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

“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.

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