Concho Resources Q3 Profit Surges, Tightens Annual Production Forecast - Update

(RTTNews) - Concho Resources (CXO) Wednesday said third-quarter profit increased significantly feom the prior year, as revenues climbed 40 percent. The company further tightened its production forecast for the year, citing volume curtailment issues in the New Mexico Shelf core area.

Profit climbed to $30.42 million or $0.29 per share from $6.0 million or $0.06 per share in the same period last year.

The latest results included a $168.6 million loss on derivatives not designated as hedges, $45.3 million in cash payments on commodity derivatives, $7.6 million of leasehold abandonments and $1.8 million loss on the disposition of assets.

Adjusted earnings for the quarter was $111.1 million or $1.06 per share, while it totaled $99.9 million or $0.96 per share in the previous year. On average, 33 analysts polled by Thomson Reuters expected the company to earn $1.04 per share for the quarter. Analysts' estimates typically exclude special items.

Operating revenues increased to $652.92 million from $465.34 million last year. Analysts expected revenues of $612.47 million.

Oil and natural gas sales from continuing operations increased 40 percent, attributable to a 16 percent increase in the company's unhedged realized oil price, a 6 percent increase in unhedged realized natural gas price and a 19 percent increase in production from continuing operations to 8.7 million barrels of oil equivalent or MMBoe.

Tim Leach, CEO, said, ''The third quarter was a great example of the quality of our assets and our ability to execute. We had a record quarter in terms of production and cash flow. It's hard to ignore all of the momentum that Concho has generated, especially when you consider our industry-leading well results in both the northern and southern Delaware Basin..."

The company now estimates that its annual 2013 production will total 33.5 to 34.0 MMBoe, compared to previous guidance of 33.4 to 34.8 MMBoe. The tightening was due to volume curtailment issues in the New Mexico Shelf core area due to midstream and infrastructure delays.

The firm also announced a new three-year growth plan intended to double production by 2016. It is expected to deliver annual production of over 67 MMBoe in 2016 and reduce the company's leverage ratio to less than 1.5 times. Concho's capital budget for 2014 is $2.3 billion.

CXO closed down around 4 percent on Wednesday at $106.88, but added 0.5 percent in the extended trade.