Concho Resources’ 1Q16 Operational Highlights
Concho Resources Up Despite Lower-than-Expected Earnings
Concho Resources’ 1Q16 production
Concho Resources’ (CXO) total production volume in 1Q16 was 12.7 million barrels of oil equivalent (MMboe). This represents a rise of ~6.7% year-over-year.
For 2016, CXO expects its annual production to be flat. Whiting Petroleum (WLL), by comparison, has provided 2016 production growth guidance of -18% at the midpoint. Oasis Petroleum (OAS) has provided growth guidance of -6% at the midpoint. Apache (APA) has provided growth guidance of -9% at the midpoint.
On the other hand, PDC Energy (PDCE) expects its annual production to grow by 30%–40% in 2016. All these companies comprise ~8.7% of the iShares US Oil & Gas Exploration & Production ETF (IEO).
CXO’s 1Q16 realized prices and cost efficiencies
CXO’s realized crude oil (USO) price, including the effect of hedges in 1Q16, averaged $60.90 per barrel, which was ~3.6% lower than its realized crude oil price in 1Q15.
Including the effect of hedges, CXO’s realized natural gas price averaged $1.75 per thousand cubic feet, which was 42% lower than its realized natural gas price in 1Q15.
CXO’s capex guidance and key management comments
Concho Resources’ (CXO) exploration and development capex (capital expenditure) is expected to be $0.9 billion–$1.1 billion, down 44% at the midpoint compared to 2015’s exploration and development capex. Also, the company is reducing its rig count in 2016.
Tim Leach, Concho Resources’ CEO, noted in the company’s earnings release, “Our per-unit cost structure trended lower and drilling and completion capital was well within cash flow. Our success is a direct result of our high-quality drilling inventory across all our assets in the Permian Basin and our relentless focus on driving low costs and optimizing field development.”
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