CXO - Earnings call transcript Q4 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2018 Concho Resources Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Hays. Megan begin. may you Ma'am,

Megan Hays

Thank you, fourth welcome Concho's morning Daniel. XXXX earnings Good quarter and call. to Great.

Our earnings current report release website, and forward-looking uncertainties. Participants corporate presentation are will call subject plan today market make file to on XX-K and today's and based available to our They're Form annual on on statements after close. expectations. we on our risks

disclaimers and and other are presentation. statements the release provided Forward-looking earnings in

Our comments reference measures. may today also non-GAAP

joined in with members reconciliations Operating Midland our Executive appropriate today the team. I'm Chairman along in Giraud of Tim materials. CEO Vice find management senior President, our Leach, and You'll Concho Officer, Will Chief by earnings Harper, the President and and Jack

operational XXXX results on and update you During outlook. will financial quarter call, today's will XXXX discuss and our we fourth year and full

prepared our one to and Following question-and-answer a we host limit remarks, session up. yourself please one follow question will

Now, to the call turn over Tim. let me

Timothy Leach

This the discipline. for morning. and year capital was transformational the Good strategy, strength our communicating Megan. of year Thanks, execution a started We Concho. importance

XXXX, these strong one of running while development and the delivered we largest results in of on programs achieved the During Permian. each

was milestone on track checked RSP. our of in of Our in our our RSP The the all and the Based Permian, transaction boxes. scale the biggest record the enhanced XXXX strategy acquisition long-term growth platform.

that us. portfolio we’re we in asset with the covering we're up focused in development. pleased drilling The that long XX on extremely for assets and created laterals trades acreage fold XXXX, project we blocking acres To aggregate. machine and net competitive team into premium it and end, XX,XXX high this grading that the development executed As is advantage joined our inventory and a we've

of delineation assets The this return is of to thirds in and our our Oryx of and two oil. a $XXX non-core proceeds of Roughly rate considered than high have sold and XXXX, investment rate billion gathering XX% premium years million this $XXX and million resource barrels we average XX oil distribution achieves return XX resource pace. also grading horizontal regional equivalent. system. $XX development, the current is resource runway from during portfolio increased at our greater about Through of received at of we of We XX% premium for

Our program to is in XXXX capital directed these locations.

operational XX% delivered volume. increase a increased also We year-over-year by solid performance. driven in XX% oil We production

excluding for investment track from the our a And and free our enables this ended record for capital grade investments acquisitions. year initiate competes balance made strong progress to achieving in across industry a significant XXXX and deliver working sheet. the goal. and proposition We're quality our not we we in for in teams Free and billion program exceed the third of is around the invested a that are and highlighted the for transition consecutive total XXXX cash Our our generated again completion drilling large the in projects our flow has and scale leading program cash cash of flow, a $X.X billion stall well agencies the three the flow business dividend assets. for We $X.X rating that to We this to strong. manufacturing with executed disciplined And to marking a ratings completed concept. us a broader practice year market credit in top flow value the quarter. development been performance of capital cash outlook

oil While are prices and welcome. higher conditions our supportive market

respond and historically find there game slowdown about if times service activity There we market opportunity to focus before typically a month delay cost, realities. of materializes plan service of been means returns Our three volatility. lot the a has in is levels or conversation cost especially four

lower commodity the quarter the are the even We calibrating the of sheet in benefits RSP to flow at balance evolution growth strength. focus transaction to this, about our around continuing talked and program prices free apparent. on this prices, XXXX. efficiency this of Against and XXXX business the we're expect we're maintaining compelling and We be cash case the last of Because machine lower E&P backdrop, of model. the

off flow and Our industry cash combined model industry of and strategy can. will maximize with best in excess timeframe deliver returns build a on a very will in At capital. balance our and assets the a team, and our change, few time broad way sheet in

better and to other XXXX, sets Jack. and in any Concho. case We With our I'll investment time plan. history. company, an have platform, one more Developing thoughtfully that up incredible turn carefully the pursued position the our reinforces for for that, our capable And than over trajectory it

Jack Harper

you, Tim. Thank

recap million, to to cost $X.XX focus XXXX. day, XX% adjusted in results, performance earnings Fourth value with capital offense XXXX XXXX up most year year short, high per the share our on cost, actions quarter good, quarter history. and projects, of delivering program in production good strengthened of of XXX,XXX executed of strategically on start disciplined compared outlook say to increase volume in and now it but fourth I'll Oil XX% in full was the do. years to important invested the of cash $XXX before totaled averaged our was updated We for growth of and our quarter EBITDAX production continue a and a XXXX. controlled and another per barrels averaged guidance we're contributed during we as quarter year. XX% range. improvement. volumes Our fourth a with make portfolio. last Controllable cash to look we going XXX,XXX line one our reviewing Adjusted compared day In what BOEs and per fourth

compared from adjusted $X.XX per $X.X This RSP, partial totaled cash For includes day. $XXX,XXX volumes X% which XXXX. XXXX, improved, down per to share a Full production and contribution per Controllable adjusted year were acquired year we earnings mid-July. in was unit BOEs billion. EBITDAX cost

generating million divestitures approximately our and while our As $X.X in investment program, strategic invested $X.X billion operating received Oryx. of and we capital flow in Tim from $XXX mentioned, cash in proceeds billion

Our at is stood our year and steep activity $X.X debt disciplined quarter. prudent different balance crude prices be at our and in XX% core oil was leverage sheet as were are last and are the our X.X this on cash increase at fast Companies continued year ratios strengthen capital things well and to sheet. the backdrop Clearly, times. ended to the is end illustrates not Operationally, a our and position poised advantage used wins XX% with inflation is hedged The swaps. basis and Based A were billion portfolio how prices strong proceeding the management and balance flows program to of oil range drop for Long-term can of financial competitive the approximately protected. change. annualized value favor. in guidance our covered planned. business roughly

the the quarter, we XX During rigs, fourth of basin. ran programs one largest in the

scale our of across on which development, multi-well large and advance style asset to centric our base. focuses return continue We projects

Our project parent-child demonstrate this our efficiencies mitigates impacts, value investments. to operational maximizes continue results long-term the the of approach, drives prudence and of which

As competition technology the intensifies the important. supply to most barrel is efficient increasingly

projects was peak optimizing improving is XX% while lateral lateral an style more per and relatively on rate use was innovation, absolute day, performance to XXXX, manufacturing of development increased technology basis BOE accelerating to an average moved And with to the economics. average adjusted well capital consistent than program length In the large-scale day than and directed combined of XX productivity team's before. ever our year-over-year. X,XXX more Our

gas of discount oil creating how out we were how and value most regional and and short-term significantly to we I'm build, expected to scenario as conversions addition The the also ramps clear as of and the and glad with patient takeaway we're line narrowed develop the value In has played has to market. market assets, Cushing Since that Plains sacrifice XXXX, beginning largely capacity didn't looking we didn't fruition. System transportation value arrangements. up Midland a through we single come Sunrise we barrel not operator Midland capture and We're Permian the anticipated long-term communicated. the for around produce. aware pricing

making market exposure on strategy. and position we're our Importantly, now to diversifying begin in a this pricing we're strong progress and

sector During the The focus growing ramps With frustration. barrel oil The ample had dock day a XX,XXX integrated to agreement Cactus sold entered swings flow energy marketing per pipeline of that under solution, cash control, and free provide space discipline Plains myriad firm XXXX investor our a pricing. and transportation in headwinds third-party into agreement capital including big this purchaser of we we're when first capacity. and comes online. This a arrangement receive will II redoubling on including with cost and quarter barrels waterborne of will prices, this sales returns. oil an backdrop,

performance. differentiated our strategy record are to about track others While deliver us new the sector uniquely talking in actions position and a

challenge updated is program which on volatility compared trajectory. a the in XXXX, fourth oil production free growth cash to rate of of RSP XQ continue of previous XX% Our volumes will sets guidance. of the XXXX represents XXXX The continue sustainable full we because With with billion, $X.X fourth reduction versus exit program view the $X of flow quarter includes capital XXXX capital rate level investment spend supports includes with an less up of our highlight XX% a our sector. and growth a strong billion and quarter the XXXX a based capital This that quarter to to activity.

substantial for our cash investment similar as XXXX, growth. free resulting calls Looking a flow ahead to level base in plan XXXX,

will flexibility and of emphasis free by we We cash last opportunistically on respond places the us This environment to have an guided deploy out quarter. framework the capital the capital when additional increased laid capital. framework price to gives allocation still excess returns

crews, in quarter. the free remain will which rigs completion the so year. individual XX We long-term, focus more and Our is for XX with the than flow our year started cash on growing level over peak any

day, third through of second to which the of across wells placed XXX,XXX As Production on quarter $XXX the to timing expect of $XXX reflects base XQ the BOE range million and in to ramp in per asset balance of more XXX,XXX we of move for the will a to style and we be move is development expected million, our the the production moderate project capital result quarters. the as which XXXX.

assets have team and the to We differentiated value. deliver

advantage, deliver most barrels questions. now in competitive position the allow to your one strong scale to call world. us the strength open the up of Our execution and We’ll financial

Operator

Arun JP Jayaram from Our with comes Instructions] Morgan. first question [Operator

Your now open. line is

Arun Jayaram

and Jack. Good Tim morning,

has do First see plan? that more question, in as the could some operating was and you us what wondering the capital of to in you volatility, last XXXX how terms maybe on seem your sizable plan, I guide which the your time benefits own pretty new indicate you quarter, the you since articulated does thoughts but of mentioned if change versus what versus give XXXX, guide evolved efficiency thinking

Timothy Leach

this put really conservative very in and were the together November we when be thinking plant cash to were flow. Yes, thinking that guess, what Arun, generate we I is free similar we to is trying

declining being that will us so the capital gives is flow, And we in quarter, pace at free of in at back prices reduction deploying conservative November we fourth thought us There’s oil a were production. we’re with with time. cash substantial how also just that give additional the growth

amounts us So will flow allow demonstrate we growing the cash of free grow I and it that to think can company. generate

Arun Jayaram

Fair a flow on on XXXX it cash the sense follow cash could prioritizing a a portfolio? per on thoughts what’s $XX sheet the new your to thoughts Tim, characteristics enough. reinvesting the And terms just you barrel and of of in call flow flow XXXX free of number cash cash give plan. your return, $XX or balance your between in free like the would that free in us and Anyway up

Timothy Leach

about specifics. to going to it Yes, and you the a then and and I'm I cleanup let I'm going you more mess think directionally give give Jack how

can what and growing all industries cash exceptional free that is think of I yield think rates in very our competes that at that’s for can kind free inventors range to the start of focused as you we really of excited we big we can get free flow us growth company future demonstrate generate, yield I look doing can that generally between on that I'm to and the there’s good that across is that a generate flow into and $XX change a about. grow level cash a and I pricing $XX cash but amount think

Jack Harper

price And see year even XXXX. than of like us year, and add Yes flow that. about $XX an level I capital a color free this our but reflects that on dividend inflection that, this budget free think approaches the just allows an we point think capital cash at our that this price cash pace a billion level -- in little to a you when to and cover lower Arun an low next amount to in XXs and $X amount

Arun Jayaram

then… And

Jack Harper

Go ahead I'm sorry.

Arun Jayaram

There was in XXXX? $X billion

Jack Harper

we And That’s is about correct. also most huge us. talked strength you wanted sheet priority make sure balance -- priority I to asked a for certainly about

be We X gravitate strong it balance can we've I like of lower stronger towards of stated to the more have X.X a the it we and believe to range sheet, see times. end think

and for at time. So returns making the that that, our optionality shareholders business in achieve set moment that or having then depending circumstances the on we sure to of to additional are run

Arun Jayaram

a thanks Great, lot.

Operator

you. comes Goldman with from question And next our Sachs. Singer Thank Brian

Your line is now open.

Brian Singer

morning. Thank Good you.

Timothy Leach

morning. Good

Brian Singer

cash bit the Following flow on little free up a point.

you M&A. could potentially stay having if a about oil in prices But bit if I XXXX. little flow talked cash free about wondered, talk strong You a number big

your premium you you in like a whether premium sought flow lot inventory. interest net shareholders mentioned? debt the down seems to talk free as presentation out highlight that potential further or for a basis? a pay use is you And consolidation of in the on that slide you years and return earlier inventory be would XX mentioned to more or disinterest Can of have cash cash of flow and free You whether

Timothy Leach

Tim. This is

how to consolidation that to something assets. think block a I be player Basin And in that I up many always try in mentioned Permian leadership continue in. to done we've trades is our we'll

be and industry need at see So on we of we doesn't that grade I that. is flow and of to cash assets, go cash this flow to the high forefront flow into program to continuing want business provides runs to free entire cash free you're of what our the generate think going that, portfolio consolidation. business, our The though, to from our The shareholders. kind runs capital working

I -- separately. think two wouldn't I those So things about

Brian Singer

regards And to then oil with mix, follow a as oil my percent Great, the thanks. up of is production total.

as a the the XXXX dynamics to expected? to flaring imply side gas and Your and an drivers increase i.e. in as constraints see total guidance in that you Can oil on natural XXXX are or or quarters. talk recent would appear both you percent and whether of being versus reinjection any this of the just assumed

Jack Harper

the we of it's which this increase Jack. bringing The projects. planned of oil mix for have and accurate is capital have increasingly Brian, oily a projects do is is which in on reflection percentage the timing in that and cadence And those the budget, an the mix.

driven not As gas in The really to the increased any constraints, we business. more do anticipate meaningful capital allocation. constraints in is our by oil

Brian Singer

you. thank Great,

Operator

you. next Thank from Jungwirth comes Phillip our And BMO. question with

Your line open. now is

Phillip Jungwirth

Thanks. morning. Good

Timothy Leach

Good morning.

Phillip Jungwirth

the you the outlook or your out. original would you're synergies infrastructure and savings? versus either you're on guidance outperforming you would or shared say How is XXXX, asset RSP currently synergy tracking which billion XXXX say development optimization, level Based efficiencies, corporate laid areas $X

Timothy Leach

G&A cost development, the before, of assets said achieved I've savings going XXXX and as in RSP think interest real styles. manufacturing are we've RSP Yes, which and long are laterals of done. on manufacturing The development terms was value part opportunity synergy XX% those I the reduction, on style now creation of in assets the the it on things

So that as develop on RSP over creation that on is value assets will a many the those now years. continue we

I very value that created of pleased with out RSP. I'm So think is the being

Phillip Jungwirth

of between from development efficiencies, well. on three communicate project for the to are then, of measure terms wells Great. you upcoming leveraging dominator expect And the how how looking this to you facilities, then project? operational would success results And productivity there, in

William Giraud

Will. its Phillip, Sure,

these as the other elements of size we measure also trying to see think drilling of any bit the be far obviously the we’ve that’s larger way in on before push we we a we we But just that its said in speaking there’s I on efficiencies the we’re that investment. quarter. of and going testing versus would project returns can make project detail bringing and would received things and I project in more same project. it other measure given spacing, We’re would next say will something now, to also that’s unique larger we terms the how right And and projects as

anything versus lot we’re it So I'm there’s that, doing. about other there’s any but unique big a of in projects not the sure

Phillip Jungwirth

Great, thanks.

Operator

our Neal And you. comes with Dingmann SunTrust. question next Thank from

Your line is now open.

Neal Dingmann

looks your My of just it first but Jack, then looks and pointed on for Morning nice about I like question it as capital talked what XXXX just you sort guys. XXXX and Tim plan think like out, if I and of would you very cut rigs try mean those and up in that you sort years? sometime of just or pick relatively balance Does right two assumes part to am reading for year-over-year and XXXX XXXX latter flat. that XXXX XXXX some XXXX CapEx

Timothy Leach

this in year, similar XX average rigs to rigs we level declining year over that obviously the and get are but there it’s of we a Yes, year next plan.

XXXX, bit would a So, a I anticipate sometime yes, ramp but much. of not during

Neal Dingmann

projects Okay. lastly show areas Delaware equally about you Midland, kind where you that looks about Basin that XX feel key plan? diversified of far with the like and in about as key by some XX cadence diversified still to of those guess slide of projects, as And judged is And I be you as to continue kind just your two then looking XX wells pretty the good wise? as

Timothy Leach

to Delaware capital about allocation the Basin at of the the this and Delaware. when you with look diversity mix XX:XX going the it’s like year we a Absolutely, Midland and our XX

Neal Dingmann

good. Thank Very you.

Operator

comes Leo question our with Mariani KeyBanc. Thank you. from And next

is now line Your open.

Leo Mariani

if color quarter Can of bit you reduce XXXX? plan spending kind first full could the Hey, of your XXXX CapEx at do and how run lot little on away it’s you’ve guidance a second CapEx work us around high of quarter certainly kind guys. as the rate. quarter little guys activity full expand us kind got you first you to give looking year a as of I activity the activity What CapEx kind bit year. sort above in can about of throughout rigs the just tell plan kind into of roll the of a off kind pace you the of was we you quarter is obviously hoping year for

William Giraud

there’s in XXXX slide last the Leo, where guidance really very we helpful you definitely, cadence. slide a the show the back actually our around deck on Yes, rig

rigs XX the to back And in and so averaging XX. year half quarter second going the first in then averaging we’re the of XX

a aspect year loaded come ended rigs the there’s off frontend high definitely we as So the XX of we with.

Leo Mariani

Okay, you guess that’s And a us helpful decent we kind for sales in off asset pieces to should can Are XXXX? terms little continue assets some prune proceeds just what XXXX, for and here in I on of sign you bit sure. plans XXXX? guys the about kind and non-core of tell obviously of expect of you guys the which sales in focused in

William Giraud

off for up That’s When parts is be this side, very the to of we and on we end best the us non-core goal a something with blocks that’s look predict, a in that’s on the the trades XXXX. the Permian. at currency saw look you two definitely most peel mentioned our in XXXX very to you kind the preferred acreage at or will package little acreage as large of asset use focused hard of non-core certainly map and of use in trade, to active management Tim the portfolio but we’re the

map Northern the focal scattered trades it’s but area at is page, for we the Delaware actually a have non-core like for certainly relatively of off it jumps look and point assets. you position, we kind an still our opportunity when so And that there an the

Leo Mariani

you. All thank right,

Operator

Research. comes Thank from you. And question our Brackett Bernstein with Bob next

Your line open. is now

Bob Brackett

acreage? some question the a lateral had to I from able that big I in length that jump saw a efficiencies, about development Midland mix a with achieve and X,XXX of you’re X,XXX Yes, of to Delaware

William Giraud

pushing That’s this especially the right. and big to that And conversation swaps been length that enabler lateral really Delaware in for goes trades the back Basin. that’s around

Bob Brackett

the count you also that if on year, goes last talk of the you change can dropped maybe foot, count then, pound about tuning but you and per talk expanding about in wells. improve there's stage stage relevant Can XXXX where completions, any fine there? And

William Giraud

evolution has the Certainly, I think notice stage you the was year-to-year completions bit. of then the also at backed off program look we spacing, intensity should, one a if as but you

to of per of bones it's the evolving different work of lot and foot, continue lateral aspects for the completion. also applications We of on pounds strategy not kind and targeting just completion around -- there's all a other

change think in I continue to well. time expect future, over performance the well driver that see would as increased So that's I but a to over

Bob Brackett

you. Thank

Operator

our Morgan next with comes question Drew And you. Stanley. Thank Venker from

Your line is now open.

Drew Venker

morning, Good everyone.

spacing can targeting on well -- Just question have up opposed think you modifications? follow and last and wanted to performance completion as come to well design how much performance speak to things you reservoir, the well from on improvements, on the just the aside improvements from optimizing design

Timothy Leach

describe we hard a by That's to interesting do this as enabling we brief in some little that seeing continuing the it. to a expect pretty -- way and I certainly results to We're the testing from it's project is us understand what pleased we're best development. what and large-scale to thing moved think way. do But into

Drew Venker

a $XX XXXX spending Maybe or higher I $XX that’d you be Understood. XXXX? more little would like color price in you think helpful, guess a how all flex for price both environments give bit maybe and on if could environment

Timothy Leach

us Yes, generate would cash a for we really that say cash will think flow. oil I higher free bigger that But yields flexible I business. just run prices

and So strong we really growth can flow. free so -- we can how cash think show I that's ourselves differentiate and

Drew Venker

Thanks, Tim.

Operator

you. Thank Heikkinen Hall question Energy. our from with next Michael And comes

open. is line Your now

Michael Hall

business, your on as of would falling of on the E&P morning. what costs model? kind some probably line come Good kind Appreciate evolution cyclically. to deepest model, E&P business differentials your the the of cost low narrowing, business the behind level kind principles side thinking the guiding -- in conscious on say the Thanks. this of the I'm call just it to I are you of kind of I and guess, of other you are just back one structure, the wanted inventories time. Just curious that evolution taking

through? could the not kind one guiding principles the of kind I'm why extent or debated discussed just I this curious guess what push behind just to ask So, what of that are flow was evolution? why now, in why and

Timothy Leach

we've quarters for a model is some while the for compelling industry. think about the this business I Concho company in to talking now been we're mean, only the leaders about ago. revolution, of our one was shale And that thing where I Well, one remember started XX years

shareholders trying And oil stayed our this with so, have with field of to we talk us while it. to IPO a They've as -- drill the figure company, I my delineating payday. investors best biggest and of time And on they of us how to discovery for that stayed the of shareholders the were now were best kind in the out it's it world. through

the a you new competes where shareholders And look it's enough the other model any investors, for and model with that redistribute world I long-term the those you that about it's kind can think so and gas model. cash when a of like of in generate free flow think kind to payday what oil does industrial grow

Michael Hall

think about you color. segues into of pace have Okay, should dividend? I And of sort target growing that's for How one? question, yields the And are on thinking you we about guys which it that I the if was timeframe of payday I guess next the guess, appreciate kind the dividend. helpful, my the what

Timothy Leach

I so kind the this first sheet is demonstrate initiated -- capital of to increasing what ever what want our back in right gain. just dividend about But able say shareholders. you quarter, that to it's cash would get I being we earlier more is best about I to think thinking it after yields. I we're balance then way your where And talk form mean, is

Michael Hall

the color. very Thanks Appreciate much. Okay.

Timothy Leach

you. Thank

Operator

question from Citi. you. next Morris comes Bob with And Thank our

line now Your open. is

Bob Morris

Thank in deflation. good there we're that is month at service when cost But oilfield Basin, a mentioned today little and a oilfield gentlemen. inflation, seeing what this slowdown a year? your you earlier on you service deflation by bit on seeing a lag lot or the typically morning far with three there the that or and peers as Permian as point, expecting into slowdown of are is four you Tim, you the cost

Timothy Leach

if Permian in let that Well, me XXX rigs need Basin. everybody say we within the don't cash was running general their flow in

the year how? is up of to So to expensive about Jack, you today. it less be thinking we than the are talk that back want half

Jack Harper

I just would plan that today. to cost them that have we add as we on is -- our see based

And that do so to the come extent down, incrementally would beneficial. be they

Bob Morris

Okay. you Tim, the economics legacy this does really is slowdown with with the how assets do activity in the now, just you of then, the the are And curious on how the impact slowdown for think to price about bulk paid Concho RSP or that on regard RSP?

Timothy Leach

cash flow. RSP a was that own We've generating combined this businesses thriving -- we've two its together, business successfully put

you distributed as going is just XXXX, as capital capital is much being to back represented the about combination. in how whole they in the assets the look at If there RSP

into efficiency that one we two the it the capital assets. drilling so as RSP taking -- I gained way the better them about businesses business. So But think from is and are combining

Bob Morris

Okay, you. thank

Timothy Leach

Yes, thanks.

Operator

next Thank Paul question And comes our Mizuho. from you. with Sankey

open. Your is line now

Paul Sankey

the Is cash the was idea a it two big sell cash changed or your is and Appreciate three would longer company. about maybe think hard you're now the guys. company. ago oriented the strategy. IPOed for I comments that Things you more taking more shareholders what Hi -- run to going And going now the that obviously want. guess Are you then have years run idea I if cash you've really in time to to been the return return? point Thanks.

Timothy Leach

may Either have big my Paul. wasn't idea, That your idea. been big

Paul Sankey

told you that. thought me I

Timothy Leach

all capital to think. across create create assets And You for existed see of big create capital and were right that's compelling a I is because to something talking can But really something that's capital gets return before investors. that is the growth that we and if it compelling one allocation pumping through set my that's attracts business investment? why other, model industries to the hasn't ever of idea Tim, to our blood

Paul Sankey

guess return opportunity the so such big mean I is growth, now rapid or growth And right I volumes have terms? in idea -- cash you

Timothy Leach

Yes, pretty in think growing substantially a scenario. I still even mean, we're I reduced capital

Paul Sankey

Okay.

Timothy Leach

From pretty say. base a big would I

Paul Sankey

big well guess sell because right? you're idea, getting kind the Yes, So. too yourselves, of that's to I

Timothy Leach

Go to don’t know, next yes. topic. on your I

Paul Sankey

Thank you.

Operator

Thank comes question Jeffery you. Tuohy from next Campbell with our Brothers. And

now is open. Your line

Jeffery Campbell

in Good year-over-year morning. outlook the XXXX XXXX’s year-over-year call and variables benchmarks. lower a spend alleviate cash in are said XXXX you is Earlier in free lower What commodity a a assumption. low-XXs using flattish the to mind than bearing

Jack Harper

just have the what our into said program look we be we lower that price even of things can $X dividend low-XX. to approaching free flow. somewhere all price the we billion. as strip clarify of and XX capital at additional a is at that Yes, those if And is see earlier cash level a in currently funded a approaching we cash XXXX or And cover like can we XXXX and XX see

Jeffery Campbell

if variables Okay. just and that’s bigger assumption make And is what projects even that push and just lower asking of it guess are towards or commodity it to longer what XXXX about laterals is discontinued performance there? I'm the -- the but I is some going is bigger what

Jack Harper

and for lateral through project to be be on within the small spacing think the that turned placement commodity our deployment But ourselves. will actually investment I highlighted it’s lower the Sure, I efficient now can development our our large most it’s all nubs circumstance any that further an to of and capital under increased focus the right making differentiate zones, of is us mean, prices opportunity you’re efficiency. well better the

Jeffery Campbell

and of helpful. County And been acreage? with if large was just your core the Basin looking competing capital Okay, how’s the the area? in Delaware was just for on XX what thank are That any projects you’ve I recently, located the map wondering Mexico was at doing detailed also the wondering, Reeves acreage wondering I'm you’ve slide Basin Midland I'm of And that scale just you. Reeves

William Giraud

located. all think in Reeves wells I our this look is if did There Will. showing of Sure, area job projects scale are slide you on mean nine where large that a are of good the I

looked now. just you that’s development but all see quarter, almost see can basis the of think portfolio. assets annual see would And an dispersion a our can fourth entire you if across think across on pretty the broad of it you I that So I you

Jeffery Campbell

Okay.

in So none are but projects? Reeves named its is that doing slide of XX on projects were own the Reeves,

William Giraud

significant the I there’s in and project Yes, other is. also one Jack it is there’s a then Reeves think the Tempest there, project well and

Jeffery Campbell

for that. Okay, Thanks great.

Operator

our And question comes Todd you. Energy. next with Simmons from Ryan Thank

open. line now Your is

Ryan Todd

well additional color this? seen just takeaways on that thanks. from like you’re proper provide developed. these impact project, development scale of things parent-child on seeing that various regarding projects strong Can Great, the Maybe and projects whether results question on horizons, to large productivity any the dynamics efficiency you’ve potential a to-date you’ve you gains, multiple

Timothy Leach

we on it we’re way Sure, better it. these and see projects us I still doing the that addition parent of to I'm this things evolution do it to it measured slow that mean, years also what And continue to we’re for child mitigating around sizes. doing into efficiencies way reasons larger is find the while this just in the seeing it’s to will optimistic think of just and base impact modestly down in a obviously it’s periods and pleased more terms in double of been I over we’re to say like how we’re way that that. larger early necessity to expecting and I’ll do very what with

William Giraud

again you becomes like once also it and from and having way I the you look frac to things relationship parent-child would Permian the mitigate neighbors us Basin heads can big also add that that acreage that. apparent when map at blocky that’s

the parts to up So our the and of blocks the we’ve block configured a and big way the we’re continued chunky trades way pleased best of very is Permian. acreage with the

Ryan Todd

time or at three Thanks. increasingly you or later think primary the horizons? develop of the full And target are are and developable one time towards go you -- you two a or mean of on horizons where secondary a at and two you that all in same back focus sections I the or first terms do time then trending horizons do you

Timothy Leach

three think to No, horizons we dimensional all do so it’s a problem need simultaneously. you

the you of think XX at so length, And what our your can it the to where it’s and different lateral important upon questions you project bit the you of Permian is on in optimal big depending the we one projects of one see questions are a big the look little so, is list of slide kind if size answer but and do.

We’re mile typically it time. half the open fairway it’s mile entire a of doing kind is developing in fairways half a of we all way horizontal about think targets the

Ryan Todd

end that? the a on just that's any driver there was little expectations quick one just fourth was XQ and higher helpful, quarter. was tightness of bit the probably the towards maybe of Thanks, quarter, particular that a CapEx than

Timothy Leach

I mean, an ramping activity level activity we were anticipated in into XXXX. clearly

I’d those little range. point bit a end there whole to fact of is is there But of the of a came capital just at So guidance things. XXXX our the that that, high you bunch

So upside expectation. think really don't was I our of it

Ryan Todd

the help. Great. Thanks, I appreciate

Operator

question And you. with Freeman next Thank from John James. comes our Raymond

Your line is open.

John Freeman

Good morning.

Timothy Leach

John. Hey,

John Freeman

wells XQ. breakdown helpful. XX, of activity to slide this get in trying the just it the to kind the really the I'm large anticipated Hi. pads those percentage be XQ XQ. to which come total Would out XQ of in The sort the get what end shows the is that of very year pop are at of possible -- really Delaware is that the of in

Timothy Leach

quarter, XQ. the there pretty the guiding first lot that clearly in of of XX in coming neighborhood you the the far side in is We're wells of half back There a right on of page. on probably

John Freeman

hold X year rigs of of how the crews Perfect. frac of rig ratio through got as it cadence sort XXXX, through XQ about And when you and does the the I rigs have look we crews. Does the that? that maybe just then, or you've should that in that think XX frac sort at goes

Timothy Leach

range the time that way do project on and around It's we crews. little the been of the will a we've as probably is rigs the projects in with from the the X time and big spud the for throughout on bounce -- we bit multiple at sales same of one these the compress And working to multiple completion in completion XXXX. trying year it if we crews it also hit will

in number the to the think I X average around that may X but number. bounce from So completion month-to-month,

John Freeman

lot. Great, I a appreciate it. Thanks

Operator

Johnson Rice. question Thank next you. our And from comes Meade Charles with

is line now open. Your

Charles Meade

going rest to go the XXXX if your rig would to and from through and pretty Good and at down guide. I -- steady back on be of to like morning, guys XXXX looked pointing just wanted wouldn't you that steady growth. XXXX you Jim XX quarter-over-quarter to and some half team spending questions capital trending of the the and that looks But the wouldn't Jack XXXX. there. the of XX growth count to you into earlier down back year there to guess are It around the

are some guys growth -- missing in what's of continue that despite reduced the rig picture helps other steady from what that the spending So you that rates.

Jack Harper

production. those producing wells all the I the Sure, left bottom year. completions cadence during to being you not being we and and drilling have start last if completing put placed that of while were up we look year, on in of the And being of more last year. the it's invested do large and think XX for wells slide production And year, at projects the match on the able

Charles Meade

just kind to the those bring through of production? delay completions wells size of pads So to on it's the and the

Jack Harper

correct. That's

Charles Meade

one I the this of you the little two you, the talk different way -- earlier, Thank Mexico. Okay. one about I the a but if somebody what's the just going in more talk and Bone the two going Square the Woods bit the pads going could was New pad. wondered targeted or Knuckle about those one you Bone pad Southeast, in Xrd are you Spring Bill Gettysburg where indicative that both way could pad, say what's about that a -- was a I was if you about And to one guys across talked the mentioned if forward? and guys been of A. kind And to the as Wolfcamp Xrd and you're to And those there them zone in on -- Spring operate you and then, reason developing Jack. is I’m same trying of and zones the other you, actually other to for question Will different you've asked way But perhaps wondered this

William Giraud

half zones. have be Yes, idea mile mean, as I should doing clarified, all is probably we fairway to the attacking the so I are

on You to when products this think started these were back continuum. is that evolutionary

interaction been horizontal square we've an the example which within which that. Gettysburg example different we've testing as landings, as been builds also between an individual been that the doing is that. as -- spacing testing we've an And zone, And of so, of

this you're the just developing currently to large-scale all simultaneously. evolution of So part it's zones that where model

Charles Meade

Thank you for that.

Operator

next our And Barclays. from question you. Thank Jeanine comes Wai with

Your line is now open.

Jeanine Wai

everyone. morning, Good Hi.

Timothy Leach

morning. Good

Jack Harper

morning. Good

Jeanine Wai

flow The activity just earlier I enhances free that updated some follow-up the indicates flow think in the questions. cash you prior really on $X moderating I of wanted on free outlook of that billion And cash outlook efficiency. to and cash generates call the XXXX capital flow mentioned $XX release WTI. Concho’s free at

that oil much prior same is the price? So outlook wondering just the higher number versus at how I'm

Jack Harper

compare efficiency we in terms really, bar of the think set kind see levels. the where important able focus think to level to I base is grading But to relative by stem hard different the I today, budget. the gains it's we -- of And budget. with the commodity That's high most capital are to the lowering capital of the are

if just not I least we on better so, if dollars of and And as where good today. before. And focused gained, think, more it's in I invested than terms yield are at

Jeanine Wai

then, general question I guess, more one. And my just is second a great. Okay,

and any in how you've be a that the numbers metrics yourself company benchmark Can peers a discuss near-term already, medium versus know can the building you on I mentioned that specific bunch hasn't on would of existed but You Thank And the call mentioned great? term? provide before. both the you things you. you

Jack Harper

appreciation, the card we We with track share is that is think most the price report metrics our share itself correlate certain but Sure. ultimately price that most important. closely

Jeanine Wai

Okay, great. for questions. you taking my Thank

Operator

Thank our from David comes question you. And next with Deckelbaum Cowen.

now open. Your line is

David Deckelbaum

and questions. everyone. for morning, Good Jack taking and Thanks my Tim

Timothy Leach

Good morning. Sure, David.

David Deckelbaum

innings in large associated sort working recycle you as cash XXXX had thought do guess, I'm where you the efficiency to beyond periods and you focus you about look versus your about and of curious to you Jack lot 'XX annual costs. process, a you free also of an the the free at perhaps lot balance with projects, cut be sort at And and still of XXXX that his program there's lot cash, optimizing a things to alluded gains a and that if how desire it's the to do of talked feel on in large look I team You pads? in you XXXX? early cash like yield create are and When

Jack Harper

projects. been loading now, spacing length, of stand wells lateral -- obvious to yes, mentioned the spacing it's Well, do with gains. they up to they had there I stage zone and spacing as they're start as the be think are And efficiency going -- the spacing large I'll we within and placement in which as the to be is have they’re zone -- before within not

think And are be so incremental I there gains to had.

ramp development we're question, last Speaking of of as up was we've of the those project the on in further of terms of capital ramped and projects year spent now. going your in kind though, biggest percentage the part first large

that come we're equal wells in of And to and so, out now into a we out get and mode starting number where completed. will go roughly the

see next I starting and this efficiency to year. of year of that development And type so, enhancing able think that you're that

David Deckelbaum

Okay.

cadence that of over that kind out couple smooths years? So of then the next

Jack Harper

should the Yes, production in it next should may. should wouldn't the cadence never trajectory But I first -- I very flattest happen shallowest that over that again to will it well future, be quarter think look say the we out the fourth quarter because year, the up. be year, this and as or

Timothy Leach

PDP And run the the that flattening of that more and flow. of one it, this way curve. would also us add helps that we're decline in things pace business free our it about PDP the flattens decline continuing business cash our really I generate the curve at and doing

David Deckelbaum

sense. makes That

still whatever the a targets overtime. get suppose cash your XXXX lowering based XXXX decline on lowered talking to to about still was are like you’re that I even need as Jack where PDP rigs, a at you if end free breakeven your there’s to So add of point you

Jack Harper

That’s right.

David Deckelbaum

to could sales alluded talked quick Okay. to as you getting appreciate the If one didn’t I act follow agreement waited ask that you’ve to down before. earlier about you Gulf, firm it you up, rationally just the

balance able for more there clear a versus waited is philosophical opportunity of you or sort to And to your Midland? to be mix see a mark with you’ve barrels the As have Brent sort to of natural to bit market terms? did that a Brent of favorable exposed you’d to like

Jack Harper

the Gulf and the idea and pricing and Sure, between Midland some related to have David. We like beyond of described desire price. mix have a

we place However, to a as Midland price like barrels.

though think priced. the even build And barrels of where diversity likely so, up I we’ll this our are majority always out will Midland make more than

David Deckelbaum

Thank you, guys.

Operator

comes with Fargo. from Kumar you. Wells question our next Thank And Nitin

line is open. now Your

Nitin Kumar

my question. for morning, taking Hey, Thanks guys. good

got activity? curious know got just your extra kind I'm Just of XX% quarter get to back maybe said talked some about at four but of point? of to next are about mentioned prioritizing that are I the you’ve takes markers you the something additional this for you you flow What activity, years growth. free markers call, months activity activities over just by the to cash your also adding within referring the beginning it here to three you to what two at your

Jack Harper

shift as we Sure, we’ve described valuate steady in past. running the a

a us we and XXXX. And for talking think plan you about see out so, lay XXXX when base that’s I what

have see cash so, and production be as growth time. it thing, like base should be And the But see our grows well flow I grow at to will you increasing balance think and look expect circumstances point expect cash -- we’ll that should you our same in activity what it the levels as to should grows the with yield.

Nitin Kumar

Got you.

Timothy Leach

lower I’d service this see same and year second with year if next we dollars. can more half done get the also of cost, into say we

lower activity So that at and service to more efficiency cost. might lead more

Nitin Kumar

to that normalized and the for come other you of to forward your discount just you to XX% And for model is level you is for XX% been expect around a have kind XX% back do thank basin? one pricing it’s that Great, at you that go year to or that. more When of NGL gas traditionally versus premium. the kind and normal

Jack Harper

Well, be the pricing. it by NGL driven highly will

when for higher gas to so And levels propane like quarter the third ethane driver the would recover think in saw us. we that be main we that and of realization

Nitin Kumar

Great. Jack. Thank you,

Jack Harper

you. Thank

Operator

Thank you. Tullis And Richard Capital our Securities. comes next One with from question

open. now Your line is

Richard Tullis

Good morning.

cost. the long fairly from today well Concho some well recently. Tim, history industry does given And drilling that generally the seeing I So Abo drilling area shelf, Yeso has we’ve lower and how guess compare returns solid Northwest on been results a

are you at looking these area that days? how So

Timothy Leach

we’ve the Sure, doesn’t returns referenced challenge are is I just the of attractive gotten mean, growth you we company. very the the still been shelf it like still the as as bigger has always for us drive Northwest

and we and And for time. Delaware because a the piece the been has our smaller not become growth of asset smaller so, it long capital disfavored really of wheel budget Basin a funded overtime it’s over great the a fly years

Richard Tullis

oil, team lastly, viewpoint I guess of leg on slow, $XX, what consolidation more at just with in M&A And for $XX consolidation an next say macro process? the Permian a oil? then the And the Okay. question least anyone from is or does the Tim

Timothy Leach

has. has everybody is and never years Well, several has it saying consolidation oil that like. going next seems start volatility to And of been quarter, the enemy always for it been consolidation

year yet in though I year So last mean, deals Permian. pretty active in a was the

the map to I critical. and scale that also are I to resolving very stream who going assets to can itself be, So think really the execute steady a the are blocky with players going see final you're of mentioned

picture think, think will I it itself. the I So take for of work, resolve years to

Richard Tullis

Thank Well you. that's for me. right. all All

Timothy Leach

you. Thank

Jack Harper

you. Thank

Operator

last you. our Whitfield from And Derrick Thank Stifel. question comes with

Your open. line is now

Derrick Whitfield

and your to guys want applaud capital discipline morning outlook. all Good you on Thanks. certainly

Timothy Leach

start. The question

Derrick Whitfield

or Building PDP Tim, question to and XXXX? decrease for on quite comment, your to XXXX is degree earlier the growth Tim is as efficiency your year-end impressive. XXXX capital Jack, relative in year-end outlook an implied decline, decline in at base slow Perhaps does and consensus earlier XXXX your you what

Timothy Leach

barrels. moves couple a base a is a but number the of in of near-term, points It's couple big right big it only now of such points a

long-term the to So over -- eye an but keep an on. factor that's important

Derrick Whitfield

accounted Completely growth? then amount premium in agree. for of that material resource that specific areas significant intervals guys eight you a And post category. referencing growth page your PowerPoint, Are there the of or

Jack Harper

really you've seen about talking to It's representative XX Derek. over on that Hey, months. us and last XX the of focusing the areas

Northern by Delaware driven Basin. it's Midland So Basin,

really more is the continue and into attempt that representative move to and that to portfolio And resource so, of category. it we’ll hydrate

Derrick Whitfield

Great and thanks for questions. my the update and taking

Timothy Leach

All right. Thank you.

Jack Harper

Thank you.

Operator

it question-and-answer that over Thank to turn you. to call today's remarks. Tim I now And concludes for Leach any the our session further for like would back call.

Timothy Leach

your very a the quarter. there's I to calls. earnings in lot talking lots your Thank of appreciate look I much. coming to Concho interest know today for and you But you in of attention. you next and Thank forward

Operator

Ladies and today's for conclude participating gentlemen thank today's disconnect. have program. Everyone all day. conference. wonderful a you This does you in And may

Concho Resources (CXO) 20 Feb 192018 Q4 Earnings call transcript