Tim Leach, Concho's Chairman, CEO and President commented, “The Permian Basin continues to be one of the most attractive and profitable oil basins in the country. The recent acquisition of assets from Three Rivers was our most strategic acquisition since Marbob and reinforced Concho’s significant presence in the Permian Basin. The unprecedented level of activity across the Permian Basin during the first half of 2012 has certainly introduced new challenges; however, I am confident that given our scale and continued success in our core areas, like the Delaware Basin, our capital budget and production guidance for the year remains on track.”

For the second quarter of 2012, the Company reported net income of $319.3 million, or $3.07 per diluted share, as compared to net income of $232.2 million, or $2.24 per diluted share, for the second quarter of 2011. The Company’s second quarter 2012 results were impacted by several non-cash items including: (1) a $394.8 million unrealized mark-to-market gain on commodity derivatives and (2) $8.4 million of leasehold abandonments. Excluding these items and their tax effects, the second quarter 2012 adjusted net income (non-GAAP) was $80.5 million, or $0.78 per diluted share. Excluding similar non-cash items and their tax impact, adjusted net income (non-GAAP) for the second quarter of 2011 was $113.2 million, or $1.09 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 $327.4 million in the second quarter of 2012, an increase of 5% from $310.7 million reported in the second quarter of 2011. 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 2012 decreased 3% when compared to the second quarter of 2011. This decrease was attributable to a 12% decrease in the Company’s unhedged realized oil price and a 46% decrease in the Company’s unhedged realized natural gas price, which was substantially offset by a 22% increase in production in the second quarter of 2012 compared to the second quarter of 2011. In addition, oil sales were adversely impacted by a temporary widening of the Midland-to-Cushing basis differential, which averaged approximately $5.00 per barrel during the second quarter of 2012. Today, the Midland-to-Cushing basis differential has returned to historical levels of less than $1.00 per barrel. Finally, natural gas price realizations were adversely impacted by the decline in natural gas liquids and residue gas prices.

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