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Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc.

Concho Resources, Inc. · Sep 26, 2012 · 30 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 1
    September 2012 Barclays European High Yield Presentation
  2. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 2
    Company Overview Company Highlights Permian Basin Leading pure-play Permian Basin operator 457 MMBoe year-end 2011 estimated proved reserves1 Results in 2Q 2012: Drilled 221 gross wells Produced 6.8 MMBoe Net income of…
  3. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 3
    1H 2012 Highlights Achieved record levels of production and earnings during 1H 2012 Drilled 431 gross wells Produced 13.7 MMBoe, a 27% increase over 1H 2011 production Net income of 350.4 million, a 28% increase over 1H 2011 net…
  4. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 4
    Permian Basin Current Activity Technology expanding resource potential across the Permian Basin Yeso Activity targeting Lower Abo Wolfberry unconventional reservoirs Wolfcamp Cline/Penn Approximately 500 rigs Mississippian…
  5. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 5
    Permian Basin Horizontal Drilling Activity Horizontal Rig Growth since 1Q11 % Horizontal Rigs % Vertical Rigs 495 503 434 410 420 360 75% 71% 77% 88% 84% 87% 25% 29% 23% 13% 12% 16% 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12…
  6. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 6
    Operational Strategy Continued focus on the Permian Basin Exposed to some of the most prolific oil plays in the U.S. Capitalize on the strategic benefits of being one of the largest operators in the Permian Basin Committed to…
  7. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 7
    Track Record of Production & Reserve Growth Annual Production (MMBoe) Proved Reserves (MMBoe) 28.7 - 29.8 386.5 323.5 23.6 211.5 15.6 10.9 137.3 7.1 91.0 77.8 5.0 3.9 1.2 17.9 17.8 12.5 0.1 2004 2005…
  8. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 8
    Commodity Mix Significantly Tied to Oil 2Q12 Production 7% Residue 2Q12 Revenue Gas Contribution 6.8 MMBoe 432.8 Million 4% Dry Gas 38% Wet Gas 96% Liquids (84% Oil) 62% Oil 10
  9. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 9
    Strong, Oil-driven Profitability Unhedged Cash Margin Percentage1 vs. Average NYMEX Natural Gas Price (/MMbtu) 80.07 5.07 73.24 73.39 70.84 72.01 Realized Price (/Boe) 65.96 66.04 62.49 63.43 61.68 4.37 Avg. NYMEX Gas 4.34…
  10. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 10
    Compelling Unhedged Cash Margins 1H 2012 Unhedged Cash Margin (/Boe) 65 60 CXO 55 52.022 50 45 40 Median3: 38.75 35 30 25 20 15 10 5 0 Source: Company filings Note: Peers include: BRY, CLR, DNR, KOG, OAS, PXD, PXP, RRC,…
  11. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 11
    Reinvest High Margin Cash Flow into Robust ROR Projects Inventory Rates of Return1 Bone Spring Wolfberry Yeso Avalon Shale 63% 55% 49% 53% 45% 38% 36% 44% 28% 27% 36% 28% 27% 25% 23% 20% 70 bbl /4 mmbtu 80…
  12. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 12
    2012 Capital Budget and Activity 2012 Capital Budget: 1.5bn 2012 Drilling & Completion Budget: 1.4bn 4% 4% 35% 37% Drilling & New Mexico Shelf Completion Texas Permian Facilities Delaware Basin Leasehold & G&G 92% 28% New…
  13. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 13
    Northern Delaware Basin Overview Active Horizons 2,3751 locations targeting: Delaware sands Bone Spring sand (1st/2nd/3rd) Avalon shale Bone Spring sands Wolfcamp shale Other targets: Delaware sands Penn shale Significant…
  14. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 14
    Southern Delaware Basin Overview 140,000 gross (125,000 net) acre position1 Target horizons: Delaware sands Avalon shale Bone Spring sands Wolfcamp shale Encouraging early production Two wells completed with 30 days of…
  15. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 15
    Midland Basin Wolfberry Play Technical team has drilled over 1,000 wells Have added over 500 Wolfberry locations through acquisitions in 2012 Drilled one horizontal Wolfcamp shale well in 1H12; will drill another in 2H12…
  16. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 16
    Midland Basin Expanding Into The Emerging Southern Midland Basin Southern Midland Basin Expansion Continued expansion into emerging southern Midland Basin unconventional plays Acquired 39,700 gross (29,000 net) acres with Three…
  17. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 17
    New Mexico Shelf Shelf Overview Will average 7 rigs in 2H12 3 Horizontal Yeso rigs 4 Vertical Yeso rigs Concho has drilled over 1,000 wells in the Yeso Expanding the play boundary through horizontal development Drilled 15…
  18. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 18
    Long History of Capital Discipline Adjusted Cash Flows1 vs. Capital Expenditures ( in millions) Capital Expenditures Adjusted Cash Flows 4,000 3,000 2,000 1,000 0 2009 2007 - 2011 2007 2008 2010 2011 1 The…
  19. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 19
    Liquidity Pro Form a as ( in thousands) June 30, 2012 Pro Form a (a) Further Adjusted (b) Borrowing com m itm ents .............................................................................................. 2,500,000 2,500,000…
  20. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 20
    Debt Maturity Profile as of 6/30/12 in millions Credit facility 8.625% Senior Unsecured Notes 7.000% Senior Unsecured Notes 6.500% Senior Unsecured Notes 5.500% Senior Unsecured Notes New 5.500% Senior Unsecured Notes 1,500…
  21. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 21
    Disciplined Hedging Program (at 9/13/2012) Hedges as a % of Estimated Proved Developed Production Natural Gas Swaps Oil Swaps C G H I J K L P Q R S T U V W X Y Z AA 100% 96.01 96.01 96.15 90% 80% (% of PDP) 70% 91.99…
  22. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 22
    Investment Highlights Leading Permian producer with focused operations in three core plays Yeso, Delaware Basin and Wolfberry Compelling margins driven by cost discipline, operating benefits of scale, and liquids focus…
  23. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 23
    Appendix 25
  24. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 24
    Recent Bond Offering Senior Unsecured Notes Issuer: Concho Resources Inc. Amount: 700mm Pricing: 5.500% Issue: Senior Unsecured Notes Expected Rating: B1 / BB+ Maturity: 10.5 years Use of proceeds: Repay credit facility…
  25. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 25
    EBITDAX Reconciliation Historical EBITDAX Years Ended T hree Months Ended Six Months Ended LT M Decem ber 31, June 30, June 30, June 30, (in thousands) 2006 2007 2008 2009 2010 2011 2012 2011 2012 2011 2012 Net incom e (loss)…
  26. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 26
    Adjusted Net Income Reconciliation Historical Adjusted Net Income The following provides information that the Company believes may be useful to investors who follow the practice of some industry analysts who adjust company earnings…
  27. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 27
    Unhedged Cash Margin Reconciliation Historical Unhedged Cash Margin Unhedged cash margin per BOE (as calculated below) is presented herein, and reconciled to the generally accepted accounting principle (GAAP) measure of net income…
  28. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 28
    Adjusted Cash Flow Reconciliation Historical Adjusted Cash Flow The Company believes adjusted cash flows may be useful to investors who follow the practice of some industry analysts who adjust reported cash flow from operating…
  29. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 29
    Hedges as of 9/13/2012 Current Oil and Natural Gas Swaps 2012 T hird Fourth Quarter Quarter T otal 2013 2014 2015 2016 2017 Oil Swaps Volume (Bbl) ............................................... 4,044,500 3,67 6,500 7 ,7 21,000…
  30. Barclays European High Yield & Leveraged Finance Conference – Concho Resources, Inc. – slide 30
    Updated 2012 Guidance (Including Three Rivers) Concho 2012 Production and Operating Guidance Production: Oil equivalent (MMBoe) 28.7 - 29.8 % Oil 60% - 63% Price differentials to NYMEX: (excluding the effects of hedging) Oil…

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