Concho Resources Updated Its 2017 Outlook after Acquisition
Concho’s 2017 outlook: Production
Following its Permian acquisition, Concho Resources (CXO) expects to increase its total 2017 production 18.0%–21.0%, compared to its previous guidance of 17.0%–20.0% in its 3Q16 earnings call. Oil production volumes are expected to rise more than 20.0% year-over-year.
Concho plans to operate an average of eight rigs in the Northern Delaware Basin in 2017.
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Concho’s 2017 outlook: Capex
Concho maintained its 2017 capex (capital expenditure) guidance of $1.4 billion–$1.6 billion. About 90.0% of its capital will be invested in drilling and completion-related expenses. The remaining 10.0% will be directed to infrastructure-related expenses in the New Mexico Shelf.
Of the 90.0%, 35.0% will be allocated to drilling and completion expenses in the Northern Delaware Basin, 25.0% to the Southern Delaware Basin, and 30.0% to the Midland Basin.
Concho also noted that it expects to fund its 2017 capex with its cash flow.
According to a company press release, Concho’s 2017 capex plan excludes acquisitions and could change, depending on several factors such as commodity prices.
Key management comments about 2017
Tim Leach, CXO’s chief executive officer, made the following comments about the company’s outlook for 2017 in the 3Q16 earnings conference call: “Looking ahead to 2017 and beyond, we expect to deliver peer-leading growth. We’re targeting 20% annualized growth through 2019, within cash flow at the current commodity price outlook. Our asset base, financial discipline, and operational excellence fuel our confidence in what we believe is a truly differentiated long-term outlook.”