710            3,376
Changes in operating assets and
liabilities, net of acquisitions and
dispositions:
Accounts receivable                                (10,139  )       12,608
Prepaid costs and other                            21               726
Inventory                                          1,126            (21      )
Accounts payable                                   20,087           (27,679  )
Revenue payable                                    21,675           (15,636  )
Other current liabilities                         13,516         (15,623  )
Net cash provided by operating activities         475,980        219,671  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on oil and natural            (554,266 )       (419,766 )
gas properties
Additions to other property and equipment          (5,617   )       (4,244   )
Proceeds from the disposition of assets            24               15,865
Settlements received from (paid on)               (14,837  )      6,016    
derivatives not designated as hedges
Net cash used in investing activities             (574,696 )      (402,129 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt                     593,400          626,700
Payments of debt                                   (548,750 )       (463,300 )
Exercise of stock options                          1,254            2,059
Excess tax benefit from stock-based                2,993            3,277
compensation
Purchase of treasury stock                         (3,748   )       (2,909   )
Bank overdrafts                                   53,567         14,725   
Net cash provided by financing activities         98,716         180,552  
Net decrease in cash and cash equivalents          -                (1,906   )
Cash and cash equivalents at beginning of         21             2,880    
period
Cash and cash equivalents at end of period       $ 21            $ 974      
                                                           
                                                                    


Concho Resources Inc.
Summary Production and Price Data
Unaudited

The following table sets forth summary information concerning our production
and operating data for the periods indicated:
                                   
                                
                                       Three Months Ended
                                       March 31,
                                   2014                    2013
                                                            
Production and
operating data:
Net production volumes:
Oil (MBbl)                                 5,846                     4,767
Natural gas (MMcf)                         19,800                    17,798
Total (MBoe)                               9,146                     7,733
                                                                     
Average daily
production volumes:
Oil (Bbl)                                  64,956                    52,967
Natural gas (Mcf)                          220,000                   197,756
Total (Boe)                                101,623                   85,926
                                                                     
Average prices:
Oil, without                           $   92.35                 $   82.49
derivatives (Bbl)
Oil, with derivatives                  $   90.68                 $   83.75
(Bbl) (a)
Natural gas, without                   $   6.12                  $   4.43
derivatives (Mcf)
Natural gas, with                      $   5.86                  $   4.43
derivatives (Mcf) (a)
Total, without                         $   72.27                 $   61.05
derivatives (Boe)
Total, with derivatives                $   70.65                 $   61.83
(Boe) (a)
                                                                     
Operating costs and
expenses per Boe:
Lease operating
expenses and workover                  $   8.07                  $   7.74
costs
Oil and natural gas                    $   5.80                  $   5.31
taxes
Depreciation, depletion                $   24.21                 $   21.79
and amortization
General and                            $   5.22                  $   5.60
administrative
                                                            
                                                                     
(a) Includes the effect of cash settlements received from (paid on) commodity
derivatives not designated as hedges:
                                                            
                                       Three Months Ended
                                       March 31,
(in thousands)                      2014                    2013
                                                                     
Cash receipts from
(payments on)
derivatives not
designated as hedges:
Oil derivatives                        $   (9,769    )           $   6,016
Natural gas derivatives                   (5,068    )              -
Total                                  $   (14,837   )           $   6,016
                                                            
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 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
                                          March 31,
(in thousands, except per             2014                  2013
share amounts)
                                                           
Net income - as reported              $   91,307                $  30,093
                                                                   
Adjustments for certain
non-cash and unusual
items:
Loss on derivatives not                   35,615                   59,017
designated as hedges
Cash receipts from
(payments on) derivatives                 (14,837   )              6,016
not designated as hedges
Leasehold abandonments                    3,945                    4,387
(Gain) loss on
disposition of assets,                    (146      )              5
net
Discontinued operations:
Gain on disposition of                    -                        (20,363  )
assets
Tax impact (a)                           (9,266    )             (18,889  )
Adjusted net income                   $   106,618              $  60,266   
                                                                   
Adjusted earnings per
share:
Basic                                 $   1.01                  $  0.58
Diluted                               $   1.01                  $  0.58
                                                                   
                                                                   
Effective tax rates                       37.7      %              38.5     %
                                                          
                                                                   
(a) The tax impact is computed utilizing the Company's adjusted statutory
effective federal and state income tax rates shown in the table above.



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:


                                                  Three Months Ended
                                                     March 31,
(in thousands)                                    2014          2013
                                                                  
Cash flows from operating activities                 $ 475,980       $ 219,671
Settlements received from (paid on)                   (14,837 )      6,016
derivatives not designated as hedges (a)
Adjusted cash flows                                  $ 461,143      $ 225,687
                                                              
                                                                       
(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) loss
on derivatives not designated as hedges, (6) cash receipts from (payments on)
derivatives not designated as hedges, (7) (gain) loss on disposition of
assets, net, (8) interest expense, (9) federal and state income taxes on
continuing operations and (10) 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 Ended
                                                   March 31,
(in thousands)                                  2014          2013
                                                                
Net income                                         $ 91,307        $ 30,093
Exploration and abandonments                         25,375          18,407
Depreciation, depletion and amortization             221,392         168,420
Accretion of discount on asset retirement            1,671           1,394
obligations
Non-cash stock-based compensation                    11,432          6,767
Loss on derivatives not designated as hedges         35,615          59,017
Cash receipts from (payments on) derivatives         (14,837 )       6,016
not designated as hedges
(Gain) loss on disposition of assets, net            (146    )       5
Interest expense                                     56,135          52,106
Income tax expense from continuing                   55,331          10,977
operations
Discontinued operations                             -             (12,534 )
EBITDAX                                            $ 483,275      $ 340,668 
                                                            
                                                                     


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
                                       March 31,
(in thousands)                      2014                   2013
                                                           
Property acquisition
costs:
Proved                                 $    20,490              $   1,885
Unproved                                    24,688                  27,896
Exploration                                 324,497                 266,690
Development                                211,679                174,722
Total costs incurred
for oil and natural gas                $    581,354             $   471,193
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)                      2014                   2013
                                                                    
Exploration costs                      $    558                 $   734
Development costs                          965                    1,530
Total asset retirement                 $    1,523               $   2,264
obligations
                                                           
                                                                    


Concho Resources Inc.
Derivatives Information
Unaudited


The tables below provide data associated with the Company’s derivatives at May 12, 2014 for the periods indicated:


                2014
              Second          Third           Fourth          Total            2015             2016        2017
                 Quarter           Quarter           Quarter
                                                                                                                           
Oil
Swaps:
(a)
Volume           4,984,000         4,571,000         4,173,000         13,728,000         13,952,000         429,000       168,000
(Bbl)
Price          $ 93.32           $ 92.06           $ 91.74           $ 92.42            $ 87.22            $ 88.31       $ 87.00
(Bbl)
                                                                                                                           
Oil
Basis
Swaps:
(b)
Volume           3,458,000         3,956,000         3,956,000         11,370,000         543,000            -             -
(Bbl)
Price          $ (0.72     )     $ (0.99     )     $ (1.07     )     $ (0.93      )     $ (3.00      )     $ -           $ -
(Bbl)
                                                                                                                           
Natural
Gas
Swaps:
(c)
Volume           3,335,000         2,576,000         2,053,000         7,964,000          23,725,000         -             -
(MMBtu)
Price          $ 4.22            $ 4.23            $ 4.24            $ 4.23             $ 4.16             $ -           $ -
(MMBtu)
                                                                                                                           
Natural
Gas
Collars:
(d)
Volume           5,460,000         5,520,000         5,520,000         16,500,000         -                  -             -
(MMBtu)
Ceiling
Price          $ 4.40            $ 4.40            $ 4.40            $ 4.40             $ -                $ -           $ -
(MMBtu)
Floor
Price          $ 3.85            $ 3.85            $ 3.85            $ 3.85             $ -                $ -           $ -
(MMBtu)
                                                                                                                           
Natural
Gas
Basis
Swaps:
(e)
Volume           1,220,000         1,840,000         1,840,000         4,900,000          -                  -             -
(MMBtu)
Price          $ (0.11     )     $ (0.11     )     $ (0.11     )     $ (0.11      )     $ -                $ -           $ -
(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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