Concho Resources Inc. reported strong first-quarter 2018 revenues and earnings results on the back of higher commodity-price realizations and robust production growth.
The company reported adjusted net earnings per share of $1.00, comfortably beating the Zacks Consensus Estimate of 81 cents. The bottom line also improved significantly from the prior-year quarter’s adjusted income of 49 cents per share.
Concho’s total operating revenues for the first quarter amounted to $947 million, which increased substantially from $612 million a year ago. The top line further surpassed the Zacks Consensus Estimate of $804 million.
Operating revenues from oil sales witnessed a year-over-year increase of 58% to $793 million while gas revenues increased by 4% from the prior-year quarter to $154 million.
Volume Analysis
Concho's average quarterly volume increased 26.5% year over year to 227.9 thousand barrels of oil equivalent per day (MBoe/d), exceeding the high-end of the company’s guidance range. Of the volume, 63.1% consisted of liquids. Daily oil output was up 26.6% to 143.8 thousand barrels while natural gas production was 505 million cubic feet (up 24.2%).
Realized Prices
The average realized natural gas price jumped about 13% from the year-ago quarter to $3.39 per thousand cubic feet while average oil-price realization increased 25% to $61.29 per barrel. Overall, the company fetched $46.17 per barrel compared with $37.47 a year ago.
Strategic Strides During Q1
During the first quarter, Concho entered into major strategic acquisition and divestment deals to bolster long-term growth. The company jettisoned its non-core acreage in Ward and Reeves counties to private buyers for $280 million. It also closed a strategic trade to upgrade its core development area in the Northern Midland Basin.
Concho entered a major strategic deal in the first quarter to acquire its rival, RSP Permian Inc. . The deal is expected to close by the third quarter of 2018. The $9.5-million mega-deal, to strengthen Concho’s Permian foothold, marks the largest takeover in the U.S. oil and gas exploration and production industry since 2012. It is also the biggest pure-Permian deal ever.
Financial Position
As of Mar 31, Concho had long-term debt of $2,370 million, representing a debt-to-capitalization ratio of 19.6 %, thus witnessing an impressive decline from the leverage of 23.2% as of Dec 31.
Outlook
Capitalizing on its enviable acreage of low-risk top-tier assets and a multiyear drilling inventory, Concho raised its production outlook for 2018. The company now expects output to grow 18%-20% against the prior guidance of 16-20%. Capital expenditure guidance for 2018 remains intact at about $2 billion. Notably, the second-quarter output levels are expected to be between 226 MBoe/d and 230 MBoe/d.
Zacks Rank & Key Picks
Concho deals with the exploration and development of oil and natural gas properties. Its strategic acreage position in the Permian Basin is expected to drive continued productivity gains.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked players from the same industry are W&T Offshore, Inc, (WTI - Free Report) and Wildhorse Resource Development Corporation , each sporting a Zacks Rank #1.
W&T Offshore surpassed estimates in three out of four trailing quarters with an average positive earnings surprise of 542.78%.
Wildhorse Resource’s earnings are anticipated to witness year-over-year growth of 288.37% in 2018.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Concho Resources Inc. reported strong first-quarter 2018 revenues and earnings results on the back of higher commodity-price realizations and robust production growth.
The company reported adjusted net earnings per share of $1.00, comfortably beating the Zacks Consensus Estimate of 81 cents. The bottom line also improved significantly from the prior-year quarter’s adjusted income of 49 cents per share.
Concho’s total operating revenues for the first quarter amounted to $947 million, which increased substantially from $612 million a year ago. The top line further surpassed the Zacks Consensus Estimate of $804 million.
Operating revenues from oil sales witnessed a year-over-year increase of 58% to $793 million while gas revenues increased by 4% from the prior-year quarter to $154 million.
Volume Analysis
Concho's average quarterly volume increased 26.5% year over year to 227.9 thousand barrels of oil equivalent per day (MBoe/d), exceeding the high-end of the company’s guidance range. Of the volume, 63.1% consisted of liquids. Daily oil output was up 26.6% to 143.8 thousand barrels while natural gas production was 505 million cubic feet (up 24.2%).
Realized Prices
The average realized natural gas price jumped about 13% from the year-ago quarter to $3.39 per thousand cubic feet while average oil-price realization increased 25% to $61.29 per barrel. Overall, the company fetched $46.17 per barrel compared with $37.47 a year ago.
Strategic Strides During Q1
During the first quarter, Concho entered into major strategic acquisition and divestment deals to bolster long-term growth. The company jettisoned its non-core acreage in Ward and Reeves counties to private buyers for $280 million. It also closed a strategic trade to upgrade its core development area in the Northern Midland Basin.
Concho entered a major strategic deal in the first quarter to acquire its rival, RSP Permian Inc. . The deal is expected to close by the third quarter of 2018. The $9.5-million mega-deal, to strengthen Concho’s Permian foothold, marks the largest takeover in the U.S. oil and gas exploration and production industry since 2012. It is also the biggest pure-Permian deal ever.
Financial Position
As of Mar 31, Concho had long-term debt of $2,370 million, representing a debt-to-capitalization ratio of 19.6 %, thus witnessing an impressive decline from the leverage of 23.2% as of Dec 31.
Outlook
Capitalizing on its enviable acreage of low-risk top-tier assets and a multiyear drilling inventory, Concho raised its production outlook for 2018. The company now expects output to grow 18%-20% against the prior guidance of 16-20%. Capital expenditure guidance for 2018 remains intact at about $2 billion. Notably, the second-quarter output levels are expected to be between 226 MBoe/d and 230 MBoe/d.
Zacks Rank & Key Picks
Concho deals with the exploration and development of oil and natural gas properties. Its strategic acreage position in the Permian Basin is expected to drive continued productivity gains.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked players from the same industry are W&T Offshore, Inc, (WTI - Free Report) and Wildhorse Resource Development Corporation , each sporting a Zacks Rank #1.
W&T Offshore surpassed estimates in three out of four trailing quarters with an average positive earnings surprise of 542.78%.
Wildhorse Resource’s earnings are anticipated to witness year-over-year growth of 288.37% in 2018.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on WTI - FREE