Concho Resources, Inc. (CXO)
Q4 2008 Earnings Call Transcript
February 25, 2009 10:00 am ET
Jack F. Harper - Vice President - Business Development and Capital Markets
Timothy A. Leach - Chairman & Chief Executive Officer
Steven L. Beal - President & Chief Operating Officer
Michael Scialla – Thomas Weisel
Noel Parks – Ladenburg
Curtis Trimble – Natixis Bleichroeder
Irene Haas – Canaccord Adams
Mark Lear – Sidoti & Company
Derrick Whitfield – Canaccord Adams
[Asha Heman] – JPMorgan
» Concho Resource Inc. Q1 2008 Earnings Call Transcript
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Good morning, I’ll read the forward-looking statement and then turn the call over to Tim. The following conference call contains forward-looking statements within the meaning of Section 27(a) of the Securities Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this conference call that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements.
These statements are based on certain assumptions made by the company and are subject to a number of assumptions, risks and uncertainties many of which are beyond the control of the company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Additional information concerning the factors that could cause actual results to materially differ from those in the forward-looking statements is contained in the company’s annual report on Form 10-K and quarterly report on Form 10-Q under the heading Cautionary Statement regarding forward-looking statements as filed with the Securities and Exchange Commission.
Any forward-looking statements speak only as of the date on which such statement is made and the company undertakes no obligation to correct or update any forward-looking statement except as required by applicable law.
I’ll now turn the call over to Concho’s Chairman and CEO, Tim Leach.
Thanks Jack. Thank you for diving into our call. Let me first say that on behalf of the management of Concho, I want to thank you for your interest in supporting our company. I think that a contributing factor to our success is the degree to which our shareholders and the investment community understand this company and its strategy. I’ve got the Concho management team here with me today at Midland, so after a few brief comments from me and Steve we will turn it back over and look forward to your questions.
We've accomplished many things in 2008. The performance goals that management is still accountable for that we believe drive the value of our stock were all exceeded. During 2008 net asset value, production reserves and EBITDAX grew at rates that exceeded our business plan, while drill bit, F&D was held about $10 of Boe.
Production increased 41% over 2007. Proved reserves increased 51% and EBITDAX per share increased 50%. Operationally, we completed almost 500 wells with a 99% success rate. In addition to the integration of the Permian and Wolfberry assets in 2008, we had great success further developing and exploring our New Mexico Permian assets.
As we mentioned on the call a few weeks ago, we’ve had good results on our New Mexico Yeso assets with larger fracs in 10-acre spaced wells. Additionally, the results we reported in the Lower Abo horizontal well play produced some of the most productive wells in our company's history. Our plan is to continue to develop these assets probably pursue new opportunities to grow the company.
The other accomplishments achieved during 2008 include adding two strong members to our management team. Both Darin Holderness and Matt Hyde had fit-in seamlessly with the rest of the team and are making major contributions.
Also during the last year, we've increased our coverage universe to 13 analysts and have made major progress in our shareholder base [inflow].
I’m very pleased with the company’s position today, and the opportunities that we have before us. Despite volatile industry and financial market conditions, we will continue to execute the same strategy that has been successful for the last 20 years. In 2009, we’ll manage our capital expenditures around our cash flow and concentrate on our activity in our core assets of operation.
Now let me turn the call over to Steve before we go to Q&A.
Thank you, Tim. Good morning everyone. I want to briefly touch on some financial and operational matters before we get to your questions. We’re very pleased with results of our drilling program in 2008 as evidenced by the organic growth and production we experienced last year. If you exclude production from the properties that we acquired in the Henry acquisition, full year 2008 production grew 24% over 2007, and fourth quarter ’08 production grew 28% when compared to the same quarter of 2007.
As Tim mentioned, we experienced the same level of success in our Texas drilling, which is almost exclusively in the Wolfberry as we did in Southeast New Mexico and we exhibit 2008 producing approximately 25,500 barrels of oil equivalent a day.