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Concho Resources’ Production Trends and Capex Guidance

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2016 production guidance

Concho Resources (CXO) expects its annual production to be flat in 2016. The company noted in its 1Q16 earnings release that its production forecast for 2016 was driven by reduced activity, its shift to pad drilling, and the timing of its completion activity.

In comparison, Whiting Petroleum (WLL) has provided 2016 production growth guidance of -18% at the midpoint, and Oasis Petroleum (OAS) has provided growth guidance of -6% at the midpoint. Apache (APA) has provided growth guidance of -9% at the midpoint.

On the other hand, PDC Energy (PDCE) expects its annual production to grow by 30%–40% in 2016. All these companies together make up ~8.7% of the iShares U.S. Oil & Gas Exploration & Production ETF (IEO).

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Production volumes in 1Q16

Concho Resources’ (CXO) total production volume in 1Q16 was 12.7 million barrels of oil equivalent (MMboe). This represented a rise of ~6.7% year-over-year.

Operational and cost efficiencies

Concho Resources (CXO) is focusing on improving its operational and cost efficiency. It has increased levels of production compared to the corresponding quarters last year. Its average rig counts have also fallen since 4Q14, indicating operational efficiencies.

In 1Q16, CXO’s lease operating expenses (or LOE) per boe were down 5% year-over-year while its cash general and administrative per Boe were down 18% year-over-year.

Capex guidance for 2016

CXO’s exploration and development capex is expected to be $0.9 billion–$1.1 billion in 2016, a fall of 44% at the midpoint compared to 2015’s exploration and development capex.

 

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