Enercom’s 2008 Oil and Gas Conference August 14, 2008 1
Forward Looking Statements This presentation 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 facts, included in this presentation that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward ‐ looking statements. Without limiting the generality of the foregoing, forward ‐ looking statements contained in this presentation specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including as to the Company’s drilling program, production, hedging activities, capital expenditure levels and other guidance included in this presentation. These statements are based on certain assumptions made by the Company based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. 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 risks and uncertainties relating to financial performance and results, prices and demand for oil and natural gas, availability of drilling and production equipment and personnel, availability of sufficient capital to execute our business plan, risks associated with drilling and operating wells, our ability to replace reserves and efficiently develop and exploit our current reserves and other important factors that could cause actual results to differ materially from those projected in the forward ‐ looking statements. When considering our forward ‐ looking statements, you should keep in mind the risk factors and other cautionary statements found in the Company’s Annual Report on Form 10 ‐ K for the year ended December 31, 2007. 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. In its filings with the Securities and Exchange Commission, Concho is permitted to disclose only proved reserves that it has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Concho uses certain terms in this presentation, such as "unproved", or "potential" in relation to reserves that the SEC's guidelines strictly prohibit it from including in filings with the SEC. These estimates are subject to substantially greater risk of the Company not actually realizing them. Investors are urged to closely consider Concho's disclosure of its proved reserves, along with certain risks and uncertainties inherent in its business, set forth in its filings with the SEC. 2
Company Overview Map of operations Ticker: ND Market Cap 1 : $2.6 billion NM AR Enterprise Value 2 : $3.3 billion Midland Core operating area TX Emerging resource plays Headquarters New Mexico Shelf properties Portfolio highlights Texas Permian properties NM � 2Q ‘08 average daily production of 96 Mmcfe/d New Mexico Shelf Properties • June ‘08 pro forma average daily production of 134 TX Central Basin Platform Mmcfe/d 3 � 782 Bcfe proved reserves (99% Permian) 4 • 62% Oil Western Delaware Basin • 56% Proved developed 1 Based on 8/1/08 closing price of $31.01 and 85M fully diluted shares outstanding 2 Long term Debt at 8/1/08 was $675M � Over 4,200 identified opportunities 3 Based on Concho’s 2 nd Quarter and Henry’s June daily production 4 Concho’s mid ‐ year and Henry’s June reserves 3
Recent Highlights Revenues of $244.1 million in 1 st half '08; 93% above 1st half '07 of $126.4 million � Net cash provided by operating activities in 1 st half '08 of $162.9 million, a 156% increase over 1 st half '07 � 1 in 1 st half '08 of $173.8 million, a 97% increase over 1 st half '07 � EBITDAX � Closed acquisition of Henry Petroleum on July 31, 2008 � Increased '08 capital budget 22% from revised budget of $318 million to $389 million � Increased budget in Texas Permian by $43 million Added 6 th rig on core Southeast New Mexico Shelf asset in July ‘08 � � Increased budget in Southeast New Mexico Shelf by $28 million due to larger fracs and increased tubular costs � Increased budget in Bakken Shale and Wolfcamp horizontal oil play to $29 million from $7 million due to early success in the regions � Increased '08 production guidance from 35 ‐ 37 Bcfe to 42 ‐ 43.5 Bcfe 1 st half '08 production of 17.2 Bcfe, a 18% increase over 1 st half '07 � 1 See reconciliation in Appendix 4
Margin Analysis � Strong price realizations due to 2007 Cash Margin 1 60/40 oil/gas mix and liquid $8.00 $7.38 content in gas stream $7.00 � Favorable cost structure in core $5.66 $6.00 area due to concentration of assets $5.00 ($’s / Mcfe) $4.00 � Stable differentials historically in $3.00 the Permian Basin $2.00 � Established infrastructure $1.00 $ ‐ � First half ‘08 cash margin was CXO Median $12.39/ Mcfe 1 Source: JP Morgan North American Equity Research dated March 10, 2008: Numbers are based on full year 2007 results Cash Margin defined as: Revenue (ex. hedging) minus LOE, Severance Tax, and G&A Peers Include: DNR, EAC, HK, RRC, SD, SM, SWN, WLL and XCO 5
Overview of Henry Petroleum Acquisition 6
Transaction Overview � Concho Resources acquired Henry Petroleum plus additional interests for approximately $588 million � Funded by borrowings under amended senior credit facility and the proceeds from common stock private placement � Approximately $300 million available under senior credit facility at 8/1/08 � Acquired assets contain an estimated 172 Bcfe of proved reserves with current average daily production of approximately 33 Mmcfe/d � 100% of estimated proved reserves are located in the Permian Basin, 79% concentrated in the Wolfberry play � Wolfberry assets are substantially all operated � Approximately 1,650 drilling locations; 312 of which are proved undeveloped � Identified unproved reserve potential of approximately 295 Bcfe � Acquisition is immediately accretive on the following metrics: � Cash flow per share � Recurring earnings per share � Production per share � Proved reserves per share 7
Strategic Rationale � Established second proven growth engine within the Permian Basin � Technical/operational synergies with Southeast New Mexico Shelf asset Strategic � Increased portfolio of identified opportunities by ~68% (2,500 to 4,200) Rationale � Provided additional consolidation opportunity in a second resource play � Attractive valuation � Family owned business with estate planning considerations � Midland based acquirer provided opportunity for existing employees Catalysts � Willingness / ability to accelerate development activity and capitalize on further consolidation opportunity � Accretive to both cash flow per share and recurring earnings per share in each of 2008 & 2009 � Valuation is attractive at current development pace with opportunity to Considerations accelerate � Opportunity to add technical team with cost substantially mitigated by COPAS reimbursement � Additional upside through further downspacing and enhanced recovery 8
CXO Assets and Henry Petroleum Assets SENM Shelf Artesia W. Wolfberry E. Wolfberry Midland Spraberry Trend CXO Acreage Henry Petroleum Wolfberry Acreage 9
Henry Petroleum Acquisition – Key Takeaways � Established second proven growth engine in the Permian Basin � Immediately accretive to recurring EPS and CFPS � Incremental capital development plan is self ‐ funding � Enhanced Concho’s growth profile � Cash margin per Mcfe remains among best in the industry � Potential upside includes accelerated drilling program, downspacing and additional acquisitions 10
Combined Concho Assets 11
Concho Assets (Post Henry Acquisition) • New Mexico Shelf NM TX 782 Bcfe proved reserves 1 • 61% of proved reserves • 61% oil Northwest • Majority of • 56% proved developed Shelf opportunities < 7,000’ Tatum Basin June ‘08 pro forma average Midland Texas Permian daily production of 134 Basin • 34% of proved reserves Mmcfe/d 2 • Activities concentrated Lea Co. in Wolfberry Over 4,200 opportunities Eddy Co. • Over 1,700 projects • 1,424 Yeso NM • 1,420 Wolfberry New Mexico Basin TX • 1,356 Other Midland Central • 4% of proved reserves Delaware Basin • Atoka, Morrow, Strawn Basin Platform Salt • 140 projects in Basin inventory Marfa Basin 1 Assumes Concho’s mid ‐ year 2008 and Henry’s June 2008 reserves 2 Assumes Concho’s 2 nd Qtr and Henry’s June daily production 12
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