Investor Presentation March 2020 Forward-Looking Statements and - PowerPoint PPT Presentation

Investor Presentation March 2020

Forward-Looking Statements and Other Disclaimers These materials and the accompanying oral presentation contain “forw ard -looking statements” w ithin 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 w ill or may occur in the future are forw ard-looking statements. The w ords “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “enable,” “strategy,” “intend,” “foresee,” “positioned,” “plan,” “w ill,” “guidance,” ”maximize,” “outlook,” “goal,” “strategy,” “target,” or other similar expressions, as w ell as predicted or illustrative rates of return (“ROR”), that convey the uncertainty of future events or outcomes are intended to identify forw ard-looking statements, w hich generally are not historical in nature. How ever, the absence of these w ords does not mean that the statements are not forw ard-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. Forw ard-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forw ard-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 w ill be achieved (in full or at all) or w ill prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of w hich are beyond the control of the Company, w hich may cause actual results to differ materially from those implied or expressed by the forw ard-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 w ith the Securities and Exchange Commission (the “SEC”) . Any forward-looking statement speaks only as of the date on w hich 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 otherw ise, except as required by applicable law . Information on Concho’s w ebsite, 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 forw ard looking information. To supplement the presentation of the Company’s financial results prepared in accordance w ith U.S. generally accepted accounting principles (“GAAP”), this presentation contains certain financial measures that are not prepared in accordance w ith GAAP, operating cash flow before working capital changes and free cash flow (“FCF”) . See the appendix for the descriptions and reconciliations of these non-GAAP measures presented in this presentation to the most directly comparable financial measures calculated in accordance w ith GAAP. 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 w hich are outside management's control. Additionally, estimating free cash flow to provide a meaningful reconciliation consistent w ith 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 w ithout unreasonable effort. Forw ard-looking estimates of free cash flow are estimated in a manner consistent w ith the relevant definitions and assumptions noted above and herein. The SEC requires oil and natural gas companies, in their filings w ith the SEC, to disclose proved reserves, w hich are those quantities of oil and natural gas, w hich, by analysis of geoscience and engineering data, can be estimated w ith reasonable certainty to be economically producible — from a given date forw ard, from know n 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 w hich contracts providing the right to operate expire, unless evidence indicates that renew al 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; how ever, 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, 2019 are estimated utilizing SEC reserve recognition standards and pricing assumptions based on the trailing 12-month average first-day-of-the- month prices of $52.19 per Bbl of oil and $2.58 per MMBtu of natural gas. Cautionary Statement Regarding Production Forecasts and Other Matters Concho’s guidance and outlook regarding future performance, including production forecasts and expectations for future periods and statements regarding drilling inventory and ROR, are dependent upon many assumptions, including estimates of production decline rates from existing w ells and the undertaking and outcome of future drilling activity, w hich may be affected by significant commodity price declines or drilling cost increases or other factors that are beyond Concho’s control. 2

Concho Resources Our Position in the Permian Basin Well Positioned to Deliver Growth & Returns 800,000 gross (550,000 net) acres › High-quality asset portfolio • Sustainable, long-term growth platform in the Midland & Delaware Basins › Driving cost savings and efficiencies MIDLAND BASIN › Free cash flow outlook for 2020 supports return of capital › Commitment to financial discipline DELA WARE BASIN Our Strategy › Building a great team NM › Investing in high-margin assets TX › Generating high-quality returns › Maintaining a strong financial position CXO Acreage CXO acreage as of December 31, 2019. Free cash flow (FCF) is a non-GAAP measure. See appendix for a definition and reconciliation to GAAP measure. 3

4Q19 Summary Key messages Delivering growth & Driving strong free Strengthening Growing lower costs cash flow investment case sustainably › Production exceeded › 2020 capital program › Repurchased $250mm › Continuous high end of guidance expected to deliver shares in 4Q19 improvement in ~$350mm in FCF at emissions reduction › Continued reduction of › 60% increase in $50/Bbl WTI › Published climate risk DC&E costs quarterly dividend to › Hedging program $0.20 per share in report using the TCFD › Achieved controllable designed to protect 1Q20 framework cost target 1 year early cash flow 2020 Outlook Advancing Growing Growing free Growing sustainability progress margins cash flow distributions Drill, complete, and equipment (DC&E) costs are for operated activity and include drilling, completion and wellsite equipment. Controllable costs include oil and natural gas production expenses (consisting of lease 4 operating and workover expenses), general and administrative expenses (which excludes non-cash stock-based compensation) and interest expense. Free cash flow (FCF) is a non-GAAP measure. See appendix for a definition and reconciliation to GAAP measure.

FY19 Summary Strategic focus resulting in better margins, optimized portfolio & increasing returns Capital Efficiency Margin Expansion Sustainable Growth › Capture efficiencies through scale › Deliver cost-efficient oil growth over › Execute a returns-based program › $9/Boe controllable cost target for the long term › Improve cycle times & reduce well › Long inventory run way FY20 costs Total Program DC&E Costs Controllable Costs Oil Production ($ per foot) ($ per Boe) (MBopd) $1,224 $10.08 $9.44 209.2 $999 $1.55 $1.53 167.8 $2.39 $1.98 -18% +25% -7% $6.14 $5.93 FY18 FY19 FY18 FY19 FY18 FY19 LOE G&A Interest Portfolio Management Financial Strength Shareholder Returns › Sell non-core assets, accelerate cash › Exercise capital discipline, maintain › Increase shareholder returns with distribution strong financial position & flexibility dividend growth & share repurchases › Continuously optimizing portfolio $1.3bn Oryx sale generated $500-750mm Achieved by paying $100mm $1.5bn strong ROI down revolver with Non-core Debt reduction FY19 dividends Share repurchase proceeds from New Mexico Shelf asset asset sales target paid program asset sales sale focused portfolio Controllable costs include oil and natural gas production expenses (consisting of lease operating and workover expenses), gen eral and administrative expenses (which excludes non-cash stock-based 5 compensation) and interest expense.