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Concho (CXO) Q3 Earnings Beat Estimates, Revenues Miss Mark

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Concho Resources Inc. (CXO - Free Report) reported third-quarter 2020 net income per share (excluding special items) of $1.43, outperforming the Zacks Consensus Estimate of $1.14 as well as the prior-year period’s earnings of 61 cents. The company’s bottom line was favorably impacted by better-than-expected daily production volumes. Precisely, the upstream player’s output of 320 thousand barrels of oil equivalent per day (MBoe/d) surpassed the Zacks Consensus Estimate of 309 MBoe/d.

However, this Permian-focused player’s revenues of $834 million missed the consensus mark of $927 million and also declined from the year-ago level of $1.12 billion due to lower oil price realizations.

Earlier in October, Concho Resources entered into an agreement with ConocoPhillips (COP - Free Report) wherein the latter confirmed its decision to buy the former in an all-stock transaction deal valued at $9.7 billion.

Volume Analysis

Concho's average quarterly volume dipped 3.03% year over year to 320 MBoe/d (62.8% oil).

Daily oil output slid 2.4% year over year to 201 thousand barrels while natural gas production slipped 3.76% year over year to 716 million cubic feet (MMcf).

Concho Resources Inc. Price, Consensus and EPS Surprise

Concho Resources Inc. Price, Consensus and EPS Surprise

Concho Resources Inc. price-consensus-eps-surprise-chart | Concho Resources Inc. Quote

Realized Prices (Excluding Derivatives Effect)

The average realized natural gas price increased from $1.34 per thousand cubic feet (Mcf) in the year-ago quarter to $1.64. The average oil price realization came in at $39.23 per barrel, lower than $54.01 in the year-ago period. Overall, the company fetched $28.27 per Boe compared with $36.74 a year ago.

Operating Performance

The company reported an operating income of $28 million. Operating expenses in the quarter amounted to $806 million. A year ago, Concho recorded an operating income of $822 million. However, as part of its efforts to improve costs and drive margins, the company succeeded in cutting 27% of its controllable expenses year over year to $7.06 per Boe.

Balance Sheet

As of Sep 30, this Midland, TX-based oil and gas producer had $402 million in cash and cash equivalents and long-term debt of $3.9 billion, representing a total debt-to-total capital of 33.1%.

Zacks Rank & Key Picks

Concho currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Cabot Oil Gas Corporation (COG - Free Report) and Earthstone Energy, Inc. (ESTE - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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