Concho Resources 8K/A Special-Purpose Combined Financial Statements | CXO 1 Dec 10

Exhibit 99.2

Concho Resources Inc.
Unaudited Pro Forma Combined Financial Statements

On July 19, 2010, Concho Resources Inc. (“Concho” or the “Company”) entered into an asset purchase agreement to acquire certain of the oil and natural gas leases, interests, properties and related assets owned by Marbob Energy Corporations and its affiliates (“Marbob”) for aggregate consideration of (i) cash in the amount of $1.45 billion, (ii) the issuance by the Company to Marbob of an 8 percent unsecured promissory note due 2018 in the aggregate principal amount of $150 million and (iii) the issuance to Marbob of approximately 1.1 million shares of the Company’s common stock, subject to purchase price adjustments, which included downward purchase price adjustments based on the exercise of third parties of contractual preferential rights to purchase certain interests in properties to be acquired from Marbob.

In October 2010, the Company closed the Marbob acquisition. At closing, the Company paid approximately $1.1 billion in cash plus the unsecured promissory note and common stock described above for a total purchase price of approximately $1.4 billion. The total purchase price as originally announced was reduced due to third party contractual preferential rights to purchase certain of the interests in the Marbob properties (“Marbob Acquisition”). The Marbob Acquisition remains subject to certain post-closing adjustments. Certain of the third partiescontractual preferential rights became subject to litigation, as discussed below.

The Company funded the cash consideration in the Marbob Acquisition with (a) borrowings under the Company’s amended and restated credit facility (“Credit Facility”) and (b) net proceeds of $292.7 million from a private placement of approximately 6.6 million shares of Concho common stock at a price of $45.30 per share that closed on October 7, 2010 (“Private Placement”).Concho paid approximately $7.3 million in transaction costs associated with the Private Placement, which includes the placement agent fee.

Certain of the Marbob interests in properties contained contractual preferential rights to purchase by third parties if Marbob were to sell them. Marbob informed the Company of its receipt of a notice from BP America Production Company (“BP”) electing to exercise its contractual preferential purchase right to purchase interests in certain of Marbob’s properties as a result of the Marbob Acquisition.

On July 20, 2010, BP announced it was selling all its assets in the Permian Basin to a subsidiary of Apache Corporation (“Apache”). Marbob and BP owned common interests in certain properties subject to contractual preferential rights to purchase. BP and Apache contested Marbob’s ability to exercise its contractual preferential rights in this situation. As a result, Marbob and the Company filed suit against BP and Apache seeking declaratory judgment and injunctive relief to protect Marbob’s contractual right to have the option to purchase these interests in these common properties.

On October 15, 2010, the Company and Marbob resolved the litigation with BP and Apache related to the disputed contractual preferential rights. As a result of the settlement, Concho acquired a non-operated interest in substantially all of the oil and natural gas assets subject to the litigation for approximately $286 million in cash (“Preferential Right Acquisition”). The Preferential Right Acquisitionremains subject to certain post-closing adjustments. The Company funded the Preferential Right Acquisition with borrowings under its Credit Facility. The unaudited pro forma combined financial statements do not include the effects of the Preferential Right Acquisition as it is not a significant acquisition under Rule 3-05 of Regulation S-X.

In October 2010, the Company amendedits Credit Facility simultaneously with the closing of the Marbob Acquisition to increase the borrowing base from $1.2 billion to $2.0 billion. The Company paid its bank group approximately $23.6 million in fees and expenses associated with the amendment to increase the borrowing base.

The accompanying unaudited pro forma combined financial statements have been prepared to assist investors in their analysis of the financial effects of the Marbob Acquisition. This information is based on the historical financial statements of the Company and Marbob and should be read in conjunction with the Company’s (a) historical audited financial statements and related notes filed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 filed with the United States Securities and Exchange Commission (“SEC”) on February 26, 2010 and (b) historical unaudited financial statements and related notes filed in the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2010 filed with the SEC on November 4, 2010 and Marbob’s historical special-purpose combined financial statements and related notes which are included in this filing.

The accompanying unaudited pro forma combined balance sheet of Concho as of September 30, 2010 has been prepared to give effect to (i) the Marbob Acquisition, (ii) the increased Credit Facility borrowing base and (iii) the issuance of common stock of Concho in the Private Placement, as if each had occurred on September 30, 2010.

The accompanying unaudited pro forma combined statements of operations of Concho for the nine months ended September 30, 2010 and the year ended December 31, 2009 have been prepared to give effect to (i) the Marbob Acquisition, (ii) the increased Credit Facility borrowing base and (iii) the issuance of common stock of Concho in the Private Placement, as if each had occurred on January 1, 2009.

The unaudited pro forma combined financial statements included herein are not necessarily indicative of the results that might have occurred had the transactions taken place on September 30, 2010 or January 1, 2009 and are not intended to be a projection of future results. In addition, future results may vary significantly from the results reflected in the accompanying unaudited pro forma combined financial statements because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities and other factors.

Concho Resources Inc.
Unaudited Pro Forma Combined Balance Sheet
September 30, 2010


							Pro Forma			Pro Forma
	Concho			Marbob			Adjustments			Combined
	(in thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	357		$	—					$	357
Accounts receivable, net of allowance for doubtful accounts:
Oil and natural gas		99,402			23,103			(23,103	) (b)		99,402
Joint operations and other		101,421			31,567			(31,567	) (b)		101,421
Related parties		311			—						311
Derivative instruments		23,339			—						23,339
Deferred income taxes		2,551			—						2,551
Prepaid costs and other		11,295			248			(248	) (b)		11,295

Total current assets		238,676			54,918						238,676

Property and equipment, at cost:
Oil and natural gas properties, successful efforts method		3,871,715			896,454			445,270	(a)		5,213,439
Accumulated depletion and depreciation		(692,922	)		(429,632	)		429,632	(a)		(692,922	)

Total oil and natural gas properties, net		3,178,793			466,822						4,520,517
Other property and equipment, net		17,105			14,884			(6,288	) (a)		25,701

Total property and equipment, net		3,195,898			481,706				��		4,546,218

Deferred loan costs, net		19,544			—			23,617	(c)		43,161
Intangible asset, net - operating rights		35,360			—						35,360
Inventory		20,903			11,316			702	(a)		32,921
Noncurrent derivative instruments		20,105			—						20,105
Other assets		11,189			—						11,189

Total assets	$	3,541,675		$	547,940					$	4,927,630


Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable:
Trade	$	7,133		$	6,938			(6,938	) (b)	$	7,133
Related parties		474			—						474
Other current liabilities:
Bank overdrafts		38,551			—						38,551
Revenue payable		40,785			—						40,785
Accrued and prepaid drilling costs		174,000			—						174,000
Derivative instruments		27,104			—						27,104
Other current liabilities		62,098			124,262			(123,033	) (b)		63,443
								116	(a)

Total current liabilities		350,145			131,200						351,490

Long-term debt		688,620			—			830,695	(a)		1,708,334
								159,000	(a)
								23,617	(c)
								6,402	(d)
Deferred income taxes		677,573			—						677,573
Noncurrent derivative instruments		15,713			—						15,713
Asset retirement obligations and other long-term liabilities		21,002			6,543			(287	) (a)		27,258
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.001 par value		92			—			7	(a)		100
								1	(a)
Additional paid-in capital		1,270,887			—			292,673	(a)		1,635,921
								72,361	(a)
Net investment for Marbob		—			410,197			(485,250	) (a)		—
								75,053	(b)
Retained earnings		518,853			—			(6,402	) (d)		512,451
Treasury stock, at cost		(1,210	)		—						(1,210	)

Total stockholders’ equity		1,788,622			410,197						2,147,262

Total liabilities and stockholders’ equity	$	3,541,675		$	547,940					$	4,927,630

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

Concho Resources Inc.
Unaudited Pro Forma Combined Statement of Operations
Nine months ended September 30, 2010


						Pro Forma			Pro Forma
	Concho			Marbob		Adjustments			Combined
	(in thousands, except per share amounts)
Operating revenues:
Oil sales	$	528,129		$	137,880	$	(23,267	) (n)	$	642,742
Natural gas sales		140,077			72,216		(9,639	) (n)		202,654

Total operating revenues		668,206			210,096					845,396

Operating costs and expenses:
Oil and gas production		122,220			104,463		(58,868	) (g)		162,208
							826	(l)
							(6,433	) (n)
Exploration and abandonments		5,798			—					5,798
Depreciation, depletion and amortization		169,844			40,556		38,951	(e)		249,351
Accretion of discount on asset retirement obligations		1,177			434		(91	) (f)		1,520
Impairments of long-lived assets		9,234			—					9,234
General and administrative		46,141			48,979		(33,626	) (g)		63,369
							1,875	(n)
Bad debt expense		578			—					578
Gain on derivatives not designated as hedges		(62,229	)		—					(62,229	)

Total operating costs and expenses		292,763			194,432					429,829

Income from operations		375,443			15,664					415,567

Other income (expense):
Interest expense		(34,293	)		—		(20,250	) (h)		(66,762	)
							(9,000	) (i)
							646	(j)
							(3,865	) (k)
Other, net		(3,898	)		776		3,198	(m)		(435	)
							(511	) (n)

Total other expense		(38,191	)		776					(67,197	)

Income before income taxes		337,252			16,440					348,370
Income tax expense		(124,766	)		—		(4,436	) (o)		(129,202	)

Net income	$	212,486		$	16,440				$	219,168


Basic earnings per share:
Net income per share	$	2.35							$	2.23

Weighted average shares used in basic earnings per share		90,361					7,727	(p)		98,088

Diluted earnings per share:
Net income per share	$	2.32							$	2.21

Weighted average shares used in diluted earnings per share		91,631					7,727	(p)		99,358

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

Concho Resources Inc.
Unaudited Pro Forma Combined Statement of Operations
Year ended December 31, 2009


							Pro Forma			Pro Forma
	Concho			Marbob			Adjustments			Combined
	(in thousands, except per share amounts)
Operating revenues:
Oil sales	$	425,361		$	129,585		$	(22,493	) (n)	$	532,453
Natural gas sales		119,086			62,030			(8,007	) (n)		173,109

Total operating revenues		544,447			191,615						705,562

Operating costs and expenses:
Oil and gas production		108,118			40,691			477	(l)		142,384
								(6,902	) (n)
Exploration and abandonments		10,660			—			103	(l)		10,763
Depreciation, depletion and amortization		206,143			49,144			18,262	(e)		273,549
Accretion of discount on asset retirement obligations		1,058			629			(104	) (f)		1,583
Impairments of long-lived assets		12,197			—			868	(l)		13,065
General and administrative		52,277			10,426			779	(n)		63,467
								(15	) (l)
Bad debt expense		(1,035	)		—						(1,035	)
(Gain) loss on derivatives not designated as hedges		156,857			—						156,857

Total operating costs and expenses		546,275			100,890						660,633

Income (loss) from operations		(1,828	)		90,725						44,929

Other income (expense):
Interest expense		(28,292	)		(35	)		(24,461	) (h)		(69,072	)
								(12,000	) (i)
								869	(j)
								(5,153	) (k)
Other, net		(414	)		568			215	(l)		(412	)
								(781	) (n)

Total other expense		(28,706	)		533						(69,484	)

Income (loss) before income taxes		(30,534	)		91,258						(24,555	)
Income tax benefit (expense)		20,732			—			(2,386	) (o)		18,346

Net income (loss)	$	(9,802	)	$	91,258					$	(6,209	)


Basic earnings per share:
Net income (loss) per share	$	(0.12	)							$	(0.07	)

Weighted average shares used in basic earnings per share		84,912						7,727	(p)		92,639

Diluted earnings per share:
Net income (loss) per share	$	(0.12	)							$	(0.07	)

Weighted average shares used in diluted earnings per share		84,912						7,727	(p)		92,639

The accompanying notes are an integral part of these unaudited pro forma combined financial statements.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

Note A.Basis of Presentation

Following are descriptions of the individual columns included in the accompanying unaudited pro forma combined financial statements and notes to unaudited pro forma combined financial statements:

	Concho-		Represents historical consolidated balance sheet of Concho as of September 30, 2010 and the historical consolidated results of operations of Concho for the nine months ended September 30, 2010 and for the year ended December 31, 2009. Concho applies the successful efforts method for accounting for their oil and natural gas properties.

	Marbob-		Represents historical combined balance sheet of Marbob as of September 30, 2010 and the historical combined statements of operations of Marbob for the nine months ended September 30, 2010 and for the year ended December 31, 2009. Marbob applied the full cost method for accounting for their oil and natural gas properties. Also included are assets and results of operations that the Company did not ultimately purchase due to the exercise of contractual preferential rights and certain other excluded assets and obligations, as well as certain insignificant overriding royalty interests of a certain affiliate of Marbob.

Note B.Method of Accounting for the Marbob Acquisition

Concho will account for the Marbob Acquisition using the purchase method of accounting for business combinations. Concho is deemed to be the acquirer of Marbob for purposes of accounting for the Marbob Acquisition. The purchase method of accounting requires Concho to record the assets and liabilities of Marbob at their fair values. The purchase price of the net assets acquired will be based on the respective fair values. The initial purchase price allocation is preliminary and subject to adjustment.

Note C.Concho Pro Forma Adjustments

	(a)		To record the Marbob Acquisition in accordance with the terms of the purchase agreement for $1.4 billion of consideration. The financing of the cash portion of the Marbob Acquisition was through fundings under the Credit Facility and the Private Placement.See Notes D and E for additional information.

			The allocation of the purchase price to Marbob assets and liabilities is preliminary and, therefore, subject to change. Any future adjustments to the allocation of the total purchase price are not anticipated to be material to Concho’s consolidated financial statements.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

The following table represents the preliminary allocation of the total purchase price of the Marbob Acquisition to the acquired assets and liabilities and the consideration paid for the Marbob Acquisition. The allocation represents the fair values assigned to each of the assets acquired and liabilities assumed:


(in thousands)

Fair value of Marbob Acquisition net assets:
Proved oil and natural gas properties	$	1,008,823
Unproved oil and natural gas properties		332,901
Other long-term assets		20,614

Total assets acquired		1,362,338


Asset retirement obligations assumed		(7,601	)

Total purchase price	$	1,354,737

Fair value of consideration paid for Marbob Acquisition net assets:
Cash consideration paid	$	830,695
Marbob $150 million senior unsecured 8% note, due 2018⁽¹⁾		159,000
Common stock, $0.001 par value; 1,103,752 shares issued⁽²⁾		72,362
Private Placement common stock, $0.001 par value; 6,600,000 shares issued, see Note E		292,680

Total purchase price	$	1,354,737


⁽¹⁾		The Marbob $150 million senior unsecured 8% note has an estimated fair value at September 30, 2010 of apporximately $159 million.

⁽²⁾		The Concho common stock issued to Marbob was valued at Concho’s average of the high and low price on September 30, 2010 of $65.56 per share.

(b)		To adjust certain assets and liabilities that Concho did not acquire or assume in the Marbob Acquisition.

(c)		To record the deferred loan costs paid related to the credit facility.See Note D.

(d)		To record additional estimated transaction costs not incurred as of September 30, 2010.

(e)		To adjust (i) depletion expense for the additional basis allocated to oil and natural gas properties acquired and accounted for using the successful efforts method of accounting, (ii) historical depreciation for certain other propertyand equipment not acquired and (iii) depreciation for the allocated fair value to other propertyand equipment.

(f)		To adjust accretion for the acquired asset retirement obligations.

(g)		To adjust oil and natural gas production expense and general and administrative expense for a bonus primarily attributable to amounts paid to Marbob employees for the successful completion of the Marbob Acquisition. See Note F.

(h)		To record interest expense associated with the cashportion of the purchase price of the Marbob Acquisition funded utilizing borrowings under the Credit Facility,payment of deferred loancosts on the Credit Facility and payment of transaction costs associated with the Marbob Acquisition.The interest ratesofapproximately3.1% and 2.8% used to determine such interest expense represent Concho’s estimated average borrowing rate on outstanding bank indebtedness for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively. These rates would not be materially different under the pricing terms of the Credit Facility, as compared to the pricing terms of Concho’s previous credit facility.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

(i)		To record the cash interest expense related to the Marbob $150 million senior unsecured 8% note, due 2018.

(j)		To record interest expense related to the amortization of the premium on the Marbob $150 million senior unsecured 8% note, due 2018.

(k)		To record amortization related to new deferred loan costs.

(l)		To adjust items capitalized under the full cost method which should be expensed under the successful efforts method of accounting.

(m)		To eliminatetransaction costs for the Marbob Acquisition included in the historical results of operations for Concho and Marbob during the nine months ended September 30, 2010.

(n)		To adjust the cash revenues and expenses associated with the assets and related obligations which Concho did not acquire in the Marbob Acquisition.

(o)		To adjust income tax expense to a 39.9% estimated effective tax rate for the Marbob Acquisition which includes the estimated effect of federal and state income taxes.

(p)		To adjust Concho’s weighted average basic and diluted common shares outstanding for the nine months ended September 30, 2010 and the year ended December 31, 2009, as a result of the Concho common stock issued to Marbob and in the Private Placement.

		The following table provides the calculation of the Concho’s historical weighted average basic and diluted outstanding shares to Concho’s pro forma weighted average basic and diluted outstanding shares:


	Nine Months		Year
	Ended		Ended
	September 30,		December 31,
(in thousands)	2010		2009
Basic:
Concho’s historical weighted average shares outstanding		90,361		84,912
Shares issued to Marbob		1,104		1,104
Shares issued in Private Placement		6,623		6,623

Pro forma weighted average shares outstanding		98,088		92,639


Diluted:
Concho’s historical weighted average shares outstanding⁽¹⁾		91,631		84,912
Shares issued to Marbob		1,104		1,104
Shares issued in Private Placement		6,623		6,623

Pro forma weighted average shares outstanding⁽¹⁾		99,358		92,639


⁽¹⁾		The historical Concho and pro forma combined statements of operations had a net loss for the year ended December 31, 2009, thus diluted shares equal basic shares.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

Note D.Credit Facility

In October 2010, the Company amended its Credit Facility simultaneously with the closing of the Marbob Acquisition to increase the borrowing base from $1.2 billion to $2.0 billion.

Note E.Common Stock Private Placement

On July 19, 2010, the Company entered into a common stock purchase agreement with certain third-party accredited investors to sell 6,622,517 shares of its common stock at a price of $45.30 per share in a private placement for aggregate cash consideration of approximately $300 million. Also, the Company entered into a registration rights agreement with the investors. The Company paid approximately $7.3 million in transaction costs, which includes the placement agent fee. The common stock was issued and sold simultaneously with the closing of the Marbob Acquisition in October 2010.

Note F.Marbob Acquisition Bonus

The Marbob historical statement of operations for the nine months ended September 30, 2010 includes bonuses of approximately $107.4 million to Marbob employees upon closing of the Marbob Acquisition. A significant portion of the bonus is attributable to amounts paid for the successful completion of the Marbob Acquisition. Under its annual bonus program, Marbob would have paid no more than $12 million in annual bonuses for the year ended December 31, 2010.

Note G.Litigation

The unaudited pro forma combined financial statements do not include the effects of the Preferential Right Acquisition as it is not a significant acquisition under Rule 3-05 of Regulation S-X.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

Note H.Supplementary Pro Forma Information for Oil and Natural Gas Producing Activities

The following tables present supplementary pro forma information for oil and natural gas producing activities.

Pro Forma Reserve Quantity Information

The following table sets forth the changes in net proved reserve quantities of oil and natural gas and total proved reserves of Concho, Marbob and on a Pro Forma Combined basis, with related pro forma adjustments, for the year ended December 31, 2009:


	Concho									Marbob									Pro Forma Adjustments^(a)									Pro Forma Combined
	Oil and									Oil and									Oil and									Oil and
	Condensate			Natural Gas			Total			Condensate			Natural Gas			Total			Condensate			Natural Gas			Total			Condensate			Natural Gas			Total

	(MBbls)			(MMcf)			(MBoe)			(MBbls)			(MMcf)			(MBoe)			(MBbls)			(MMcf)			(MBoe)			(MBbls)			(MMcf)			(MBoe)
Total Proved Reserves:
Balance, January 1, 2009		86,285			305,948			137,275			34,748			147,301			59,298			(7,492	)		(26,997	)		(11,990	)		113,541			426,252			184,583
Purchase of minerals-in-place		13,916			38,096			20,265			—			116			19			—			—			—			13,916			38,212			20,284
Sales of minerals-in-place		(18	)		(315	)		(71	)		—			—			—			—			—			—			(18	)		(315	)		(71	)
Discoveries and extensions		47,750			109,150			65,942			3,303			13,943			5,627			(50	)		20			(47	)		51,003			123,113			71,522
Revisions of previous estimates		1,421			(14,400	)		(977	)		2,593			10,870			4,405			(915	)		(2,262	)		(1,294	)		3,099			(5,792	)		2,134
Production		(7,336	)		(21,568	)		(10,931	)		(2,251	)		(12,923	)		(4,405	)		381			1,709			666			(9,206	)		(32,782	)		(14,670	)

Balance, December 31, 2009		142,018			416,911			211,503			38,393			159,307			64,944			(8,076	)		(27,530	)		(12,665	)		172,335			548,688			263,782


Proved Developed Reserves:
January 1, 2009		46,661			179,124			76,515			20,946			113,303			39,830			(5,040	)		(20,378	)		(8,436	)		62,567			272,049			107,909
December 31, 2009		66,578			222,776			103,707			23,597			122,507			44,015			(4,793	)		(19,004	)		(7,960	)		85,382			326,279			139,762

Proved Undeveloped Reserves:
January 1, 2009		39,624			126,824			60,760			13,802			33,998			19,468			(2,452	)		(6,619	)		(3,554	)		50,974			154,203			76,674
December 31, 2009		75,440			194,135			107,796			14,796			36,800			20,929			(3,283	)		(8,526	)		(4,705	)		86,953			222,409			124,020


^(a)		To adjust certain assets not acquired in the Marbob Acquisition. See Note A.

Concho Resources Inc.
Notes to Unaudited Pro Forma Combined Financial Statements
September 30, 2010 and December 31, 2009

Pro Forma Standardized Measure of Discounted Future Net Cash Flows

The following table sets forth the standardized measure of discounted future net cash flows relating to the proved oil and natural gas reserves of Concho, Marbob and on a Pro Forma Combined basis, with related pro forma adjustments, as of December 31, 2009:


							Pro Forma			Pro Forma
(in thousands)	Concho			Marbob			Adjustments^(a)			Combined
Oil and gas producing activities:
Future cash inflows	$	10,145,876		$	2,786,575		$	(559,293	)	$	12,373,158
Future production costs		(2,956,257	)		(823,169	)		139,062			(3,640,364	)
Future development and abandonment costs		(1,272,695	)		(266,422	)		54,962			(1,484,155	)
Future income tax expense		(1,807,582	)		—			(501,790	)^(b)		(2,309,372	)

Future net cash flows		4,109,342			1,696,984			(867,059	)		4,939,267
10% annual discount factor		(2,187,313	)		(939,434	)		481,233			(2,645,514	)

Standardized measure of discounted future cash flows	$	1,922,029		$	757,550		$	(385,826	)	$	2,293,753


^(a)		To adjust certain assets not acquired in the Marbob Acquisition. See Note A.

^(b)		To adjust future income tax expense due to Marbob not being subject to income taxes. All properties will be subject to income taxes in Concho’s organizational structure.

Pro Forma Changes in Standardized Measure of Discounted Future Net Cash Flows

The following table sets forth the changes in the standardized measure of discounted future net cash flows relating to the proved oil and natural gas reserves of Concho, Marbob and on a Pro Forma Combined basis, with related pro forma adjustments, for the year ended December 31, 2009:


							Pro Forma			Pro Forma
(in thousands)	Concho			Marbob			Adjustments^(a)			Combined
Oil and gas producing activities:
Purchases of minerals-in-place	$	403,242		$	160		$	—		$	403,402
Sales of minerals-in-place		(953	)		—			—			(953	)
Extensions and discoveries		844,742			60,998			(1,054	)		904,686
Net changes in prices and production costs		220,372			102,378			(23,922	)		298,828
Oil and gas sales, net of production costs		(436,329	)		(150,924	)		24,075			(563,178	)
Changes in future development costs		49,626			16,799			3,617			70,042
Revisions of previous quantity estimates		(19,234	)		61,766			(4,024	)		38,508
Accretion of discount		162,844			60,405			(13,118	)		210,131
Changes in production rates, timing and other		(87,960	)		1,917			459,590			373,547

Change in present value of future net revenues		1,136,350			153,499			445,164			1,735,013
Net change in present value of future income taxes		(413,306	)		—			(226,939	)^(b)		(640,245	)

		723,044			153,499			218,225			1,094,768
Balance, beginning of year		1,198,985			604,051			(604,051	)		1,198,985

Balance, end of year	$	1,922,029		$	757,550		$	(385,826	)	$	2,293,753


^(a)		To adjust certain assets not acquired in the Marbob Acquisition. See Note A.

^(b)		To adjust future income tax expense due to Marbob not being subject to income taxes. All properties will be subject to income taxes in Concho’s organizational structure.

Concho Resources (CXO) 8-K/ASpecial-Purpose Combined Financial Statements