Concho Resources Inc. reported strong second-quarter 2018 revenues and earnings on the back of higher commodity-price realizations and robust production growth.
The company reported adjusted net earnings per share of $1.24, comfortably beating the Zacks Consensus Estimate of 92 cents. The bottom line also improved significantly from the prior-year quarter’s adjusted income of 52 cents per share.
Concho’s total operating revenues in the second quarter came in at $945 million, increasing substantially from $567 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $861 million.
Operating revenues from oil sales recorded a year-over-year increase of 72.4% to $795 million while gas revenues increased 41.5% from the prior-year quarter to $150 million.
Volume Analysis
Concho's average quarterly volume increased 24% year over year to 228.9 thousand barrels of oil equivalent per day (MBoe/d), within the company’s guidance range. Of the volume, 62.5% consisted of liquids. Daily oil output was up 26.5% to 143.2 thousand barrels while natural gas production was 514.7 million cubic feet (up 20%).
Realized Prices
The average realized natural gas price jumped about 17.7% from the year-ago quarter to $3.19 per thousand cubic feet while average oil-price realization increased 36.3% to $60.98 per barrel. Overall, the company fetched $45.31 per barrel compared with $33.73 a year ago.
Financial Position
As of Jun 30, Concho had cash and cash equivalents of $55 million. The company had long-term debt of $2,371 million, representing a debt-to-capitalization ratio of 19.3%, recording a marginal decline from the leverage of 19.6% as of Mar 31.
Updated Outlook
Taking into account the acquisition of RSP Permian, Inc., which got closed on Jul 19, 2018, Concho updated its full-year 2018 guidance. It expects production to average 260-263 MBoe/d in 2018. Notably, third-quarter output levels are expected between 280 MBoe/d and 285 MBoe/d. The company expects capex in the band of $2.5-$2.6 billion versus prior guidance of $2 billion. The increased capital expenditure budget reflects the company’s intention to drill several development projects in the second half of 2018.
Zacks Rank and Key Picks
Concho currently carries a Zacks Rank 3 (Hold).
Some better-ranked players in the energy space are China Petroleum and Chemical Corporation , also known as Sinopec, PetroChina Company Limited , and Bonanza Creek Energy, Inc. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sinopec delivered an average positive earnings surprise of 492.8% in the trailing four quarters.
PetroChina delivered an average positive earnings surprise of 21.99% in the trailing four quarters.
Bonanza Creek surpassed earnings estimates in each of the trailing four quarters, delivering an average positive earnings surprise of 215.16%
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Concho (CXO) Q2 Earnings Beat on Price and Volume Gain
Concho Resources Inc. reported strong second-quarter 2018 revenues and earnings on the back of higher commodity-price realizations and robust production growth.
The company reported adjusted net earnings per share of $1.24, comfortably beating the Zacks Consensus Estimate of 92 cents. The bottom line also improved significantly from the prior-year quarter’s adjusted income of 52 cents per share.
Concho’s total operating revenues in the second quarter came in at $945 million, increasing substantially from $567 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $861 million.
Operating revenues from oil sales recorded a year-over-year increase of 72.4% to $795 million while gas revenues increased 41.5% from the prior-year quarter to $150 million.
Concho Resources Inc. Price, Consensus and EPS Surprise
Concho Resources Inc. Price, Consensus and EPS Surprise | Concho Resources Inc. Quote
Volume Analysis
Concho's average quarterly volume increased 24% year over year to 228.9 thousand barrels of oil equivalent per day (MBoe/d), within the company’s guidance range. Of the volume, 62.5% consisted of liquids. Daily oil output was up 26.5% to 143.2 thousand barrels while natural gas production was 514.7 million cubic feet (up 20%).
Realized Prices
The average realized natural gas price jumped about 17.7% from the year-ago quarter to $3.19 per thousand cubic feet while average oil-price realization increased 36.3% to $60.98 per barrel. Overall, the company fetched $45.31 per barrel compared with $33.73 a year ago.
Financial Position
As of Jun 30, Concho had cash and cash equivalents of $55 million. The company had long-term debt of $2,371 million, representing a debt-to-capitalization ratio of 19.3%, recording a marginal decline from the leverage of 19.6% as of Mar 31.
Updated Outlook
Taking into account the acquisition of RSP Permian, Inc., which got closed on Jul 19, 2018, Concho updated its full-year 2018 guidance. It expects production to average 260-263 MBoe/d in 2018. Notably, third-quarter output levels are expected between 280 MBoe/d and 285 MBoe/d. The company expects capex in the band of $2.5-$2.6 billion versus prior guidance of $2 billion. The increased capital expenditure budget reflects the company’s intention to drill several development projects in the second half of 2018.
Zacks Rank and Key Picks
Concho currently carries a Zacks Rank 3 (Hold).
Some better-ranked players in the energy space are China Petroleum and Chemical Corporation , also known as Sinopec, PetroChina Company Limited , and Bonanza Creek Energy, Inc. , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Sinopec delivered an average positive earnings surprise of 492.8% in the trailing four quarters.
PetroChina delivered an average positive earnings surprise of 21.99% in the trailing four quarters.
Bonanza Creek surpassed earnings estimates in each of the trailing four quarters, delivering an average positive earnings surprise of 215.16%
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>