Concho Resources Inc. (NYSE: CXO) today announced
third-quarter 2020 results, reporting a net loss of $61 million, or
$0.31 per share. Adjusted net income (non-GAAP), which excludes
certain non-cash and special items, for third-quarter 2020 was $282
million, or $1.43 per share.
Tim Leach, Chairman and Chief Executive Officer, commented,
"Despite the challenging market environment, Concho delivered
excellent results that demonstrate the strength of our business,
our high-quality asset base and our ability to execute. On October
19, we announced our intention to merge with ConocoPhillips. We
look forward to closing the transaction in the first quarter of
next year.”
Third-Quarter 2020 Results
Third-quarter 2020 oil production volumes averaged 201 thousand
barrels per day (MBopd). Natural gas production for third-quarter
2020 averaged 716 million cubic feet per day (MMcfpd). The
Company’s total production for third-quarter 2020 was 320 thousand
barrels of oil equivalent per day (MBoepd).
Concho’s average realized price for oil and natural gas for
third-quarter 2020, excluding the effect of commodity derivatives,
was $39.23 per Bbl and $1.64 per Mcf, respectively.
For third-quarter 2020, controllable costs totaled $7.06 per
Boe, representing a 27% decrease year over year. Controllable costs
include production expenses (consisting of lease operating and
workover expenses), cash general and administrative (G&A)
expenses (which excludes non-cash stock-based compensation) and
interest expense.
Cash flow from operating activities was $608 million, including
$60 million in working capital changes. Operating cash flow before
working capital changes (non-GAAP) was $668 million, exceeding
third-quarter capital expenditures of $284 million, and resulting
in free cash flow (non-GAAP) of $384 million. Capital expenditures
refers to the Company’s additions to oil and natural gas properties
on the Company’s condensed consolidated statements of cash
flows.
At September 30, 2020, Concho had long-term debt of $3.9 billion
with no outstanding debt maturities until January 2027, no debt
outstanding under its credit facility and approximately $400
million in cash and cash equivalents.
Investor Conference Call
Due to the pending transaction with ConocoPhillips, which was
announced on Monday, October 19, 2020, the Company will not host a
conference call/webcast to review its third-quarter 2020
results.
About Concho Resources
Concho Resources (NYSE: CXO) is one of the largest
unconventional shale producers in the Permian Basin, with
operations focused on safely and efficiently developing and
producing oil and natural gas resources. We are working today to
deliver a better tomorrow for our shareholders, people and
communities. For more information about Concho, visit
www.concho.com.
Forward-Looking Statements and Cautionary Statements
The foregoing contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements, other than statements of historical fact, included
in this press release that address activities, events or
developments that the Company expects, believes or anticipates will
or may occur in the future are forward-looking statements. The
words “estimate,” “project,” “predict,” “believe,” “expect,”
“anticipate,” “potential,” “could,” “may,” “enable,” “strategy,”
“intend," “positioned,” “foresee,” “plan,” “will,” “guidance,”
“outlook,” “goal,” "target" or other similar expressions that
convey the uncertainty of future events or outcomes are intended to
identify forward-looking statements, which generally are not
historical in nature. However, the absence of these words does not
mean that the statements are not forward-looking. These statements
are based on certain assumptions and analyses made by the Company
based on management’s experience, expectations and perception of
historical trends, current conditions, current plans, anticipated
future developments, access to capital, market conditions, impacts
of hedges, the impact of the COVID-19 pandemic and the actions
taken by regulators and third parties in response to such pandemic
and other factors believed to be appropriate. Forward-looking
statements are not guarantees of performance. Although the Company
believes the expectations reflected in its forward-looking
statements are reasonable and are based on reasonable assumptions,
no assurance can be given that these assumptions are accurate or
that any of these expectations will be achieved (in full or at all)
or will prove to have been correct. Moreover, 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 the risk factors
and other information discussed or referenced in the Company’s most
recent Annual Report on Form 10-K and other filings with the
Securities and Exchange Commission. In particular, the
unprecedented nature of the current economic downturn, pandemic and
industry decline may make it particularly difficult to identify
risks or predict the degree to which identified risks will impact
the Company’s business and financial condition. 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. Information on Concho’s website is not part of this
press release.
Use of Non-GAAP Financial Measures
To supplement the presentation of the Company’s financial
results prepared in accordance with U.S. generally accepted
accounting principles (“GAAP”), this press release contains certain
financial measures that are not prepared in accordance with GAAP,
including adjusted net income, adjusted earnings per share,
operating cash flow before working capital changes and free cash
flow.
See “Supplemental Non-GAAP Financial Measures” below for a
description and reconciliation of each of these non-GAAP measures
to the most directly comparable financial measure calculated in
accordance with GAAP.
For future periods, the Company is unable to provide a
reconciliation of free cash flow to the most comparable GAAP
financial measures because the information needed to reconcile this
measure is dependent on future events, many of which are outside
management’s control. Additionally, estimating free cash flow to
provide a meaningful reconciliation consistent with the Company’s
policies for future periods is extremely difficult and requires a
level of precision that is unavailable for these future periods and
cannot be accomplished without unreasonable effort. Forward-looking
estimates of free cash flow are estimated in a manner consistent
with the relevant definitions and assumptions noted
herein.
Concho Resources Inc.
Condensed Consolidated Balance
Sheets
Unaudited
(in millions, except share and per
share amounts)
September 30,
2020
December 31,
2019
Assets
Current assets:
Cash and cash equivalents
$
402
$
70
Accounts receivable, net:
Oil and natural gas
392
584
Joint operations and other
130
304
Inventory
26
30
Derivative instruments
212
6
Prepaid costs and other
44
61
Total current assets
1,206
1,055
Property and equipment:
Oil and natural gas properties, successful
efforts method
27,143
28,785
Accumulated depletion and depreciation
(16,643
)
(7,895
)
Total oil and natural gas properties,
net
10,500
20,890
Other property and equipment, net
456
437
Total property and equipment, net
10,956
21,327
Deferred income taxes
19
—
Deferred loan costs, net
5
7
Goodwill
—
1,917
Intangible assets, net
16
17
Noncurrent derivative instruments
5
11
Other assets
330
398
Total assets
$
12,537
$
24,732
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable - trade
$
45
$
53
Revenue payable
140
268
Accrued drilling costs
181
386
Derivative instruments
5
112
Other current liabilities
326
363
Total current liabilities
697
1,182
Long-term debt
3,856
3,955
Deferred income taxes
—
1,654
Noncurrent derivative instruments
47
7
Asset retirement obligations and other
long-term liabilities
150
152
Stockholders’ equity:
Common stock, $0.001 par value;
300,000,000 authorized; 197,551,182 and 198,863,681 issued at
September 30, 2020 and December 31, 2019, respectively
—
—
Additional paid-in capital
14,511
14,608
Retained earnings (accumulated
deficit)
(6,573
)
3,320
Treasury stock, at cost; 1,244,629 and
1,175,026 at September 30, 2020 and December 31, 2019,
respectively
(151
)
(146
)
Total stockholders’ equity
7,787
17,782
Total liabilities and stockholders’
equity
$
12,537
$
24,732
Concho Resources Inc.
Condensed Consolidated
Statements of Operations
Unaudited
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except per share
amounts)
2020
2019
2020
2019
Operating revenues:
Oil sales
$
725
$
1,023
$
2,027
$
3,007
Natural gas sales
109
92
203
339
Total operating revenues
834
1,115
2,230
3,346
Operating costs and expenses:
Oil and natural gas production
115
190
406
552
Production and ad valorem taxes
71
85
196
255
Gathering, processing and
transportation
46
25
139
73
Exploration and abandonments
14
26
2,749
90
Depreciation, depletion and
amortization
288
488
1,083
1,431
Accretion of discount on asset retirement
obligations
2
3
6
8
Impairments of long-lived assets
—
20
7,772
888
Impairments of goodwill
—
81
1,917
81
General and administrative (including
non-cash stock-based compensation of $18 and $20 for the three
months ended September 30, 2020 and 2019, respectively, and $53 and
$67 for the nine months ended September 30, 2020 and 2019,
respectively)
70
75
204
254
(Gain) loss on derivatives, net
199
(397
)
(1,056
)
445
Net (gain) loss on disposition of assets
and other
1
(303
)
(99
)
(302
)
Total operating costs and expenses
806
293
13,317
3,775
Income (loss) from operations
28
822
(11,087
)
(429
)
Other income (expense):
Interest expense
(44
)
(46
)
(127
)
(141
)
Loss on extinguishment of debt
(24
)
—
(24
)
—
Other, net
5
4
(208
)
311
Total other income (expense)
(63
)
(42
)
(359
)
170
Income (loss) before income
taxes
(35
)
780
(11,446
)
(259
)
Income tax (expense) benefit
(26
)
(222
)
1,673
25
Net income (loss)
$
(61
)
$
558
$
(9,773
)
$
(234
)
Earnings per share:
Basic net income (loss)
$
(0.31
)
$
2.78
$
(50.04
)
$
(1.18
)
Diluted net income (loss)
$
(0.31
)
$
2.78
$
(50.04
)
$
(1.18
)
Concho Resources Inc.
Earnings per Share
Unaudited
The Company uses the two-class method of
calculating earnings per share because certain of the Company’s
unvested share-based awards qualify as participating
securities.
The Company’s basic earnings (loss) per
share attributable to common stockholders is computed as (i) net
income (loss) as reported, (ii) less participating basic earnings
(iii) divided by weighted average basic common shares outstanding.
The Company’s diluted earnings (loss) per share attributable to
common stockholders is computed as (i) basic earnings (loss)
attributable to common stockholders, (ii) plus reallocation of
participating earnings (iii) divided by weighted average diluted
common shares outstanding.
The following table reconciles the
Company’s income (loss) from operations and earnings (loss)
attributable to common stockholders to the basic and diluted
earnings (loss) used to determine the Company’s earnings (loss) per
share amounts for the periods indicated under the two-class
method:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2020
2019
2020
2019
Net income (loss) as reported
$
(61
)
$
558
$
(9,773
)
$
(234
)
Participating basic earnings (a)
—
(4
)
(1
)
(1
)
Basic earnings (loss) attributable to
common stockholders
(61
)
554
(9,774
)
(235
)
Reallocation of participating earnings
—
—
—
—
Diluted earnings (loss) attributable to
common stockholders
$
(61
)
$
554
$
(9,774
)
$
(235
)
(a)
Unvested restricted stock awards represent
participating securities because they participate in nonforfeitable
dividends or distributions with the common equity holders of the
Company. Participating earnings represent the distributed and
undistributed earnings of the Company attributable to the
participating securities. Unvested restricted stock awards do not
participate in undistributed net losses as they are not
contractually obligated to do so.
The following table is a reconciliation of
the basic weighted average common shares outstanding to diluted
weighted average common shares outstanding for the periods
indicated:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in thousands)
2020
2019
2020
2019
Weighted average common shares
outstanding:
Basic
195,323
199,448
195,311
199,272
Dilutive performance units
—
6
—
—
Diluted
195,323
199,454
195,311
199,272
Concho Resources Inc.
Condensed Consolidated
Statements of Cash Flows
Unaudited
Nine Months Ended
September 30,
(in millions)
2020
2019
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss
$
(9,773
)
$
(234
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation, depletion and
amortization
1,083
1,431
Accretion of discount on asset retirement
obligations
6
8
Impairments of long-lived assets
7,772
888
Impairments of goodwill
1,917
81
Exploration and abandonments
2,726
68
Non-cash stock-based compensation
expense
53
67
Deferred income taxes
(1,673
)
(25
)
Net gain on disposition of assets and
other non-operating items
(104
)
(591
)
(Gain) loss on derivatives, net
(1,056
)
445
Net settlements received from (paid on)
derivatives
789
(57
)
Loss on extinguishment of debt
24
—
Other
198
(6
)
Changes in operating assets and
liabilities, net of acquisitions and dispositions:
Accounts receivable
326
(19
)
Prepaid costs and other
18
(1
)
Inventory
4
2
Accounts payable
(7
)
16
Revenue payable
(129
)
(20
)
Other current liabilities
(41
)
14
Net cash provided by operating
activities
2,133
2,067
CASH FLOWS FROM INVESTING
ACTIVITIES:
Additions to oil and natural gas
properties
(1,152
)
(2,344
)
Changes in working capital associated with
oil and natural gas property additions
(156
)
(41
)
Acquisitions of oil and natural gas
properties
(45
)
(34
)
Additions to property, equipment and other
assets
(49
)
(82
)
Proceeds from the disposition of
assets
6
393
Deposit for pending divestiture of oil and
natural gas properties
—
93
Direct transaction costs for asset
acquisitions and dispositions
(1
)
(5
)
Net cash used in investing activities
(1,397
)
(2,020
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings under credit facility
345
2,680
Payments on credit facility
(345
)
(2,527
)
Issuance of senior notes, net
499
—
Repayments of senior notes
(600
)
—
Debt extinguishment costs
(20
)
—
Payments for loan costs
(4
)
—
Payment of common stock dividends
(119
)
(75
)
Purchases of treasury stock
(5
)
(15
)
Purchases of common stock under share
repurchase program
(150
)
—
Decrease in book overdrafts
—
(104
)
Other
(5
)
(6
)
Net cash used in financing activities
(404
)
(47
)
Net increase in cash and cash
equivalents
332
—
Cash and cash equivalents at beginning of
period
70
—
Cash and cash equivalents at end of
period
$
402
$
—
Concho Resources Inc.
Summary Production and Price
Data
Unaudited
The following table sets forth summary
information concerning production and operating data for the
periods indicated:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
Production and operating data:
Net production volumes:
Oil (MBbl)
18,472
18,940
55,667
56,602
Natural gas (MMcf)
65,867
68,411
194,914
199,284
Total (MBoe)
29,450
30,342
88,153
89,816
Average daily production
volumes:
Oil (MBbl)
201
206
203
207
Natural gas (MMcf)
716
744
711
730
Total (MBoe)
320
330
322
329
Average prices per unit: (a)
Oil, without derivatives (Bbl)
$
39.23
$
54.01
$
36.41
$
53.13
Oil, with derivatives (Bbl) (b)
$
48.43
$
52.84
$
49.76
$
51.85
Natural gas, without derivatives (Mcf)
$
1.64
$
1.34
$
1.04
$
1.70
Natural gas, with derivatives (Mcf)
(b)
$
1.68
$
1.54
$
1.27
$
1.77
Total, without derivatives (Boe)
$
28.27
$
36.74
$
25.29
$
37.25
Total, with derivatives (Boe) (b)
$
34.13
$
36.46
$
34.23
$
36.60
Operating costs and expenses per Boe:
(a)
Oil and natural gas production
$
3.90
$
6.26
$
4.60
$
6.14
Production and ad valorem taxes
$
2.41
$
2.79
$
2.22
$
2.84
Gathering, processing and
transportation
$
1.55
$
0.82
$
1.57
$
0.81
Depreciation, depletion and
amortization
$
9.77
$
16.07
$
12.28
$
15.93
General and administrative
$
2.30
$
2.50
$
2.30
$
2.82
(a)
Per unit and per Boe amounts calculated
using dollars and volumes rounded to thousands.
(b)
Includes the effect of net cash receipts
from (payments on) derivatives:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2020
2019
2020
2019
Net cash receipts from (payments on)
derivatives:
Oil derivatives
$
171
$
(21
)
$
744
$
(72
)
Natural gas derivatives (c)
2
14
45
15
Total
$
173
$
(7
)
$
789
$
(57
)
The presentation of average prices with
derivatives is a result of including the net cash receipts from
(payments on) commodity derivatives that are presented in the
Company's condensed consolidated statements of cash flows. This
presentation of average prices with derivatives is a means by which
to reflect the actual cash performance of the Company's commodity
derivatives for the respective periods and presents oil and natural
gas prices with derivatives in a manner consistent with the
presentation generally used by the investment community.
(c)
Includes propane and natural gasoline
price swaps.
Concho Resources Inc.
Operational Activity
Unaudited
The tables below provide a summary of
operational activity for third-quarter 2020:
Total Activity (Gross):
Number of Wells
Drilled
Number of Wells
Completed
Number of Wells Put on
Production
Delaware Basin
43
49
24
Midland Basin
20
14
33
Total
63
63
57
Total Activity (Gross
Operated):
Number of Wells
Drilled
Number of Wells
Completed
Number of Wells Put on
Production
Delaware Basin
15
29
18
Midland Basin
20
14
33
Total
35
43
51
Total Activity (Net Operated):
Number of Wells
Drilled
Number of Wells
Completed
Number of Wells Put on
Production
Delaware Basin
15
24
14
Midland Basin
20
12
29
Total
35
36
43
Concho Resources Inc.
Derivatives
Information
Unaudited
The table below provides data associated
with the Company’s derivatives at October 27, 2020, for the periods
indicated:
2020
2021
2022
Fourth Quarter
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total
Total
Oil Price Swaps – WTI:
(a)
Volume (MBbl)
13,778
9,720
9,555
8,096
8,096
35,467
9,159
Price per Bbl
$
52.11
$
46.46
$
46.61
$
46.80
$
46.80
$
46.66
$
42.21
Oil Price Swaps – Brent:
(b)
Volume (MBbl)
2,727
1,890
1,684
1,518
1,518
6,610
1,825
Price per Bbl
$
48.66
$
41.43
$
41.21
$
40.82
$
40.82
$
41.09
$
45.98
Oil Basis Swaps: (c)
Volume (MBbl)
11,192
7,650
7,735
7,636
7,636
30,657
6,570
Price per Bbl
$
(0.69
)
$
0.50
$
0.50
$
0.50
$
0.50
$
0.50
$
0.25
WTI Oil Roll Swaps: (d)
Volume (MBbl)
10,381
180
182
184
184
730
—
Price per Bbl
$
(0.31
)
$
(0.18
)
$
(0.18
)
$
(0.18
)
$
(0.18
)
$
(0.18
)
$
—
Natural Gas Price Swaps: (e)
Volume (BBtu)
34,938
32,930
31,240
28,520
27,290
119,980
36,500
Price per MMBtu
$
2.44
$
2.64
$
2.60
$
2.57
$
2.57
$
2.60
$
2.38
Natural Gas Basis Swaps –
HH/EPP: (f)
Volume (BBtu)
26,370
27,250
25,780
23,920
22,690
99,640
45,610
Price per MMBtu
$
(0.95
)
$
(0.62
)
$
(0.64
)
$
(0.61
)
$
(0.62
)
$
(0.62
)
$
(0.64
)
Natural Gas Basis Swaps –
HH/WAHA: (g)
Volume (BBtu)
8,280
9,000
8,490
8,280
8,280
34,050
16,410
Price per MMBtu
$
(1.03
)
$
(0.73
)
$
(0.76
)
$
(0.63
)
$
(0.63
)
$
(0.69
)
$
(0.55
)
Propane Price Swaps: (h)
Volume (gal)
81,144
—
—
—
—
—
—
Price per gal
$
0.51
$
—
$
—
$
—
$
—
$
—
$
—
Natural Gasoline Price Swaps:
(i)
Volume (gal)
36,708
—
—
—
—
—
—
Price per gal
$
0.86
$
—
$
—
$
—
$
—
$
—
$
—
(a)
These oil derivative contracts are settled
based on the New York Mercantile Exchange (“NYMEX”) – West Texas
Intermediate (“WTI”) calendar-month average futures price.
(b)
These oil derivative contracts are settled
based on the Brent calendar-month average futures price.
(c)
The basis differential price is between
Midland – WTI and Cushing – WTI. These contracts are settled on a
calendar-month basis.
(d)
These oil derivative contracts are settled
based on differentials between the NYMEX – WTI prices for certain
futures contracts.
(e)
These natural gas derivative contracts are
settled based on the NYMEX – Henry Hub last trading day futures
price.
(f)
The basis differential price is between
NYMEX – Henry Hub and El Paso Permian.
(g)
The basis differential price is between
NYMEX – Henry Hub and WAHA.
(h)
These contracts are settled based on the
OPIS Mont Belvieu Propane (non-TET) calendar-month average futures
price.
(i)
These contracts are settled based on the
OPIS Mont Belvieu Natural Gasoline (non-TET) calendar-month average
futures price.
Concho Resources Inc.
Supplemental Non-GAAP
Financial Measures
Unaudited
The Company reports its financial results
in accordance with the United States generally accepted accounting
principles (GAAP). However, the Company believes certain non-GAAP
performance measures may provide financial statement users with
additional meaningful comparisons between current results, the
results of its peers and the results of prior periods. In addition,
the Company believes these measures are used by analysts and others
in the valuation, rating and investment recommendations of
companies within the oil and natural gas exploration and production
industry. See the reconciliations throughout this release of GAAP
financial measures to non-GAAP financial measures for the periods
indicated.
Reconciliation of Net Income (Loss) to
Adjusted Net Income and Adjusted Earnings per Share
The Company’s presentation of adjusted net
income and adjusted earnings per share that exclude the effect of
certain items are non-GAAP financial measures. Adjusted net income
and adjusted earnings per share represent earnings (loss) and
diluted earnings (loss) per share determined under GAAP without
regard to certain non-cash and special items. The Company believes
these measures provide useful information to analysts and investors
for analysis of its operating results on a consistent, comparable
basis from period to period. Adjusted net income and adjusted
earnings per share should not be considered in isolation or as a
substitute for earnings (loss) or diluted earnings (loss) per share
as determined in accordance with GAAP and may not be comparable to
other similarly titled measures of other companies.
The following table provides a
reconciliation from the GAAP measure of net income (loss) to
adjusted net income, both in total and on a per diluted share
basis, for the periods indicated:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except per share
amounts)
2020
2019
2020
2019
Net income (loss) - as reported
$
(61
)
$
558
$
(9,773
)
$
(234
)
Adjustments for certain non-cash and
special items:
(Gain) loss on derivatives, net
199
(397
)
(1,056
)
445
Net cash received from (paid on)
derivatives
173
(7
)
789
(57
)
Impairments of long-lived assets
—
20
7,772
888
Impairments of goodwill
—
81
1,917
81
Unproved impairments and leasehold
abandonments
3
17
2,724
59
Loss on extinguishment of debt
24
—
24
—
Net (gain) loss on disposition of assets
and other
2
(303
)
(98
)
(589
)
(Gain) loss on equity method
investments
(9
)
—
186
(17
)
Voluntary separation program costs (a)
6
—
33
—
Tax impact (b)
(89
)
152
(2,334
)
(165
)
Changes in deferred taxes and other
estimates
34
1
463
(6
)
Adjusted net income
$
282
$
122
$
647
$
405
Earnings (loss) per diluted share - as
reported
$
(0.31
)
$
2.78
$
(50.04
)
$
(1.18
)
Adjustments for certain non-cash and
special items per diluted share:
(Gain) loss on derivatives, net
1.01
(1.98
)
(5.40
)
2.24
Net cash received from (paid on)
derivatives
0.88
(0.03
)
4.04
(0.29
)
Impairments of long-lived assets
—
0.10
39.78
4.44
Impairments of goodwill
—
0.40
9.81
0.41
Unproved impairments and leasehold
abandonments
0.02
0.08
13.94
0.30
Loss on extinguishment of debt
0.12
—
0.12
—
Net (gain) loss on disposition of assets
and other
0.01
(1.51
)
(0.50
)
(2.95
)
(Gain) loss on equity method
investments
(0.05
)
—
0.95
(0.09
)
Voluntary separation program costs
0.03
—
0.17
—
Tax impact
(0.45
)
0.77
(11.95
)
(0.83
)
Changes in deferred taxes and other
estimates
0.17
—
2.37
(0.03
)
Adjusted earnings per diluted
share
$
1.43
$
0.61
$
3.29
$
2.02
Adjusted earnings per share:
Basic earnings
$
1.43
$
0.61
$
3.29
$
2.02
Diluted earnings
$
1.43
$
0.61
$
3.29
$
2.02
(a)
In May 2020, the Company offered employees
who met certain eligibility criteria the option to participate in a
voluntary separation program.
(b)
Estimated using statutory tax rate in
effect for the period.
Reconciliation of Net Cash Provided by
Operating Activities to Operating Cash Flow ("OCF") Before Working
Capital Changes and to Free Cash Flow
The Company provides OCF before working
capital changes, which is a non-GAAP financial measure. OCF before
working capital changes represents net cash provided by operating
activities as determined under GAAP without regard to changes in
operating assets and liabilities, net of acquisitions and
dispositions as determined in accordance with GAAP. The Company
believes OCF before working capital changes is an accepted measure
of an oil and natural gas company’s ability to generate cash used
to fund development and acquisition activities and service debt or
pay dividends. Additionally, the Company provides free cash flow,
which is a non-GAAP financial measure. Free cash flow is cash flow
from operating activities before changes in working capital in
excess of additions to oil and natural gas properties. The Company
believes that free cash flow is useful to investors as it provides
a measure to compare both cash flow from operating activities and
additions to oil and natural gas properties across periods on a
consistent basis.
The Company previously defined free cash
flow for periods prior to 2020 as cash flow from operating
activities before changes in working capital in excess of
exploration and development costs incurred. Exploration and
development costs incurred include those costs that are capitalized
or charged to expense such as geological and geophysical costs and
capitalized asset retirement costs. The Company’s new calculation
better aligns with the way its industry peers compute free cash
flow and can be derived directly from line items appearing on the
Company’s statement of cash flows.
These non-GAAP measures should not be
considered as alternatives to, or more meaningful than, net cash
provided by operating activities as an indicator of operating
performance.
The following tables provide a
reconciliation from the GAAP measure of net cash provided by
operating activities to OCF before working capital changes and to
free cash flow:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2020
2019
2020
2019
Net cash provided by operating
activities
$
608
$
665
$
2,133
$
2,067
Changes in cash due to changes in
operating assets and liabilities:
Accounts receivable
19
52
(326
)
19
Prepaid costs and other
(2
)
5
(18
)
1
Inventory
(2
)
(1
)
(4
)
(2
)
Accounts payable
6
(11
)
7
(16
)
Revenue payable
33
25
129
20
Other current liabilities
6
(29
)
41
(14
)
Total working capital changes
60
41
(171
)
8
Operating cash flow before working
capital changes
$
668
$
706
$
1,962
$
2,075
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)
2020
2019
2020
2019
Operating cash flow before working
capital changes
$
668
$
706
$
1,962
$
2,075
Additions to oil and natural gas
properties
(284
)
(645
)
(1,152
)
(2,344
)
Free cash flow
$
384
$
61
$
810
$
(269
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201027006179/en/
INVESTOR RELATIONS Megan P. Hays Vice President of
Investor Relations & Public Affairs 432.685.2533
Michael Healey Manager of Investor Relations
432.818.1387
MEDIA Mary T. Starnes Manager of Public Affairs
& Corporate Responsibility Strategy 432.221.0477
Concho Resources (NYSE:CXO)
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