Profile: Concho Resources Inc. (CXO.N)

Concho Resources Inc. (Concho) is an independent oil and natural gas company. The Company is engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties. Its core operations are focused in the Permian Basin of Southeastern New Mexico and West Texas. The Permian Basin underlies an area of Southeastern New Mexico and West Texas approximately 250 miles wide and 300 miles long. At December 31, 2008, 97.9% of its total estimated net proved reserves were located in the Company’s core operating areas and consisted of approximately 62.9% crude oil and 37.1% natural gas. On July 31, 2008, the Company closed the acquisition of Henry Petroleum LP and certain entities affiliated with Henry Petroleum LP (Henry Entities), together with certain additional non-operated interests in oil and gas properties from persons affiliated with the Henry Entities. In August 2008 and September 2008, it acquired additional non-operated interests in oil and gas properties from persons affiliated with the Henry Entities.

New Mexico Permian

The Company acquired the majority of its properties in this area from the Chase Group. During 2008, its average net daily production from this area was approximately 14.7 million Boe (MBoe) per day, representing 75.6% of its total production. Within this area it targets two producing areas, which include shelf properties and the basinal properties. The shelf properties produce from the Yeso (Paddock and Blinebry intervals), San Andres and Grayburg formations, with producing depths generally ranging from 900 feet to 7,500 feet. The basinal properties produce from the Strawn, Atoka and Morrow formations, with producing depths generally ranging from 7,500 feet to 15,000 feet.

During 2008, the Company drilled or participated in the drilling of 142 (123.9 net) wells in this area, of which 132 (114.4 net) were completed as producers and 10 (9.5 net) were awaiting completion at December 31, 2008. At December 31, 2008, the Company had 153,425 gross (71,423 net) acres in this area. At December 31, 2008, on its properties in this area, it had identified 1,685 drilling locations, with proved undeveloped reserves attributed to 355 of such locations, and 1,908 recompletion opportunities, with proved reserves attributed to 720 of such opportunities. Of the drilling locations it identified 993 locations intended to evaluate both the Blinebry and the Paddock intervals, while 17 locations are intended to evaluate only the Blinebry interval, with proved undeveloped reserves attributed to 176 of such total drilling locations.

Texas Permian

The Company acquired the majority of its properties in this area in the Henry Properties acquisition. At December 31, 2008, Concho’s estimated proved reserves of 39.4 million Boe (MMBoe) in this area accounted for 28.7% of its total net proved reserves and 22.3% of its PV-10. During 2008, Concho’s average net daily production from this area was approximately 4 MBoe per day, representing 20.7% of its total production.

The Wolfberry comprises of a sequence of basinal, interbedded shales and carbonates. Concho also operates properties on the Central Basin Platform where the Grayburg, San Andres and Clearfork objectives are shallower, encountered at depths of 4,500 to 7,500 feet. The reservoirs in these formations are largely carbonates, limestones and dolomites. At December 31, 2008, Concho had 241,508 gross (69,727 net) acres in this area. In addition, at December 31, 2008, it had identified 1,780 drilling locations, with proved undeveloped reserves attributed to 456 of such locations, and 210 recompletion opportunities, with proved reserves attributed to 196 of such opportunities. During 2008, Concho drilled or participated in the drilling of 69 (24.9 net) wells in this area, of which 54 (20.1 net) were completed as producers, none were unsuccessful and 15 (4.8 net) wells were awaiting completion at December 31, 2008. In addition, during 2008, it commenced the recompletion of 26 wells, 25 of which were producing and 1 of which was unsuccessful at December 31, 2008.

Lower Abo horizontal play

The Lower Abo horizontal play is an oil play along the north-western rim of the Delaware Basin in Lea, Eddy and Chaves Counties, New Mexico. At December 31, 2008, Concho held interests in 25,535 gross (21,638 net) acres in this play. In 2008, the Company drilled or participated in the drilling of 11 wells in this play with 8 wells producing, 1 waiting on completion and 2 wells drilling at December 31, 2008. At December 31, 2008, the Company had 2.1 MMBoe of proved reserves in the play.

The Bakken/Three Forks play is in the Williston Basin in North Dakota, primarily in Mountrail and McKenzie Counties. This Mississippian/Devonian age horizon consists of siltstones encased within and below an organic oil-rich shale package. At December 31, 2008, Concho held interests in 42,802 gross (11,223 net) acres in this play. It participated in the drilling of 17 wells in this play with 14 wells producing, 2 waiting on completion and 1 well drilling at December 31, 2008. At December 31, 2008, Concho had 0.2 MMBoe of proved reserves in the play.