Concho (CXO) Q3 Earnings Beat Estimates, Revenues Miss Mark

Concho Resources Inc. CXO reported third-quarter 2020 net income per share (excluding special items) of $1.43, outperforming the Zacks Consensus Estimate of $1.14 as well as the prior-year period’s earnings of 61 cents. The company’s bottom line was favorably impacted by better-than-expected daily production volumes. Precisely, the upstream player’s output of 320 thousand barrels of oil equivalent per day (MBoe/d) surpassed the Zacks Consensus Estimate of 309 MBoe/d.

However, this Permian-focused player’s revenues of $834 million missed the consensus mark of $927 million and also declined from the year-ago level of $1.12 billion due to lower oil price realizations.

Earlier in October, Concho Resources entered into an agreement with ConocoPhillips COP wherein the latter confirmed its decision to buy the former in an all-stock transaction deal valued at $9.7 billion.

Volume Analysis

Concho's average quarterly volume dipped 3.03% year over year to 320 MBoe/d (62.8% oil).

Daily oil output slid 2.4% year over year to 201 thousand barrels while natural gas production slipped 3.76% year over year to 716 million cubic feet (MMcf).

Concho Resources Inc. Price, Consensus and EPS Surprise

Concho Resources Inc. Price, Consensus and EPS Surprise

Concho Resources Inc. price-consensus-eps-surprise-chart | Concho Resources Inc. Quote

Realized Prices (Excluding Derivatives Effect)

The average realized natural gas price increased from $1.34 per thousand cubic feet (Mcf) in the year-ago quarter to $1.64. The average oil price realization came in at $39.23 per barrel, lower than $54.01 in the year-ago period. Overall, the company fetched $28.27 per Boe compared with $36.74 a year ago.

Operating Performance

The company reported an operating income of $28 million. Operating expenses in the quarter amounted to $806 million. A year ago, Concho recorded an operating income of $822 million. However, as part of its efforts to improve costs and drive margins, the company succeeded in cutting 27% of its controllable expenses year over year to $7.06 per Boe.

Balance Sheet

As of Sep 30, this Midland, TX-based oil and gas producer had $402 million in cash and cash equivalents and long-term debt of $3.9 billion, representing a total debt-to-total capital of 33.1%.

Zacks Rank & Key Picks

Concho currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Cabot Oil Gas Corporation COG and Earthstone Energy, Inc. ESTE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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