Corporate History
Although Concho Resources Inc. (“Concho” or the “Company”) was officially formed less than five years ago, it has had a very active history.
Concho Equity Holdings Corp. was formed in April 2004 and represents the third of three Permian Basin-focused companies that have been formed since 1997 by Tim Leach and certain members of the Company’s current management team (the prior two companies were sold to large domestic independent oil and gas companies).
Concho was formed in February 2006 as a result of the combination of Concho Equity Holdings Corp. and a portion of the oil and natural gas properties and related assets owned by Chase Oil Corporation and certain of its affiliates. The Chase properties were Concho’s original footprint in the New Mexico Shelf, specifically the Yeso play.
In August 2007, Concho announced the pricing of its initial public offering of its common stock at $11.50 per share. The shares are listed on the New York Stock Exchange under the symbol CXO.
On July 31, 2008, Concho closed the acquisition of Henry Petroleum LP and some of its affiliated entities. These properties together with additional along-side interests contained approximately 30.1 MMBoe of proved reserves at closing. The properties are primarily located in the Wolfberry play in the Texas Permian. Concho paid approximately $583.7 million in net cash for the properties, which was funded with borrowings under the company’s credit facility and net proceeds of approximately $242.4 million from the private placement of 8.3 million shares of our common stock.
In December 2009, Concho closed two additional acquisitions of interests in producing and non-producing assets in the Wolfberry play in Texas for approximately $270.7 million in cash. These acquisitions contained approximately 19.9 MMBoe of proved reserves.
On October 7, 2010, Concho closed the acquisition of certain of the oil and natural gas leases, interests, properties and related assets owned by Marbob Energy Corporation and its affiliates (collectively, "Marbob"). At closing, Concho paid approximately $1.1 billion in cash plus a $150 million, 8% unsecured senior note due 2018 and the issuance to Marbob of approximately 1.1 million shares of common stock, for a total purchase price of approximately $1.4 billion. The total purchase price as originally announced was reduced due to third party contractual preferential purchase rights in the Marbob properties. Concho funded the cash consideration in the Marbob Acquisition with borrowings under the Company’s credit facility and net proceeds of $292.7 million from a private placement of approximately 6.6 million shares of common stock at a price of $45.30 per share that closed on October 7, 2010.
On October 15, 2010, Concho and Marbob resolved litigation with BP and Apache related to same disputed contractual preferential purchase rights. As a result of the settlement, Concho acquired a non-operated interest in substantially all of the oil and natural gas assets subject to the litigation for approximately $286 million in cash (the "Settlement Acquisition"). Concho funded the Settlement Acquisition with borrowings under the Company’s credit facility.
The properties acquired in the Marbob and Settlement Acquisitions are primarily located in the Permian Basin of Southeast New Mexico, including a large acreage position in the Yeso play on the New Mexico Shelf and a significant acreage position in the Bone Spring play in the Delaware Basin. The assets acquired in the Marbob and Settlement Acquisitions contained approximately 72.4 MMBoe of proved reserves at closing.
In December 2010, Concho sold certain non-core Permian Basin assets for cash consideration of $103.3 million. For 2010, these assets produced 1,393 Boe per day, of which approximately 46% was oil. The proved reserves of these assets were approximately 6.0 MMBoe at closing.
In February 2011, Concho announced that it has signed a definitive agreement to sell its North Dakota Bakken assets for $196 million. The sale is expected to close by the end of the first quarter of 2011 and is subject to customary closing conditions and purchase price adjustments.
