Merrill Lynch Global Energy Mid and Small Cap Conference October 1, 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 relating to financial performance and results, prices and demand for oil and natural gas, availability of drilling equipment and personnel, availability of sufficient capital to execute our business plan, difficulties integrating Henry Petroleum’s properties and employees into our Company, 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 as described in the Company’s reports filed with the Securities and Exchange Commission(“SEC”). 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: NM Market Cap 1 : $2.6 billion Enterprise Value 2 : $3.3 billion TX New Mexico Shelf Properties Portfolio highlights � 2Q ‘08 average daily production of 96 Mmcfe/d Texas Permian Wolfberry Properties � June ‘08 pro forma average daily production of 134 Mmcfe/d 3 � 782 Bcfe proved reserves (99% Permian) 4 � 62% Oil � 56% Proved developed 1 Based on 9/22/08 closing price of $30.34 and 85M fully diluted shares outstanding � Over 4,200 identified opportunities 2 Long term Debt at 8/1/08 was $675M 3 Based on Concho’s and Henry’s June daily production 4 Concho’s mid ‐ year and Henry’s June reserves 3
Recent Highlights Financial Highlights � Revenues of $244.1 million in 1st half '08; 93% above 1st half '07 of $126.4 million � Net cash provided by operating activities in 1st half '08 of $162.9 million, a 156% increase over 1st half '07 � EBITDAX 1 in 1st half '08 of $173.8 million, a 97% increase over 1st half '07 � Increased '08 production guidance from 35 ‐ 37 Bcfe to 42 ‐ 43.5 Bcfe � 1st half '08 production of 17.2 Bcfe, an 18% increase over 1st half '07 Henry Acquisition � Closed acquisition of Henry Petroleum plus additional interests for approximately $588 million on July 31, 2008 � 100% of estimated proved reserves are located in the Permian Basin � Immediately accretive to cash flow per share, recurring earnings per share, production and proved reserves per share � 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 August 1, 2008 Increased ‘08 capital budget to $389 million � Increased budget in Texas Permian by $43 million � Added 6th 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 1 See reconciliation in Appendix 4
Margin Analysis 1 st Six Months 2008 Cash Margin 1 � Strong price realizations due to 60/40 oil/gas mix and liquid content in gas $14.00 $12.39 stream $12.00 $9.84 � Favorable cost structure in core area $10.00 due to concentration of assets ($'s / Mcfe) $8.00 � Stable differentials historically in the $6.00 Permian Basin $4.00 � Established infrastructure $2.00 $ ‐ CXO Median 1 Sources: Company 10 ‐ Qs Cash Margin defined as: Revenue (ex. hedging) minus LOE, Severance Tax, and G&A Peers Include: DNR, RRC, SD, SWN, SM, EAC, WLL, XCO, and HK 5
Concho Assets (Post Henry Acquisition) New Mexico Shelf NM TX 782 Bcfe proved reserves 1 � 61% of proved reserves � 62% oil � Majority of Northwest � 56% proved developed Shelf opportunities < 7,000’ Tatum Basin June ‘08 pro forma average Midland Texas Permian daily production of 134 � 34% of proved reserves Basin Mmcfe/d 2 � Activities concentrated in Wolfberry Over 4,200 opportunities � Over 1,700 � 1,424 Yeso opportunities NM � 1,408 Wolfberry � 1,368 Other TX Midland New Mexico Basin Central Delaware � 4% of proved reserves Basin Basin � Atoka, Morrow, Strawn Platform Salt � 140 opportunities in Basin inventory Marfa Basin Concho Leasehold Henry Leasehold 1 Assumes Concho’s mid ‐ year 2008 and Henry’s June 2008 reserves 2 Pro forma June production for Henry acquisition 6
Southeast New Mexico Shelf � Core asset from Chase acquisition NM TX � Producing approximately 60% of Company’s total production 1 � 100,603 gross (49,306 net) acres � Historic production from shallower zones including the Grayburg, San Andres and Paddock (upper member of Yeso formation) � Initiated aggressive Blinebry drilling program in 2006 (lower member of Yeso formation) � 52 wells drilled in 2006 � 98 wells drilled 2007 � 132 wells planned for 2008 � Significant improvement in drilling times � Recently added 6 th rig drilling Blinebry / Paddock wells � Majority of wells drilled through 2010 will be combination Blinebry / Paddock wells � Additional opportunities include: � Re ‐ stimulations on existing Paddock wells � Deepening existing Paddock wells to the Blinebry � Paddock waterflood � Blinebry 10 acre down spacing � Horizontal Wolfcamp oil play Concho Leasehold SENM Shelf 1 June 2008 pro forma production 7
Southeast New Mexico Shelf � Approximately $270 million (68% of 2008 capital budget) allocated to Shelf properties � 132 drill wells � 96 Paddock add pays � 63 Paddock re ‐ stimulations � 39 Blinebry deepenings � Enhanced economics by combining Blinebry / Paddock intervals � High liquid content ties approximately 80% of revenue stream on Blinebry/Paddock wells to crude oil prices � Paddock being developed on 10 acre spacing; Blinebry locations only identified based on 20 acre spacing � Rapidly developing horizontal Wolfcamp oil play � Approximately 14,000 acres � Geographically close to our conventional shelf play � Cimarex and Concho ‐ currently most active players Concho Leasehold Acquired Wells + Other Producers 2006/07 Drilling Program 2008 Drilling Program 2008 Re ‐ fracs 2008 Deepenings 8
Southeast New Mexico Shelf Concho Leasehold Acquired Wells + Other Producers 2006/07 Drilling Program 2008 Drilling Program PUD Locations Unproved Locations Large Conventional Resource Total Proved 1 Additional Potential � 51% proved developed � 10 acre Blinebry � Paddock Waterflood � Horizontal Wolfcamp oil play Identified Unproved Total Proved Identified 489 Bcfe � Shallower zones waterflood Unproved � 70% third party engineered optimization / expansion 400 Bcfe � 65% Yeso opportunities � Quantify over next 2 to 3 years 1 As of July 1, 2008 9
Recommend
More recommend
