About Concho Resources Inc.

Concho Resources has more than a hunch that a lucrative resource lies under its feet in Southeastern New Mexico and West Texas. The company explores and develops properties (more than 604,370 net acres), located primarily in the Permian Basin region, in which it produces oil and natural gas. The bulk of the company's reported 502.9 million barrels of proved reserves in 2013 is crude oil, while the rest is natural gas. Concho Resources gets more than 80% its revenues from crude oil, which is priced much higher than natural gas. The company drilled 392 net wells in 2013.

Geographic Reach

The company’s core oil and gas exploration and production operating areas are the New Mexico Shelf, Delaware Basin, and Texas Permian, in the Permian Basin region of Southeast New Mexico and West Texas. The New Mexico Shelf represented 45% of Concho Resources' total reserves in 2013; Texas Permian, 28%; and the Delaware Basin, 27%.


The company’s core operations are focused in the Permian Basin, which underlies a 250 miles wide and 300 miles long area of Southeast New Mexico and West Texas. In 2013, substantially all of its estimated proved reserves were located in its core operating areas and consisted of approximately 61 percent oil and 39 percent natural gas.

The company has assembled a multi-year inventory of vertical and horizontal development drilling and exploration projects, including projects to further evaluate the areal extent of the Yeso formation and the Wolfberry play; the Brushy Canyon, Bone Spring and Wolfcamp formations in the Delaware Basin; and the Spraberry and Wolfcamp formations in the Texas Permian.

Sales and Marketing

The company’s major customers include HollyFrontier Refining and Marketing and Enterprise Crude Oil, which accounted for 30% and 13%, respectively, of Concho Resources' revenues in 2013.

Financial Performance

The company's revenues increased by 27% primarily due to higher oil prices and a rise in production due to successful drilling efforts during 2012 and 2013 and production from the Three Rivers Acquisition, which closed in July 2012. The company increased its average daily production from 84,700 barrels of oil equivalent during the fourth quarter of 2012 to 97,000 barrels of oil equivalent during the fourth quarter of 2013.

Concho Resources' net income decreased by 42% in 2013 thanks to increased depreciation and depletion expenses associated with new wells (drilled and completed in 2012 and 2013), and acquisitions in 2012 and higher depletion rates. Other factors included an increased loss on derivatives not designated as hedges. Its Exploration and abandonments expenses rose due to its increased drilling and exploration activity in the Delaware Basin area.

Operating cash flows during 2013 grew by $124.5 million primarily due to an increase in oil and natural gas revenues, offset in part by cash increases in oil and natural gas production costs, cash increases in general and administrative expense and interest expense, and negative variances in operating assets and liabilities.

Acquisitions and the increased demand for oil and gas have helped to lift Concho Resources' revenues each year from 2008 through 2013.


The company has focused on expanding its holdings through medium- and large-sized complementary acquisitions, primarily in the Permian Basin. Concho Resources is reinvesting high-margin cash flows into projects with robust rates of return and pursuing acquisitions that enhance existing portfolio. It intends to grow its reserves and production through development drilling and exploration activities on its multi-year project inventory and through acquisitions that meet its strategic and financial objectives. In 2013, it drilled 44% of its wells horizontally (an advanced drilling technology that usually produces more oil per well than the traditional vertical method), and it continues to evaluate converting its identified vertical locations to horizontal opportunities, where possible.

It had a 2014 capital budget of $2.3 billion focused on drilling in the Delaware Basin and Midland Basin. It planned to spend 70% of it on drilling and completion costs on the Delaware Basin assets, with which it expects to drill 281 (191 net) wells; and 23% on the Texas Permian assets, with which it expects to drill 190 (99 net) wells.

To raise cash to help fund acquisitions, in 2012 Concho Resources sold some non-core Permian Basin oil and natural gas properties to  Legacy Reserves for $520 million.

Mergers and Acquisitions

In 2012 the company acquired interests in the Wolfberry trend in the Permian Basin from Petroleum Development Corporation for $189.2 million. The acquisition added about 10,200 net acres to Concho Resources' holdings in the region and estimated proved oil reserves of about 10 million barrels of oil equivalent.

The company boosted its Permian holdings further in 2012 by buying all of the oil and gas assets of Three Rivers Operating Company for $1 billion. Three Rivers has estimated proved reserves of 45.5 million barrels of oil equivalent and 200,000 net acres in a handful of Permian plays.

Concho Resources acquired three entities affiliated with OGX Holdings II, LLC for $252 million. The OGX deal included producing and non-producing acreage in the Delaware Basin of Southeast New Mexico and West Texas representing about 5.7 million barrels of of proved oil equivalent reserves.

Company Background

It also sold its Bakken assets in North Dakota in 2011 to focus on its core Permian properties.

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Concho Resources Inc.

600 W Illinois Ave
Midland, TX 79701-4882
Phone: 1 (432) 683-7443
Fax: 1 (432) 683-7441


  • Employer Type: Public
  • Stock Symbol: CXO
  • Stock Exchange: NYSE
  • Chairman, CEO, and President: Timothy A. Leach
  • Chairman, CEO, and President: Timothy A. Leach
  • EVP and COO: E. Joseph Wright

Major Office Locations

  • Midland, TX

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