Investor Presentation November 2019 Forward-Looking Statements and - PowerPoint PPT Presentation

Investor Presentation November 2019

Forward-Looking Statements and Other Disclaimers These materials and the accompanying oral presentation contain “forward -looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this presentation that address activities, events or developments that Concho Resources Inc. (the “Company” or “Concho”) expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “enable,” “strategy,” “intend,” “foresee,” “positioned,” “plan,” “will,” “guidance,” ”maximize,” “outlook,” “goal,” “strategy,” “target,” or other similar expressions, as well as predicted or illustrative rates of return (“ROR”), 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, current plans, anticipated future developments, expected financings 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 and other information discussed or referenced in the Company’s most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission (the “SEC”) . 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. Information on Concho’s website, including information referenced directly herein such as the Climate Risk Report, is not part of this presentation. These other materials are subject to additional cautionary statements regarding risks and forward looking information. To supplement the presentation of the Company’s financial results prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this presentation contains certain financial measures that are not prepared in accordance with GAAP, including operating cash flow before working capital changes. See the appendix for a description and reconciliation of the non-GAAP measure presented in this presentation to the most directly comparable financial measure calculated in accordance with GAAP. This presentation also contains the non-GAAP term free cash flow, or FCF. Free cash flow is cash flow provided by operating activities in excess of cash flow used in investing activities for additions to oil and gas properties. The Company believes that free cash flow is useful to investors as it provides measures to compare cash provided by operating activities and exploration and development costs across periods on a consistent basis. For future periods, the Company is unable to provide a reconciliation of free cash flow to the most comparable GAAP financial measure because the information needed to reconcile this measure is dependent on future events, many of which are outside management's control. Additionally, estimating free cash flow to provide a meaningful reconciliation consistent with the Company's accounting policies for future periods is extremely difficult and requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking estimates of free cash flow are estimated in a manner consistent with the relevant definitions and assumptions noted above and herein. The SEC requires oil and natural gas companies, in their filings with the SEC, to disclose proved reserves, which are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible — from a given date forward, from known reservoirs and under existing economic conditions (using the trailing 12-month average first-day-of-the-month prices), operating methods and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The SEC also permits the disclosure of separate estimates of probable or possible reserves that meet SEC definitions for such reserves; however, the Company currently does not disclose probable or possible reserves in its SEC filings. In this presentation, proved reserves attributable to the Company at December 31, 2018 are estimated utilizing SEC reserve recognition standards and pricing assumptions based on the trailing 12-month average first-day-of-the- month prices of $62.04 per Bbl of oil and $3.10 per MMBtu of natural gas. Cautionary Statement Regarding Production Forecasts and Other Matters Concho’s production forecasts and expectations for future periods and statements regarding drilling inventory and rate-of-return (ROR) are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases or other factors that are beyond Concho’s control. 2

Concho Resources Leadership Position in the Permian Basin Well Positioned to Deliver Growth & Returns 860,000 gross (570,000 net) acres › High-quality asset portfolio • Sustainable, long-term growth platform in the Midland & Delaware Basins • Leading well productivity › Driving cost savings and efficiencies MIDLAND BASIN › Free cash flow outlook for 2020 supports return of capital › Commitment to financial discipline DELAWARE BASIN Our Strategy › Building a great team NM › Investing in high-margin assets TX › Generating high-quality returns CXO Acreage › Maintaining a strong financial position CXO acreage as of December 31, 2018, pro forma for transactions announced to date. 3

3Q19 Summary Solid operational Strong financial Strategic portfolio Increasing quarter performance management shareholder returns › Production of 330 › Controllable cash costs › New Mexico Shelf sale › Board authorized initiation of $1.5bn MBoepd above high 3% lower y/y › Accelerates value for end of guidance share repurchase › Generated excess legacy assets & program › ~20% well cost cash flow improves cost structure › Shelf sale proceeds reduction exceeds 4Q19 target jumpstart repurchases Delivering On Priorities Consistent execution Highlight asset quality Disciplined investment & cost management 4

3Q19 Operational Performance High-Quality Asset Base Production Above High End of Guidance Quarterly Volumes & 4Q19 Outlook (MBoepd) Diversified portfolio provides capital allocation flexibility Oil (MBopd) Gas › Federal lands represent 1/5th of total net acreage position › 3Q19 total production & oil Pre-Shelf Sale › Permit ~1 year in advance of 334-341 MBoepd production above high end of 330 operations guidance 287 Post-Shelf › 4Q19 guidance includes expected Sale impact from remaining spacing 318-325 tests MBoepd (64% oil) • Future development plans to Midland prioritize wider spacing Basin 206 185 Delaware Basin CXO Acreage 3Q19 Well 3Q18 3Q19 4Q19e CXO acreage as of December 31, 2018, pro forma for announced transactions. 4Q19e production guidance Pre-Shelf Sale includes a full quarter of production volumes for the New Mexico Shelf; Post-Shelf 5 Sale volumes based on November 1, 2019 close date and therefore include one month of production volumes for the New Mexico Shelf.

3Q19 Financial Performance Lower Costs Driving Excess Cash Flow Controllable Cash Costs Financial Highlights ($mm) Cash Expenses excl. GP&T ($ per Boe) LOE G&A Interest 2Q19 3Q19 Realized price $37.68 $36.74 $14.62 ($/Boe) $12.36 $3.95 Operating Cash $10.40 $10.02 $3.53 $779 $665 $9.57 $9.00 Reducing Flow (“OCF”) $1.99 $1.49 $3.21 $1.45 Cash Costs $3.02 $2.38 $1.86 $2.61 New Mexico Shelf sale OCF before working reduces LOE & $668 $706 interest expense capital changes $7.46 $6.26 $6.14 Focus on further $5.81 $5.80 reducing cash costs E&D costs incurred $785 $670 2015 2016 2017 2018 3Q19 YE20 Target Operating cash flow before working capital changes is a non-GAAP measure. See appendix for reconciliation to GAAP measure. E&D costs incurred is the sum of exploration and 6 development costs incurred.