Concho Resources Inc. Announces Acquisition of Northern Delaware Basin Assets

Concho Resources Inc. (NYSE: CXO) (“Concho” or the “Company”)
today announced it has reached a definitive agreement to acquire
approximately 24,000 gross (16,400 net) acres in the northern Delaware
Basin for approximately $430 million. The acquired acreage is
complementary to the Company’s leasehold position in the northern
Delaware Basin, with approximately 12,000 gross (10,000 net) acres
located in the Red Hills area in Lea County, New Mexico.

Acquisition Highlights

• Includes approximately 2.5 MBoepd (69% oil) of current production
• Expands position in Red Hills area by more than 25% to approximately
  47,000 net acres
• Doubles long-lateral drilling inventory in Red Hills
• Provides significant development upside across multiple, de-risked
  zones
• Accretive to cash flow per share and leverage neutral

Tim Leach, Chairman, Chief Executive Officer and President, commented,
“This transaction is an opportunistic bolt-on in the Red Hills area
where we are consistently delivering strong well performance. Our
evaluation provides for multiple opportunities to enhance value through
increased density development on multi-well pads as well as additional
zones beyond the Avalon Shale, Wolfcamp Shale and the emerging Wolfcamp
Sands. With a continued focus on driving capital efficiency gains and
actively managing our portfolio, this acquisition further strengthens
our industry-leading position in the Permian Basin and reinforces our
ability to deliver differentiated long-term growth.”

The Red Hills area is an oil-prone fairway generating exceptional
returns at current commodity prices. With more than 5,000 feet of
resource-rich hydrocarbon column, this area is highly prospective for
multi-zone development. The acquisition more than doubles the Company’s
long-lateral drilling inventory in Red Hills and enhances its ability to
drill long laterals on existing Concho leasehold.

Consideration in the transaction includes approximately $150 million of
cash and 2.18 million shares of Concho’s common stock. Concho expects to
fund the cash portion of the transaction with cash on hand, borrowings
under its credit facility and potential non-core asset sales. The
acquisition is expected to close in January 2017 and is subject to
customary closing conditions.

A presentation summarizing the transaction is available on Concho’s
website at www.concho.com.

Full-Year 2017 Outlook

As a result of this acquisition, Concho plans to increase its operated
rig count to an average of eight rigs in the northern Delaware Basin
during 2017. Concho expects to grow oil production volumes by more than
20% year-over-year in 2017 and total production by 18% to 21%, up from
the previously disclosed guidance range of 17% to 20%. The Company
maintained its capital expenditure guidance of $1.4 billion to $1.6
billion for 2017. Based on the current commodity price outlook, Concho
expects to fund its 2017 capital program within cash flow. The Company’s
2017 capital program excludes acquisitions and is subject to change
depending upon a number of factors, including commodity prices and
industry conditions.

Concho Resources Inc.

Concho Resources Inc. is an independent oil and natural gas company
engaged in the acquisition, development, exploration and production 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 the Company’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 fact, 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. Forward-looking statements contained in this
press release specifically include statements, estimates and projections
regarding the Company’s future financial position, operations,
performance, business strategy, oil and natural gas reserves, drilling
program, capital expenditure budget, liquidity and capital resources,
the timing and success of specific projects, outcomes and effects of
litigation, claims and disputes, derivative activities and
potential financing. The words “estimate,” “project,” “predict,”
“believe,” “expect,” “anticipate,” “potential,” “could,” “may,”
“foresee,” “plan,” “goal” or other similar expressions that
convey the uncertainty of future events or outcomes are intended to
identify forward-looking statements, which generally are not historical
in nature. However, the absence of these words does not mean that the
statements are not forward-looking. These statements are based on
certain assumptions and analyses 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 risk
factors discussed or referenced in the Company’s most recent Annual
Report on Form 10-K and in the Company’s Quarterly Reports on Form 10-Q
for the quarters ended June 30, 2016 and September 30, 2016; risks
relating to declines in the prices the Company receives, or sustained
depressed prices the Company receives, for its oil and natural gas;
uncertainties about the estimated quantities of oil and natural gas
reserves; drilling and operating risks; the adequacy of the Company’s
capital resources and liquidity including, but not limited to, access to
additional borrowing capacity under its credit facility; the effects of
government regulation, permitting and other legal requirements,
including new legislation or regulation of hydraulic fracturing and the
export of oil and natural gas; the impact of potential changes in the
Company’s credit ratings; environmental hazards, such as uncontrollable
flows of oil, natural gas, brine, well fluids, toxic gas or other
pollution into the environment, including groundwater contamination;
difficult and adverse conditions in the domestic and global capital and
credit markets; risks related to the concentration of the Company’s
operations in the Permian Basin of southeast New Mexico and west Texas;
disruptions to, capacity constraints in or other limitations on the
pipeline systems that deliver the Company’s oil, natural gas liquids and
natural gas and other processing and transportation considerations; the
costs and availability of equipment, resources, services and personnel
required to perform the Company’s drilling and operating activities;
potential financial losses or earnings reductions from the Company’s
commodity price risk-management program; risks and liabilities
associated with acquired properties or businesses, including risks and
liabilities associated with the Company’s acquisition of assets in the
northern Delaware Basin; uncertainties about the Company’s ability to
successfully execute its business and financial plans and strategies;
uncertainties about the Company’s ability to replace reserves and
economically develop its current reserves; general economic and business
conditions, either internationally or domestically; competition in the
oil and natural gas industry; uncertainty concerning the Company’s
assumed or possible future results of operations; 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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20161121005291/en/

News by QuoteMedia

www.quotemedia.com