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Concho (CXO) Q4 Earnings Top on Volume Gains, Dividend Hiked
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Concho Resources Inc. reported net income per share (excluding special items) of $1.03, ahead of the Zacks Consensus Estimate of 77 cents and the prior-year period earnings of 94 cents. The outperformance can be primarily attributed to better-than-anticipated production volumes. Precisely, the upstream player’s output of 337,288 barrels of oil equivalent per day (Boe/d) surpassed the Zacks Consensus Estimate of 325,265 Boe/d.
The Permian-focused player generated revenues of $1.2 billion, topping the consensus mark by 7.8% and rising 16.8% from the year-ago level.
In more good news for investors, the crude and natural gas explorer raised its quarterly dividend by 60% to 20 cents per share (or 80 cents per share annualized), to be paid out on on Mar 27 to shareholders of record as of Feb 28.
Concho Resources Inc. Price, Consensus and EPS Surprise
Concho's average quarterly volume increased 9.8% year over year to 337,288 Boe/d (63.7% oil). Total output exceeded the high end of the firm’s forecast of 318,000-325,000 Boe/d.
Daily oil output increased 8% to 214,859 barrels and natural gas production totaled 734,576 thousand cubic feet (Mcf), up 13.2% year over year. The 2018 acquisition of RSP Permian led to the expansion of its position in Midland and Delaware Basins, thereby attributing to the production rise.
For the full-year 2019, Concho’s production averaged 331,086 Boe/d (63.2% oil), reflecting an increase of 25.9% from 262,937 MBOE/d a year ago.
Realized Prices (Excluding Derivatives Effect)
The average realized natural gas price decreased from $2.82 per Mcf in the year-ago quarter to $1.88. However, average oil price realization came in at $56.63 per barrel, higher than $49.10 in the year-ago period. Overall, the company fetched $40.17 per Boe compared with $37.78 a year ago.
Operating Performance
Operating expenses in the quarter amounted to $1.8 billion, resulting in operating loss of $558 million against a profit of $1.9 billion in the year-ago period. Last year, derivative gains and asset sale proceeds resulted in the significant reduction in total costs. Meanwhile, Concho’s fourth-quarter production, exploration & depreciation, as well as gathering, processing & transportation expenses marked an increase on a year-over-year basis.
As part of its efforts to improve costs and margins, the Midland, TX-based oil and gas producer managed to lower its drilling, completion and equipment costs in 2019 to $999 per feet, down from $1,224 in the previous year. Concho also succeeded in cutting its controllable expenses 17% year over year to $8.43 per Boe.
Balance Sheet
As of Dec 31, Concho had a long-term debt of $4 billion, representing a debt-to-capitalization ratio of 18.2%.
Guidance
Production for the first quarter is expected within 316,000-325,000 Boe/d, including the impact of its New Mexico property disposition. Concho expects 2020 overall volumes to grow 6-8% y/y, with oil output increasing 10-12%. Full-year capex budget is forecast to be between $2.6 billion and $2.8 billion, 10% below the 2019 spending at the midpoint of the projected range. The company’s controllable cash costs are expected to clock in at $9 per Boe, down from $9.44 in 2019. Finally, Concho has set itself the target of increasing the length of the company’s laterals by 10% in 2020 to 10,000 feet, up from 9,000 in 2019 – reflecting improved efficiencies.
Zacks Rank & Stock Picks
Concho Resources holds a Zacks Rank #2 (Buy).
Apart from Concho, investors interested in the energy space might look at other options like Chevron (CVX - Free Report) , Marathon Oil (MRO - Free Report) and Hess Corporation (HES - Free Report) .
Over the past 30 days, Chevron has seen the Zacks Consensus Estimate for 2020 improve 4.1%.
Over the past 30 days, Marathon Oil has seen the Zacks Consensus Estimate for 2020 increase 15.6%.
The 2020 Zacks Consensus Estimate for Hess indicates 93.7% earnings per share growth from 2019 level.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
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Concho (CXO) Q4 Earnings Top on Volume Gains, Dividend Hiked
Concho Resources Inc. reported net income per share (excluding special items) of $1.03, ahead of the Zacks Consensus Estimate of 77 cents and the prior-year period earnings of 94 cents. The outperformance can be primarily attributed to better-than-anticipated production volumes. Precisely, the upstream player’s output of 337,288 barrels of oil equivalent per day (Boe/d) surpassed the Zacks Consensus Estimate of 325,265 Boe/d.
The Permian-focused player generated revenues of $1.2 billion, topping the consensus mark by 7.8% and rising 16.8% from the year-ago level.
In more good news for investors, the crude and natural gas explorer raised its quarterly dividend by 60% to 20 cents per share (or 80 cents per share annualized), to be paid out on on Mar 27 to shareholders of record as of Feb 28.
Concho Resources Inc. Price, Consensus and EPS Surprise
Concho Resources Inc. price-consensus-eps-surprise-chart | Concho Resources Inc. Quote
Volume Analysis
Concho's average quarterly volume increased 9.8% year over year to 337,288 Boe/d (63.7% oil). Total output exceeded the high end of the firm’s forecast of 318,000-325,000 Boe/d.
Daily oil output increased 8% to 214,859 barrels and natural gas production totaled 734,576 thousand cubic feet (Mcf), up 13.2% year over year. The 2018 acquisition of RSP Permian led to the expansion of its position in Midland and Delaware Basins, thereby attributing to the production rise.
For the full-year 2019, Concho’s production averaged 331,086 Boe/d (63.2% oil), reflecting an increase of 25.9% from 262,937 MBOE/d a year ago.
Realized Prices (Excluding Derivatives Effect)
The average realized natural gas price decreased from $2.82 per Mcf in the year-ago quarter to $1.88. However, average oil price realization came in at $56.63 per barrel, higher than $49.10 in the year-ago period. Overall, the company fetched $40.17 per Boe compared with $37.78 a year ago.
Operating Performance
Operating expenses in the quarter amounted to $1.8 billion, resulting in operating loss of $558 million against a profit of $1.9 billion in the year-ago period. Last year, derivative gains and asset sale proceeds resulted in the significant reduction in total costs. Meanwhile, Concho’s fourth-quarter production, exploration & depreciation, as well as gathering, processing & transportation expenses marked an increase on a year-over-year basis.
As part of its efforts to improve costs and margins, the Midland, TX-based oil and gas producer managed to lower its drilling, completion and equipment costs in 2019 to $999 per feet, down from $1,224 in the previous year. Concho also succeeded in cutting its controllable expenses 17% year over year to $8.43 per Boe.
Balance Sheet
As of Dec 31, Concho had a long-term debt of $4 billion, representing a debt-to-capitalization ratio of 18.2%.
Guidance
Production for the first quarter is expected within 316,000-325,000 Boe/d, including the impact of its New Mexico property disposition. Concho expects 2020 overall volumes to grow 6-8% y/y, with oil output increasing 10-12%. Full-year capex budget is forecast to be between $2.6 billion and $2.8 billion, 10% below the 2019 spending at the midpoint of the projected range. The company’s controllable cash costs are expected to clock in at $9 per Boe, down from $9.44 in 2019. Finally, Concho has set itself the target of increasing the length of the company’s laterals by 10% in 2020 to 10,000 feet, up from 9,000 in 2019 – reflecting improved efficiencies.
Zacks Rank & Stock Picks
Concho Resources holds a Zacks Rank #2 (Buy).
Apart from Concho, investors interested in the energy space might look at other options like Chevron (CVX - Free Report) , Marathon Oil (MRO - Free Report) and Hess Corporation (HES - Free Report) .
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Over the past 30 days, Chevron has seen the Zacks Consensus Estimate for 2020 improve 4.1%.
Over the past 30 days, Marathon Oil has seen the Zacks Consensus Estimate for 2020 increase 15.6%.
The 2020 Zacks Consensus Estimate for Hess indicates 93.7% earnings per share growth from 2019 level.
Free: Zacks’ Single Best Stock Set to Double
Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.
See 5 Stocks Set to Double>>