Concho Resources Inc. (NYSE: CXO) (“Concho” or the
“Company”) today announced three separate transactions that enhance
the Company’s position in the southern Delaware Basin, high grade
the Company’s portfolio and reduce net debt.
Highlights
- Concho agreed to acquire approximately
12,000 net acres complementary to the Company’s core North Harpoon
prospect in Ward and Reeves Counties, Texas, from a private
operator for total consideration of approximately $360 million,
through a combination of common stock, cash and drilling
carry.
- The Company completed an acreage
exchange with Clayton Williams Energy, Inc. (NYSE: CWEI) (“Clayton
Williams”), consolidating 21,000 net non-operated acres into a
concentrated, operated position adjacent to the Company’s Big Chief
prospect in Reeves County, Texas.
- Concho agreed to sell 14,000 net acres
in Loving County, Texas, for cash proceeds of $290 million.
- The aggregate impact of these
transactions is neutral to Concho’s 2016 capital and production
outlook.
Tim Leach, Chairman, Chief Executive Officer and President,
commented, “These transactions highlight our focus on actively
managing and improving our portfolio of high-quality assets in the
Permian Basin. The acquisition and acreage swap in Reeves and Ward
Counties increase our exposure to the best part of the southern
Delaware Basin and provide for more efficient development of our
existing assets in North Harpoon and Big Chief, with drilling
inventory that we believe competes with the best projects in our
portfolio. The combined effect of these transactions not only
strengthens our portfolio, but also frees up capital to develop
higher returning properties while improving our leverage
metrics.”
Property Acquisition and Asset Exchange
Concho has entered into a definitive agreement to acquire 12,000
net acres in Reeves and Ward Counties, Texas, adjacent to the
Company’s North Harpoon prospect for total consideration of
approximately $360 million, including 2.2 million shares of Concho
common stock, $150 million of cash and $40 million to carry a
portion of the seller’s future drilling costs. The acquisition
increases the Company’s exposure to core acreage in the southern
Delaware Basin and enables more efficient, long-lateral development
of Concho’s existing North Harpoon acreage. The acquired properties
have current net production of approximately 3.6 MBoepd and
estimated proved reserves of 18.5 MMBoe as of December 31, 2015. As
part of the transaction, the seller will retain a 20% non-operated
working interest in the assets. This acquisition is expected to
close during the first quarter of 2016.
The acreage exchange with Clayton Williams encompasses
approximately 21,000 net acres in the Company’s Big Chief prospect
in Reeves County, Texas. Consolidating operated positions benefits
both parties and allows Concho to optimize drilling activity with
more efficient long-lateral wells and provides for greater control
of field development. The acreage exchange will have no impact on
Concho’s daily production.
Concho was a first mover in the southern Delaware Basin, which
is characterized by multi-zone potential and considerable oil in
place. The Company continues to lead development in the region with
a focus on drilling longer laterals and optimizing completion
techniques. The property acquisition and acreage exchange add more
than 350 horizontal locations to the Company’s inventory in the
southern Delaware Basin, of which more than 200 are
long-laterals.
Acreage Divestiture
Concho also entered into a definitive agreement to sell 14,000
net acres located in Loving County, Texas, for cash proceeds of
$290 million to Silver Hill Energy Partners II, LLC. Production for
the third quarter of 2015 attributable to the assets was 2.5
MBoepd. The assets also include 5 MMBoe of estimated proved
reserves as of December 31, 2014. The asset sale eliminates
approximately $100 million of lower rate-of-return obligation
drilling in 2016. The sale is expected to close during the first
quarter of 2016 and be structured as a like-kind exchange.
Vinson & Elkins LLP acted as legal advisor to Concho on the
property acquisition and the acreage divestiture. Scotia Waterous
acted as financial advisor to Concho on the acreage
divestiture.
A presentation providing maps and other information related to
these transactions is available on Concho’s website at
www.concho.com.
Concho Resources Inc.
Concho Resources Inc. is an independent oil and natural gas
company engaged in the acquisition, development and exploration of
oil and natural gas properties. The Company’s operations are
primarily 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 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 Current Reports on Form 8-K; risks relating to
declines in the 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, including risks
related to properties where the Company does not serve as the
operator and risks related to hydraulic fracturing activities; 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; 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 management program; risks and
liabilities related to the integration of acquired properties or
businesses; 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160118005767/en/
Concho Resources Inc.Megan P. Hays,
432-685-2533Director of Investor RelationsorGabriel
Middendorf, 432-685-2577Financial Analyst
Concho Resources (NYSE:CXO)
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