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☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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76-0818600
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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One Concho Center
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600 West Illinois Avenue
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Midland
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Texas
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79701
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(Address of principal executive offices)
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(Zip Code)
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(432)
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683-7443
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(Registrant’s telephone number, including area code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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CXO
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New York Stock Exchange
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Large accelerated filer
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þ
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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•
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declines in, the sustained depression of, or increased volatility in the prices we receive for our oil and natural gas, or increases in the differential between index oil or natural gas prices and prices received;
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•
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the effects of government regulation, permitting and other legal requirements, including new legislation or regulation related to hydraulic fracturing, climate change or derivatives reform;
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•
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competition in the oil and natural gas industry;
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•
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disruptions to, capacity constraints in or other limitations on the pipeline systems that deliver our oil and natural gas and other processing and transportation considerations;
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•
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drilling, completion and operating risks, including our ability to efficiently execute large-scale project development as we could experience delays, curtailments and other adverse impacts associated with a high concentration of activity;
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•
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risks related to the concentration of our operations in the Permian Basin of West Texas and Southeast New Mexico;
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•
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uncertainties about the estimated quantities of oil and natural gas reserves;
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•
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uncertainties about our ability to successfully execute our business and financial plans and strategies;
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•
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uncertainty concerning our assumed or possible future results of operations;
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•
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evolving cybersecurity risks, such as those involving unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches or other actions;
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•
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risks related to ongoing expansion of our business, including the recruitment and retention of qualified personnel in the Permian Basin;
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•
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environmental hazards, such as uncontrollable flows of oil, natural gas, saltwater, well fluids, toxic gas or other pollution into the environment, including groundwater contamination;
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•
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general economic and business conditions, either internationally or domestically;
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•
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the costs and availability of equipment, resources, services and qualified personnel required to perform our drilling, completion and operating activities;
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•
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risks associated with acquisitions such as increased expenses and integration efforts, failure to realize the expected benefits of the transaction and liabilities associated with acquired properties or businesses;
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•
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the impact of current and potential changes to federal or state tax rules and regulations;
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•
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potential financial losses or earnings reductions from our commodity price risk-management program;
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•
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difficult and adverse conditions in the domestic and global capital and credit markets;
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•
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the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity under our Credit Facility, as defined herein;
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•
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the impact of potential changes in our credit ratings; and
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•
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uncertainties about our ability to replace reserves and economically develop our current reserves.
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Item 1.
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Consolidated Financial Statements (Unaudited)
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(in millions, except share and per share amounts)
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June 30,
2019 |
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December 31,
2018 |
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Assets
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|||||||
Current assets:
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|
|
||||
Cash and cash equivalents
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$
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—
|
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$
|
—
|
|
Accounts receivable, net of allowance for doubtful accounts:
|
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|
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||||
Oil and natural gas
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460
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466
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|
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Joint operations and other
|
301
|
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365
|
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Inventory
|
33
|
|
|
35
|
|
||
Derivative instruments
|
12
|
|
|
484
|
|
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Prepaid costs and other
|
54
|
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|
59
|
|
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Total current assets
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860
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1,409
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Property and equipment:
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Oil and natural gas properties, successful efforts method
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33,321
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31,706
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|
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Accumulated depletion and depreciation
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(11,479
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)
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(9,701
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)
|
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Total oil and natural gas properties, net
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21,842
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|
22,005
|
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Other property and equipment, net
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374
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308
|
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Total property and equipment, net
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22,216
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22,313
|
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Deferred loan costs, net
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9
|
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10
|
|
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Goodwill
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2,222
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|
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2,224
|
|
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Intangible assets, net
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18
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|
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19
|
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Noncurrent derivative instruments
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29
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|
|
211
|
|
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Other assets
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124
|
|
|
108
|
|
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Total assets
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$
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25,478
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$
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26,294
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Liabilities and Stockholders’ Equity
|
|||||||
Current liabilities:
|
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||||
Accounts payable - trade
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$
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55
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$
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50
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Book overdrafts
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143
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159
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Revenue payable
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255
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253
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Accrued drilling costs
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506
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|
574
|
|
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Derivative instruments
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126
|
|
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—
|
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Other current liabilities
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318
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|
320
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|
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Total current liabilities
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1,403
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1,356
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Long-term debt
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4,350
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4,194
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Deferred income taxes
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1,561
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1,808
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Noncurrent derivative instruments
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12
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—
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Asset retirement obligations and other long-term liabilities
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193
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168
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Commitments and contingencies (Note 9)
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Stockholders’ equity:
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Common stock, $0.001 par value; 300,000,000 authorized; 201,764,616 and 201,288,884 shares issued at June 30, 2019 and December 31, 2018, respectively
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—
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—
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Additional paid-in capital
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14,820
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14,773
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Retained earnings
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3,284
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4,126
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Treasury stock, at cost; 1,166,326 and 1,031,655 shares at June 30, 2019 and December 31, 2018, respectively
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(145
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)
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|
(131
|
)
|
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Total stockholders’ equity
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17,959
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|
18,768
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|
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Total liabilities and stockholders’ equity
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$
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25,478
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$
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26,294
|
|
|
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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(in millions, except per share amounts)
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2019
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2018
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2019
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2018
|
||||||||
Operating revenues:
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||||||||
Oil sales
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$
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1,049
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$
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795
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$
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1,984
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$
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1,588
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Natural gas sales
|
78
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|
|
150
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|
|
247
|
|
|
304
|
|
||||
Total operating revenues
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1,127
|
|
|
945
|
|
|
2,231
|
|
|
1,892
|
|
||||
Operating costs and expenses:
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Oil and natural gas production
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188
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130
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362
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|
260
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|
||||
Production and ad valorem taxes
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84
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70
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170
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|
|
140
|
|
||||
Gathering, processing and transportation
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22
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|
9
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48
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|
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20
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|
||||
Exploration and abandonments
|
17
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|
|
8
|
|
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64
|
|
|
26
|
|
||||
Depreciation, depletion and amortization
|
478
|
|
|
310
|
|
|
943
|
|
|
627
|
|
||||
Accretion of discount on asset retirement obligations
|
2
|
|
|
2
|
|
|
5
|
|
|
4
|
|
||||
Impairments of long-lived assets
|
868
|
|
|
—
|
|
|
868
|
|
|
—
|
|
||||
General and administrative (including non-cash stock-based compensation of $23 and $18 for the three months ended June 30, 2019 and 2018, respectively, and $47 and $35 for the six months ended June 30, 2019 and 2018, respectively)
|
88
|
|
|
72
|
|
|
179
|
|
|
137
|
|
||||
(Gain) loss on derivatives
|
(217
|
)
|
|
133
|
|
|
842
|
|
|
168
|
|
||||
(Gain) loss on disposition of assets, net
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
(724
|
)
|
||||
Transaction costs
|
1
|
|
|
9
|
|
|
1
|
|
|
16
|
|
||||
Total operating costs and expenses
|
1,532
|
|
|
742
|
|
|
3,482
|
|
|
674
|
|
||||
Income (loss) from operations
|
(405
|
)
|
|
203
|
|
|
(1,251
|
)
|
|
1,218
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(48
|
)
|
|
(27
|
)
|
|
(95
|
)
|
|
(57
|
)
|
||||
Other, net
|
303
|
|
|
1
|
|
|
307
|
|
|
105
|
|
||||
Total other income (expense)
|
255
|
|
|
(26
|
)
|
|
212
|
|
|
48
|
|
||||
Income (loss) before income taxes
|
(150
|
)
|
|
177
|
|
|
(1,039
|
)
|
|
1,266
|
|
||||
Income tax (expense) benefit
|
53
|
|
|
(40
|
)
|
|
247
|
|
|
(294
|
)
|
||||
Net income (loss)
|
$
|
(97
|
)
|
|
$
|
137
|
|
|
$
|
(792
|
)
|
|
$
|
972
|
|
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic net income (loss)
|
$
|
(0.48
|
)
|
|
$
|
0.92
|
|
|
$
|
(3.98
|
)
|
|
$
|
6.52
|
|
Diluted net income (loss)
|
$
|
(0.48
|
)
|
|
$
|
0.92
|
|
|
$
|
(3.98
|
)
|
|
$
|
6.50
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||
|
Common Stock Issued
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Treasury Stock
|
|
Total
Stockholders’ Equity |
||||||||||||||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||||||
BALANCE AT MARCH 31, 2019
|
201,755
|
|
|
$
|
—
|
|
|
$
|
14,797
|
|
|
$
|
3,406
|
|
|
1,156
|
|
|
$
|
(144
|
)
|
|
$
|
18,059
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||||
Common stock dividends ($0.125 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|
—
|
|
|
(25
|
)
|
|||||
Grants of restricted stock
|
26
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Performance unit share conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation of restricted stock
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
BALANCE AT JUNE 30, 2019
|
201,765
|
|
|
$
|
—
|
|
|
$
|
14,820
|
|
|
$
|
3,284
|
|
|
1,166
|
|
|
$
|
(145
|
)
|
|
$
|
17,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Six Months Ended June 30, 2019
|
||||||||||||||||||||||||
|
Common Stock Issued
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Treasury Stock
|
|
Total
Stockholders’ Equity |
||||||||||||||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||||||
BALANCE AT DECEMBER 31, 2018
|
201,289
|
|
|
$
|
—
|
|
|
$
|
14,773
|
|
|
$
|
4,126
|
|
|
1,032
|
|
|
$
|
(131
|
)
|
|
$
|
18,768
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(792
|
)
|
|
—
|
|
|
—
|
|
|
(792
|
)
|
|||||
Common stock dividends ($0.25 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|||||
Grants of restricted stock
|
261
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Performance unit share conversion
|
246
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation of restricted stock
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
134
|
|
|
(14
|
)
|
|
(14
|
)
|
|||||
BALANCE AT JUNE 30, 2019
|
201,765
|
|
|
$
|
—
|
|
|
$
|
14,820
|
|
|
$
|
3,284
|
|
|
1,166
|
|
|
$
|
(145
|
)
|
|
$
|
17,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Common Stock Issued
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Treasury Stock
|
|
Total
Stockholders’ Equity |
||||||||||||||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||||||
BALANCE AT MARCH 31, 2018
|
149,870
|
|
|
$
|
—
|
|
|
$
|
7,159
|
|
|
$
|
2,675
|
|
|
800
|
|
|
$
|
(96
|
)
|
|
$
|
9,738
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|
—
|
|
|
—
|
|
|
137
|
|
|||||
Grants of restricted stock
|
335
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Performance unit share conversion
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation of restricted stock
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
(2
|
)
|
|
(2
|
)
|
|||||
BALANCE AT JUNE 30, 2018
|
150,195
|
|
|
$
|
—
|
|
|
$
|
7,177
|
|
|
$
|
2,812
|
|
|
813
|
|
|
$
|
(98
|
)
|
|
$
|
9,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||||||
|
Common Stock Issued
|
|
Additional
Paid-in Capital |
|
Retained
Earnings |
|
Treasury Stock
|
|
Total
Stockholders’ Equity |
||||||||||||||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|
|
Shares
|
|
Amount
|
|
|||||||||||||||
|
(in thousands)
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||||||
BALANCE AT DECEMBER 31, 2017
|
149,325
|
|
|
$
|
—
|
|
|
$
|
7,142
|
|
|
$
|
1,840
|
|
|
598
|
|
|
$
|
(67
|
)
|
|
$
|
8,915
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
972
|
|
|
—
|
|
|
—
|
|
|
972
|
|
|||||
Grants of restricted stock
|
447
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Performance unit share conversion
|
446
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cancellation of restricted stock
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215
|
|
|
(31
|
)
|
|
(31
|
)
|
|||||
BALANCE AT JUNE 30, 2018
|
150,195
|
|
|
$
|
—
|
|
|
$
|
7,177
|
|
|
$
|
2,812
|
|
|
813
|
|
|
$
|
(98
|
)
|
|
$
|
9,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, |
||||||
(in millions)
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income (loss)
|
$
|
(792
|
)
|
|
$
|
972
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation, depletion and amortization
|
943
|
|
|
627
|
|
||
Accretion of discount on asset retirement obligations
|
5
|
|
|
4
|
|
||
Impairments of long-lived assets
|
868
|
|
|
—
|
|
||
Exploration and abandonments
|
51
|
|
|
14
|
|
||
Non-cash stock-based compensation expense
|
47
|
|
|
35
|
|
||
Deferred income taxes
|
(247
|
)
|
|
294
|
|
||
Net gain on disposition of assets and other non-operating items
|
(288
|
)
|
|
(724
|
)
|
||
Loss on derivatives
|
842
|
|
|
168
|
|
||
Net settlements paid on derivatives
|
(50
|
)
|
|
(194
|
)
|
||
Other
|
(10
|
)
|
|
(95
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions and dispositions:
|
|
|
|
||||
Accounts receivable
|
33
|
|
|
(56
|
)
|
||
Prepaid costs and other
|
4
|
|
|
(22
|
)
|
||
Inventory
|
1
|
|
|
(3
|
)
|
||
Accounts payable
|
5
|
|
|
5
|
|
||
Revenue payable
|
5
|
|
|
43
|
|
||
Other current liabilities
|
(15
|
)
|
|
22
|
|
||
Net cash provided by operating activities
|
1,402
|
|
|
1,090
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Additions to oil and natural gas properties
|
(1,726
|
)
|
|
(941
|
)
|
||
Acquisitions of oil and natural gas properties
|
(14
|
)
|
|
(19
|
)
|
||
Additions to property, equipment and other assets
|
(41
|
)
|
|
(11
|
)
|
||
Proceeds from the disposition of assets
|
311
|
|
|
261
|
|
||
Direct transaction costs for asset acquisitions and dispositions
|
(3
|
)
|
|
(3
|
)
|
||
Distribution from equity method investment
|
—
|
|
|
148
|
|
||
Net cash used in investing activities
|
(1,473
|
)
|
|
(565
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Borrowings under credit facility
|
2,060
|
|
|
1,222
|
|
||
Payments on credit facility
|
(1,905
|
)
|
|
(1,544
|
)
|
||
Payments for loan costs
|
—
|
|
|
(1
|
)
|
||
Payment of common stock dividends
|
(50
|
)
|
|
—
|
|
||
Purchases of treasury stock
|
(14
|
)
|
|
(31
|
)
|
||
Decrease in book overdrafts
|
(16
|
)
|
|
(116
|
)
|
||
Other
|
(4
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
71
|
|
|
(470
|
)
|
||
Net increase in cash and cash equivalents
|
—
|
|
|
55
|
|
||
Cash and cash equivalents at beginning of period
|
—
|
|
|
—
|
|
||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
55
|
|
|
|
|
|
(in millions, except per share amounts)
|
Three Months Ended
June 30, 2018 |
|
Six Months Ended
June 30, 2018 |
||||
Operating revenues
|
$
|
1,262
|
|
|
$
|
2,488
|
|
Net income
|
$
|
238
|
|
|
$
|
1,169
|
|
Earnings per share:
|
|
|
|
||||
Basic net income
|
$
|
1.19
|
|
|
$
|
5.85
|
|
Diluted net income
|
$
|
1.19
|
|
|
$
|
5.83
|
|
|
|
|
|
Level 1:
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets to be those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
|
Level 2:
|
Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the full term of the derivative instrument, can be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace. Level 2 instruments primarily include non-exchange traded derivatives such as over-the-counter commodity price swaps, basis swaps, collars and floors, investments and interest rate swaps. The Company’s valuation models are primarily industry-standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) time value, (iii) current market and contractual prices for the underlying instruments and (iv) volatility factors, as well as other relevant economic measures.
|
Level 3:
|
Prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e., supported by little or no market activity). The Company’s valuation models are primarily industry-standard models that consider various inputs including: (i) quoted forward prices for commodities, (ii) time value, (iii) current market and contractual prices for the underlying instruments and (iv) volatility factors, as well as other relevant economic measures.
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||
Carrying
Value
|
Fair
Value
|
|
Carrying
Value
|
Fair
Value
|
|||||||||
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
41
|
|
$
|
41
|
|
|
$
|
695
|
|
$
|
695
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
138
|
|
$
|
138
|
|
|
$
|
—
|
|
$
|
—
|
|
Credit facility
|
$
|
397
|
|
$
|
397
|
|
|
$
|
242
|
|
$
|
242
|
|
$600 million 4.375% senior notes due 2025 (a)
|
$
|
594
|
|
$
|
624
|
|
|
$
|
594
|
|
$
|
591
|
|
$1,000 million 3.75% senior notes due 2027 (a)
|
$
|
989
|
|
$
|
1,033
|
|
|
$
|
989
|
|
$
|
939
|
|
$1,000 million 4.3% senior notes due 2028 (a)
|
$
|
989
|
|
$
|
1,081
|
|
|
$
|
988
|
|
$
|
980
|
|
$800 million 4.875% senior notes due 2047 (a)
|
$
|
789
|
|
$
|
896
|
|
|
$
|
789
|
|
$
|
761
|
|
$600 million 4.85% senior notes due 2048 (a)
|
$
|
592
|
|
$
|
675
|
|
|
$
|
592
|
|
$
|
573
|
|
|
|||||||||||||
(a) The carrying value includes associated deferred loan costs and any discount.
|
June 30, 2019
|
|||||||||||||||||||||||
(in millions)
|
Fair Value Measurements Using
|
|
|
|
|
|
|
||||||||||||||||
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
Fair
Value
|
|
Gross
Amounts
Offset in the
Consolidated
Balance
Sheet
|
|
Net
Fair Value
Presented
in the
Consolidated
Balance
Sheet
|
|||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
$
|
—
|
|
|
$
|
109
|
|
|
$
|
—
|
|
|
$
|
109
|
|
|
$
|
(97
|
)
|
|
$
|
12
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
58
|
|
|
—
|
|
|
58
|
|
|
(29
|
)
|
|
29
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
(223
|
)
|
|
—
|
|
|
(223
|
)
|
|
97
|
|
|
(126
|
)
|
||||||
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
|
29
|
|
|
(12
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net derivative instruments
|
$
|
—
|
|
|
$
|
(97
|
)
|
|
$
|
—
|
|
|
$
|
(97
|
)
|
|
$
|
—
|
|
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
|||||||||||||||||||||||
|
Fair Value Measurements Using
|
|
|
|
|
|
|
||||||||||||||||
(in millions)
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
Fair
Value
|
|
Gross
Amounts
Offset in the
Consolidated
Balance
Sheet
|
|
Net
Fair Value
Presented
in the
Consolidated
Balance
Sheet
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
$
|
—
|
|
|
$
|
543
|
|
|
$
|
—
|
|
|
$
|
543
|
|
|
$
|
(59
|
)
|
|
$
|
484
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
243
|
|
|
—
|
|
|
243
|
|
|
(32
|
)
|
|
211
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
(59
|
)
|
|
—
|
|
|
(59
|
)
|
|
59
|
|
|
—
|
|
||||||
Noncurrent:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity derivatives
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
(32
|
)
|
|
32
|
|
|
—
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net derivative instruments
|
$
|
—
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
695
|
|
|
$
|
—
|
|
|
$
|
695
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain (loss) on derivatives:
|
|
|
|
|
|
|
|
||||||||
Oil derivatives
|
$
|
195
|
|
|
$
|
(128
|
)
|
|
$
|
(861
|
)
|
|
$
|
(161
|
)
|
Natural gas derivatives
|
22
|
|
|
(5
|
)
|
|
19
|
|
|
(7
|
)
|
||||
Total
|
$
|
217
|
|
|
$
|
(133
|
)
|
|
$
|
(842
|
)
|
|
$
|
(168
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net cash receipts from (payments on) derivatives:
|
|
|
|
|
|
|
|
|
|||||||
Oil derivatives
|
$
|
(54
|
)
|
|
$
|
(86
|
)
|
|
$
|
(51
|
)
|
|
$
|
(199
|
)
|
Natural gas derivatives
|
4
|
|
|
4
|
|
|
1
|
|
|
5
|
|
||||
Total
|
$
|
(50
|
)
|
|
$
|
(82
|
)
|
|
$
|
(50
|
)
|
|
$
|
(194
|
)
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||
Oil Price Swaps: (a)
|
|
|
|
|
|
|||||||||||
2019:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
|
|
|
|
14,829,000
|
|
12,513,000
|
|
27,342,000
|
|
||||||
Price per Bbl
|
|
|
|
|
$
|
57.06
|
|
$
|
56.65
|
|
$
|
56.87
|
|
|||
2020:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
11,243,000
|
|
10,166,500
|
|
9,453,000
|
|
9,218,000
|
|
40,080,500
|
|
||||||
Price per Bbl
|
$
|
57.48
|
|
$
|
57.24
|
|
$
|
57.18
|
|
$
|
57.14
|
|
$
|
57.27
|
|
|
2021:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
3,330,000
|
|
3,367,000
|
|
3,220,000
|
|
3,220,000
|
|
13,137,000
|
|
||||||
Price per Bbl
|
$
|
55.33
|
|
$
|
55.33
|
|
$
|
55.33
|
|
$
|
55.33
|
|
$
|
55.33
|
|
|
Oil Costless Collars: (a)
|
|
|
|
|
|
|||||||||||
2019:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
|
|
|
|
1,135,000
|
|
1,058,000
|
|
2,193,000
|
|
||||||
Ceiling price per Bbl
|
|
|
|
|
$
|
63.47
|
|
$
|
62.95
|
|
$
|
63.22
|
|
|||
Floor price per Bbl
|
|
|
|
|
$
|
55.74
|
|
$
|
55.43
|
|
$
|
55.60
|
|
|||
Oil Basis Swaps: (b)
|
|
|
|
|
|
|||||||||||
2019:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
|
|
|
|
15,778,000
|
|
16,053,000
|
|
31,831,000
|
|
||||||
Price per Bbl
|
|
|
|
|
$
|
(2.32
|
)
|
$
|
(2.19
|
)
|
$
|
(2.25
|
)
|
|||
2020:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
14,651,000
|
|
10,192,000
|
|
10,120,000
|
|
10,120,000
|
|
45,083,000
|
|
||||||
Price per Bbl
|
$
|
(0.46
|
)
|
$
|
(0.70
|
)
|
$
|
(0.71
|
)
|
$
|
(0.71
|
)
|
$
|
(0.63
|
)
|
|
2021:
|
|
|
|
|
|
|||||||||||
Volume (Bbl)
|
3,600,000
|
|
3,640,000
|
|
3,680,000
|
|
3,680,000
|
|
14,600,000
|
|
||||||
Price per Bbl
|
$
|
0.57
|
|
$
|
0.57
|
|
$
|
0.57
|
|
$
|
0.57
|
|
$
|
0.57
|
|
|
Natural Gas Price Swaps: (c)
|
|
|
|
|
|
|||||||||||
2019:
|
|
|
|
|
|
|||||||||||
Volume (MMBtu)
|
|
|
|
|
17,298,537
|
|
17,209,535
|
|
34,508,072
|
|
||||||
Price per MMBtu
|
|
|
|
|
$
|
2.87
|
|
$
|
2.87
|
|
$
|
2.87
|
|
|||
2020:
|
|
|
|
|
|
|||||||||||
Volume (MMBtu)
|
6,233,500
|
|
6,233,500
|
|
6,118,000
|
|
6,118,000
|
|
24,703,000
|
|
||||||
Price per MMBtu
|
$
|
2.70
|
|
$
|
2.70
|
|
$
|
2.70
|
|
$
|
2.70
|
|
$
|
2.70
|
|
|
|
|
|
|
|
|
|||||||||||
(a) The oil derivative contracts are settled based on the NYMEX – West Texas Intermediate (“WTI”) calendar-month average
futures price.
(b) The basis differential price is between Midland – WTI and Cushing – WTI. The majority of these contracts are settled on a
calendar month basis, while certain contracts assumed in the RSP Acquisition are settled on a trading-month basis.
(c) The natural gas derivative contracts are settled based on the NYMEX – Henry Hub last trading day futures price.
|
||||||||||||||||
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Credit facility due 2022
|
$
|
397
|
|
|
$
|
242
|
|
4.375% unsecured senior notes due 2025 (a)
|
600
|
|
|
600
|
|
||
3.75% unsecured senior notes due 2027
|
1,000
|
|
|
1,000
|
|
||
4.3% unsecured senior notes due 2028
|
1,000
|
|
|
1,000
|
|
||
4.875% unsecured senior notes due 2047
|
800
|
|
|
800
|
|
||
4.85% unsecured senior notes due 2048
|
600
|
|
|
600
|
|
||
Unamortized original issue discount
|
(10
|
)
|
|
(10
|
)
|
||
Senior notes issuance costs, net
|
(37
|
)
|
|
(38
|
)
|
||
Less: current portion
|
—
|
|
|
—
|
|
||
Total long-term debt
|
$
|
4,350
|
|
|
$
|
4,194
|
|
|
|||||||
(a) For each of the twelve-month periods beginning on January 15, 2020, 2021, 2022, 2023 and thereafter, these notes are
callable at 103.281%, 102.188%, 101.094% and 100%, respectively.
|
(in millions)
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Cash payments for interest
|
$
|
46
|
|
|
$
|
42
|
|
|
$
|
109
|
|
|
$
|
60
|
|
Non-cash interest
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
||||
Net changes in accruals
|
5
|
|
|
(15
|
)
|
|
(8
|
)
|
|
(3
|
)
|
||||
Interest costs incurred
|
53
|
|
|
29
|
|
|
104
|
|
|
60
|
|
||||
Less: capitalized interest
|
(5
|
)
|
|
(2
|
)
|
|
(9
|
)
|
|
(3
|
)
|
||||
Total interest expense
|
$
|
48
|
|
|
$
|
27
|
|
|
$
|
95
|
|
|
$
|
57
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
||
Remaining 2019
|
$
|
20
|
|
2020
|
70
|
|
|
2021
|
77
|
|
|
2022
|
38
|
|
|
2023
|
35
|
|
|
2024
|
36
|
|
|
Thereafter
|
103
|
|
|
Total
|
$
|
379
|
|
|
|
|
Oil
(MMBbl)
|
|
Natural Gas
(MMcf)
|
||
Remaining 2019
|
7
|
|
|
1,582
|
|
2020
|
32
|
|
|
4,792
|
|
2021
|
37
|
|
|
18,931
|
|
2022
|
41
|
|
|
16,425
|
|
2023
|
33
|
|
|
16,425
|
|
2024
|
33
|
|
|
16,470
|
|
Thereafter
|
114
|
|
|
32,850
|
|
Total
|
297
|
|
|
107,475
|
|
|
|
|
|
(in millions)
|
Six Months Ended June 30, 2019
|
||
Cash paid for amounts included in measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
4
|
|
Financing cash flows from finance leases
|
$
|
4
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
1
|
|
Finance leases
|
$
|
4
|
|
|
|
(in millions)
|
Operating Leases
|
|
Finance Leases
|
||||
Remaining 2019
|
$
|
4
|
|
|
$
|
3
|
|
2020
|
8
|
|
|
6
|
|
||
2021
|
7
|
|
|
5
|
|
||
2022
|
1
|
|
|
2
|
|
||
2023
|
—
|
|
|
1
|
|
||
Thereafter
|
1
|
|
|
—
|
|
||
Total lease payments
|
21
|
|
|
17
|
|
||
Less: interest
|
(2
|
)
|
|
(1
|
)
|
||
Present value of lease liabilities
|
$
|
19
|
|
|
$
|
16
|
|
|
|
|
|
(in millions)
|
|
||
2019
|
$
|
14
|
|
2020
|
12
|
|
|
2021
|
10
|
|
|
2022
|
3
|
|
|
2023
|
—
|
|
|
Thereafter
|
1
|
|
|
Total
|
$
|
40
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||
Basic
|
199,185
|
|
|
147,938
|
|
|
199,184
|
|
|
147,931
|
|
Dilutive performance units
|
—
|
|
|
177
|
|
|
—
|
|
|
357
|
|
Diluted
|
199,185
|
|
|
148,115
|
|
|
199,184
|
|
|
148,288
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||
(in thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Number of antidilutive units:
|
|
|
|
|
|
|
|
||||
Performance units
|
431
|
|
|
218
|
|
|
430
|
|
|
109
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
June 30, 2019
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Non-Guarantor
|
|
Consolidating
Entries
|
|
Total
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable - related parties
|
$
|
18,181
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(18,181
|
)
|
|
$
|
—
|
|
Other current assets
|
25
|
|
|
835
|
|
|
—
|
|
|
—
|
|
|
860
|
|
|||||
Oil and natural gas properties, net
|
—
|
|
|
21,826
|
|
|
16
|
|
|
—
|
|
|
21,842
|
|
|||||
Property and equipment, net
|
—
|
|
|
374
|
|
|
—
|
|
|
—
|
|
|
374
|
|
|||||
Investment in subsidiaries
|
5,310
|
|
|
—
|
|
|
—
|
|
|
(5,310
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
2,222
|
|
|
—
|
|
|
—
|
|
|
2,222
|
|
|||||
Other long-term assets
|
43
|
|
|
137
|
|
|
—
|
|
|
—
|
|
|
180
|
|
|||||
Total assets
|
$
|
23,559
|
|
|
$
|
25,394
|
|
|
$
|
16
|
|
|
$
|
(23,491
|
)
|
|
$
|
25,478
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable - related parties
|
$
|
—
|
|
|
$
|
18,165
|
|
|
$
|
16
|
|
|
$
|
(18,181
|
)
|
|
$
|
—
|
|
Other current liabilities
|
192
|
|
|
1,211
|
|
|
—
|
|
|
—
|
|
|
1,403
|
|
|||||
Long-term debt
|
4,350
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,350
|
|
|||||
Other long-term liabilities
|
1,058
|
|
|
708
|
|
|
—
|
|
|
—
|
|
|
1,766
|
|
|||||
Equity
|
17,959
|
|
|
5,310
|
|
|
—
|
|
|
(5,310
|
)
|
|
17,959
|
|
|||||
Total liabilities and equity
|
$
|
23,559
|
|
|
$
|
25,394
|
|
|
$
|
16
|
|
|
$
|
(23,491
|
)
|
|
$
|
25,478
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
December 31, 2018
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer
|
|
Subsidiary
Guarantors
|
|
Subsidiary
Non-Guarantor
|
|
Consolidating
Entries
|
|
Total
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable - related parties
|
$
|
18,155
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(18,155
|
)
|
|
$
|
—
|
|
Other current assets
|
534
|
|
|
875
|
|
|
—
|
|
|
—
|
|
|
1,409
|
|
|||||
Oil and natural gas properties, net
|
—
|
|
|
21,988
|
|
|
17
|
|
|
—
|
|
|
22,005
|
|
|||||
Property and equipment, net
|
—
|
|
|
308
|
|
|
—
|
|
|
—
|
|
|
308
|
|
|||||
Investment in subsidiaries
|
5,411
|
|
|
—
|
|
|
—
|
|
|
(5,411
|
)
|
|
—
|
|
|||||
Goodwill
|
—
|
|
|
2,224
|
|
|
—
|
|
|
—
|
|
|
2,224
|
|
|||||
Other long-term assets
|
224
|
|
|
124
|
|
|
—
|
|
|
—
|
|
|
348
|
|
|||||
Total assets
|
$
|
24,324
|
|
|
$
|
25,519
|
|
|
$
|
17
|
|
|
$
|
(23,566
|
)
|
|
$
|
26,294
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable - related parties
|
$
|
—
|
|
|
$
|
18,138
|
|
|
$
|
17
|
|
|
$
|
(18,155
|
)
|
|
$
|
—
|
|
Other current liabilities
|
70
|
|
|
1,286
|
|
|
—
|
|
|
—
|
|
|
1,356
|
|
|||||
Long-term debt
|
4,194
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,194
|
|
|||||
Other long-term liabilities
|
1,292
|
|
|
684
|
|
|
—
|
|
|
—
|
|
|
1,976
|
|
|||||
Equity
|
18,768
|
|
|
5,411
|
|
|
—
|
|
|
(5,411
|
)
|
|
18,768
|
|
|||||
Total liabilities and equity
|
$
|
24,324
|
|
|
$
|
25,519
|
|
|
$
|
17
|
|
|
$
|
(23,566
|
)
|
|
$
|
26,294
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
Three Months Ended June 30, 2019
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Total operating revenues
|
$
|
—
|
|
|
$
|
1,127
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,127
|
|
Total operating costs and expenses
|
217
|
|
|
(1,749
|
)
|
|
—
|
|
|
—
|
|
|
(1,532
|
)
|
|||||
Income (loss) from operations
|
217
|
|
|
(622
|
)
|
|
—
|
|
|
—
|
|
|
(405
|
)
|
|||||
Interest expense
|
(48
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|||||
Other, net
|
(319
|
)
|
|
303
|
|
|
—
|
|
|
319
|
|
|
303
|
|
|||||
Loss before income taxes
|
(150
|
)
|
|
(319
|
)
|
|
—
|
|
|
319
|
|
|
(150
|
)
|
|||||
Income tax benefit
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|||||
Net loss
|
$
|
(97
|
)
|
|
$
|
(319
|
)
|
|
$
|
—
|
|
|
$
|
319
|
|
|
$
|
(97
|
)
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
Three Months Ended June 30, 2018
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Total operating revenues
|
$
|
—
|
|
|
$
|
945
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
945
|
|
Total operating costs and expenses
|
(134
|
)
|
|
(608
|
)
|
|
—
|
|
|
—
|
|
|
(742
|
)
|
|||||
Income (loss) from operations
|
(134
|
)
|
|
337
|
|
|
—
|
|
|
—
|
|
|
203
|
|
|||||
Interest expense
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|||||
Other, net
|
338
|
|
|
1
|
|
|
—
|
|
|
(338
|
)
|
|
1
|
|
|||||
Income before income taxes
|
177
|
|
|
338
|
|
|
—
|
|
|
(338
|
)
|
|
177
|
|
|||||
Income tax expense
|
(40
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|||||
Net income
|
$
|
137
|
|
|
$
|
338
|
|
|
$
|
—
|
|
|
$
|
(338
|
)
|
|
$
|
137
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
Six Months Ended June 30, 2019
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Total operating revenues
|
$
|
—
|
|
|
$
|
2,231
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,231
|
|
Total operating costs and expenses
|
(843
|
)
|
|
(2,639
|
)
|
|
—
|
|
|
—
|
|
|
(3,482
|
)
|
|||||
Loss from operations
|
(843
|
)
|
|
(408
|
)
|
|
—
|
|
|
—
|
|
|
(1,251
|
)
|
|||||
Interest expense
|
(95
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(95
|
)
|
|||||
Other, net
|
(101
|
)
|
|
307
|
|
|
—
|
|
|
101
|
|
|
307
|
|
|||||
Loss before income taxes
|
(1,039
|
)
|
|
(101
|
)
|
|
—
|
|
|
101
|
|
|
(1,039
|
)
|
|||||
Income tax benefit
|
247
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
247
|
|
|||||
Net loss
|
$
|
(792
|
)
|
|
$
|
(101
|
)
|
|
$
|
—
|
|
|
$
|
101
|
|
|
$
|
(792
|
)
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Operations
|
|||||||||||||||||||
Six Months Ended June 30, 2018
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Total operating revenues
|
$
|
—
|
|
|
$
|
1,887
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
1,892
|
|
Total operating costs and expenses
|
(168
|
)
|
|
(503
|
)
|
|
(3
|
)
|
|
—
|
|
|
(674
|
)
|
|||||
Income (loss) from operations
|
(168
|
)
|
|
1,384
|
|
|
2
|
|
|
—
|
|
|
1,218
|
|
|||||
Interest expense
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|||||
Other, net
|
1,491
|
|
|
105
|
|
|
—
|
|
|
(1,491
|
)
|
|
105
|
|
|||||
Income before income taxes
|
1,266
|
|
|
1,489
|
|
|
2
|
|
|
(1,491
|
)
|
|
1,266
|
|
|||||
Income tax expense
|
(294
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(294
|
)
|
|||||
Net income
|
$
|
972
|
|
|
$
|
1,489
|
|
|
$
|
2
|
|
|
$
|
(1,491
|
)
|
|
$
|
972
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
Six Months Ended June 30, 2019
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Net cash flows provided by (used in) operating activities
|
$
|
(91
|
)
|
|
$
|
1,493
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,402
|
|
Net cash flows used in investing activities
|
—
|
|
|
(1,473
|
)
|
|
—
|
|
|
—
|
|
|
(1,473
|
)
|
|||||
Net cash flows provided by (used in) financing activities
|
91
|
|
|
(20
|
)
|
|
—
|
|
|
—
|
|
|
71
|
|
|||||
Net change in cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
Six Months Ended June 30, 2018
|
|||||||||||||||||||
(in millions)
|
Parent
Issuer |
|
Subsidiary
Guarantors |
|
Subsidiary
Non-Guarantor |
|
Consolidating
Entries |
|
Total
|
||||||||||
Net cash flows provided by operating activities
|
$
|
354
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,090
|
|
Net cash flows used in investing activities
|
—
|
|
|
(565
|
)
|
|
—
|
|
|
—
|
|
|
(565
|
)
|
|||||
Net cash flows used in financing activities
|
(354
|
)
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
(470
|
)
|
|||||
Net increase in cash and cash equivalents
|
—
|
|
|
55
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Cash and cash equivalents at beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
—
|
|
|
$
|
55
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
June 30,
2019 |
|
December 31,
2018 |
||||
Oil and natural gas properties:
|
|
|
|
||||
Proved
|
$
|
26,824
|
|
|
$
|
24,992
|
|
Unproved
|
6,497
|
|
|
6,714
|
|
||
Less: accumulated depletion
|
(11,479
|
)
|
|
(9,701
|
)
|
||
Net capitalized costs for oil and natural gas properties
|
$
|
21,842
|
|
|
$
|
22,005
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Property acquisition costs:
|
|
|
|
|
|
|
|
||||||||
Proved
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unproved
|
9
|
|
|
5
|
|
|
13
|
|
|
18
|
|
||||
Exploration
|
435
|
|
|
335
|
|
|
897
|
|
|
578
|
|
||||
Development
|
350
|
|
|
166
|
|
|
814
|
|
|
373
|
|
||||
Total costs incurred for oil and natural gas properties
|
$
|
794
|
|
|
$
|
506
|
|
|
$
|
1,724
|
|
|
$
|
969
|
|
|
|
|
|
|
|
|
|
•
|
Net loss was $792 million ($(3.98) per diluted share) as compared to net income of $972 million ($6.50 per diluted share) for the six months ended June 30, 2019 and 2018, respectively. The decrease in net income was primarily due to:
|
•
|
$868 million in non-cash impairments of long-lived assets during the six months ended June 30, 2019;
|
•
|
$674 million increase in loss on derivatives due to a $842 million loss on derivatives during the six months ended June 30, 2019, as compared to $168 million during 2018;
|
•
|
$724 million decrease in gain on disposition of assets, primarily due to the gains related to certain acquisitions and divestitures during 2018, as discussed in Note 4 of the Condensed Notes to Consolidated Financial Statements;
|
•
|
$316 million increase in depreciation, depletion and amortization expense, primarily due to the increase in production and the increase in depletion rate per Boe; and
|
•
|
$102 million increase in production expense, primarily due to increased production and activities associated with an increase in well count due to acquisitions in 2018 and additional wells successfully drilled and completed in 2018 and 2019;
|
•
|
$339 million increase in oil and natural gas revenues as a result of a 44 percent increase in production, partially offset by a 18 percent decrease in commodity price realizations per Boe (excluding the effects of derivative activities); and
|
•
|
$202 million increase in other income during the six months ended June 30, 2019, primarily due to the gain of $289 million on the sale of our ownership interest in the subsidiary of our equity method investment, Oryx Southern Delaware Holdings, LLC (“Oryx”).
|
•
|
Average daily sales volumes of 329 MBoe per day during the six months ended June 30, 2019 increased 44 percent as compared to 228 MBoe per day during the same period in 2018.
|
•
|
Net cash provided by operating activities increased by $312 million to $1,402 million for the six months ended June 30, 2019, as compared to $1,090 million in the six months ended June 30, 2018, primarily due to an increase in oil and natural gas revenues and changes related to cash settlements on derivatives, partially offset by increased operating costs on our oil and natural gas properties.
|
•
|
the overall global demand for oil and natural gas;
|
•
|
the domestic and foreign supply of oil, natural gas and natural gas liquids;
|
•
|
the overall North American oil and natural gas supply and demand fundamentals, including:
|
•
|
the U.S. economy,
|
•
|
weather conditions, and
|
•
|
liquefied natural gas (“LNG”) deliveries to and exports from the United States;
|
•
|
economic conditions worldwide;
|
•
|
the proximity, capacity, cost and availability of pipelines and other transportation facilities, as well as the availability of commodity processing, gathering and refining capacity;
|
•
|
risks related to the concentration of our operations in the Permian Basin of West Texas and Southeast New Mexico and the level of commodity inventory in the Permian Basin;
|
•
|
the quality of the oil we produce;
|
•
|
the level of global crude oil, crude oil products and LNG inventories;
|
•
|
volatility and trading patterns in the commodity-futures markets;
|
•
|
political and economic developments in oil and natural gas producing regions, including Africa, South America and the Middle East;
|
•
|
the extent to which members of the Organization of Petroleum Exporting Countries and other oil exporting nations are able to influence global oil supply levels;
|
•
|
technological advances affecting energy consumption and energy supply;
|
•
|
the effect of energy conservation efforts;
|
•
|
additional restrictions on the exploration, development and production of oil, natural gas and natural gas liquids so as to materially reduce emissions of carbon dioxide and methane greenhouse gases;
|
•
|
political and economic events that directly or indirectly impact the relative strength or weakness of the U.S. dollar, on which oil prices are benchmarked globally, against foreign currencies;
|
•
|
domestic and foreign governmental regulations, including limits on the United States’ ability to export crude oil, and taxation;
|
•
|
the cost and availability of products and personnel needed for us to produce oil and natural gas, including rigs, crews, sand, water and water disposal; and
|
•
|
the price, availability and acceptance of alternative fuels.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Average NYMEX prices:
|
|
|
|
|
|
|
|
||||||||
Oil (Bbl)
|
$
|
59.86
|
|
|
$
|
67.85
|
|
|
$
|
57.38
|
|
|
$
|
65.42
|
|
Natural gas (MMBtu)
|
$
|
2.51
|
|
|
$
|
2.83
|
|
|
$
|
2.69
|
|
|
$
|
2.84
|
|
|
|
|
|
|
|
|
|
||||||||
High and Low NYMEX prices:
|
|
|
|
|
|
|
|
||||||||
Oil (Bbl):
|
|
|
|
|
|
|
|
||||||||
High
|
$
|
66.30
|
|
|
$
|
74.15
|
|
|
$
|
66.30
|
|
|
$
|
74.15
|
|
Low
|
$
|
51.14
|
|
|
$
|
62.06
|
|
|
$
|
45.41
|
|
|
$
|
59.19
|
|
Natural gas (MMBtu):
|
|
|
|
|
|
|
|
||||||||
High
|
$
|
2.71
|
|
|
$
|
3.02
|
|
|
$
|
3.59
|
|
|
$
|
3.63
|
|
Low
|
$
|
2.19
|
|
|
$
|
2.66
|
|
|
$
|
2.19
|
|
|
$
|
2.55
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Production and operating data:
|
|
|
|
|
|
|
|
||||||||
Net production volumes:
|
|
|
|
|
|
|
|
||||||||
Oil (MBbl)
|
18,726
|
|
|
13,029
|
|
|
37,662
|
|
|
25,968
|
|
||||
Natural gas (MMcf)
|
67,104
|
|
|
46,837
|
|
|
130,873
|
|
|
92,285
|
|
||||
Total (MBoe)
|
29,910
|
|
|
20,835
|
|
|
59,474
|
|
|
41,349
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Average daily production volumes:
|
|
|
|
|
|
|
|
||||||||
Oil (Bbl)
|
205,780
|
|
|
143,176
|
|
|
208,077
|
|
|
143,470
|
|
||||
Natural gas (Mcf)
|
737,407
|
|
|
514,692
|
|
|
723,055
|
|
|
509,862
|
|
||||
Total (Boe)
|
328,681
|
|
|
228,958
|
|
|
328,586
|
|
|
228,447
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Average prices per unit: (a)
|
|
|
|
|
|
|
|
||||||||
Oil, without derivatives (Bbl)
|
$
|
56.02
|
|
|
$
|
60.98
|
|
|
$
|
52.68
|
|
|
$
|
61.13
|
|
Oil, with derivatives (Bbl) (b)
|
$
|
53.15
|
|
|
$
|
54.34
|
|
|
$
|
51.35
|
|
|
$
|
53.47
|
|
Natural gas, without derivatives (Mcf)
|
$
|
1.16
|
|
|
$
|
3.19
|
|
|
$
|
1.88
|
|
|
$
|
3.29
|
|
Natural gas, with derivatives (Mcf) (b)
|
$
|
1.22
|
|
|
$
|
3.29
|
|
|
$
|
1.89
|
|
|
$
|
3.34
|
|
Total, without derivatives (Boe)
|
$
|
37.68
|
|
|
$
|
45.31
|
|
|
$
|
37.51
|
|
|
$
|
45.74
|
|
Total, with derivatives (Boe) (b)
|
$
|
36.02
|
|
|
$
|
41.37
|
|
|
$
|
36.68
|
|
|
$
|
41.04
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs and expenses per Boe: (a)
|
|
|
|
|
|
|
|
||||||||
Oil and natural gas production
|
$
|
6.31
|
|
|
$
|
6.24
|
|
|
$
|
6.09
|
|
|
$
|
6.28
|
|
Production and ad valorem taxes
|
$
|
2.81
|
|
|
$
|
3.37
|
|
|
$
|
2.86
|
|
|
$
|
3.39
|
|
Gathering, processing and transportation
|
$
|
0.73
|
|
|
$
|
0.45
|
|
|
$
|
0.80
|
|
|
$
|
0.49
|
|
Depreciation, depletion and amortization
|
$
|
15.96
|
|
|
$
|
14.88
|
|
|
$
|
15.86
|
|
|
$
|
15.16
|
|
General and administrative
|
$
|
2.89
|
|
|
$
|
3.37
|
|
|
$
|
2.98
|
|
|
$
|
3.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net production volumes:
|
|
|
|
|
|
|
|
||||||||
Oil (MBbl)
|
18,726
|
|
|
13,029
|
|
|
37,662
|
|
|
25,968
|
|
||||
Natural gas (MMcf)
|
67,104
|
|
|
46,837
|
|
|
130,873
|
|
|
92,285
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Average prices per unit: (a)
|
|
|
|
|
|
|
|
||||||||
Realized oil price (Bbl)
|
$
|
56.02
|
|
|
$
|
60.98
|
|
|
$
|
52.68
|
|
|
$
|
61.13
|
|
Differential to NYMEX
|
$
|
(3.84
|
)
|
|
$
|
(6.87
|
)
|
|
$
|
(4.70
|
)
|
|
$
|
(4.29
|
)
|
|
|
|
|
|
|
|
|
||||||||
Realized natural gas price (Mcf)
|
$
|
1.16
|
|
|
$
|
3.19
|
|
|
$
|
1.88
|
|
|
$
|
3.29
|
|
Average realized natural gas price as a percentage of NYMEX
|
46
|
%
|
|
113
|
%
|
|
70
|
%
|
|
116
|
%
|
||||
|
|
|
|
|
|
|
|
•
|
total oil production increased 5,697 MBbl (44 percent) and 11,694 MBbl (45 percent) for the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018;
|
•
|
average realized oil price (excluding the effects of derivative activities) decreased 8 percent and 14 percent for the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018. The decrease in average realized oil price was primarily due to a decrease in the average NYMEX price. The basis differential (referred to as the “Mid-Cush differential”) between the location of Midland, Texas and Cushing, Oklahoma (settlement location for NYMEX pricing) for our oil directly impacts our realized oil price. For the three months ended June 30, 2019 and 2018, the average market Mid-Cush differentials were price reductions of $2.14 per Bbl and $5.15 per Bbl, respectively. For the six months ended June 30, 2019 and 2018, the average market Mid-Cush differentials were reductions of $3.00 per Bbl and $2.39 per Bbl, respectively;
|
•
|
total natural gas production increased 20,267 MMcf (43 percent) and 38,588 MMcf (42 percent) for the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018; and
|
•
|
average realized natural gas price (excluding the effects of derivative activities) decreased 64 percent and 43 percent for the three and six months ended June 30, 2019, respectively, as compared to the same periods in 2018. We derive a significant portion of our total natural gas revenues from the value of the natural gas liquids contained in our natural gas, with the remaining portion coming from the value of the dry natural gas residue. Because of our liquids-rich natural gas stream and the related value of the natural gas liquids being included in our natural gas revenues, our realized natural gas price (excluding the effects of derivatives) historically reflected a price greater than the related NYMEX natural gas price. However, during the latter part of 2018 and into 2019, amid concerns of rising natural gas production relative to the ability to transport natural gas out of the Permian Basin, the price differential for natural gas residue increased significantly. These widening natural gas residue differentials negatively impacted our realized natural gas prices during the three and six months ended June 30, 2019, but were partially offset by the value of the natural gas liquids. The combination of these factors resulted in a realized natural gas price of 46 percent and 70 percent of the average NYMEX natural gas price for the three and six months ended June 30, 2019, respectively, which falls below our historical amounts. In addition, the average Mont Belvieu price for a blended barrel of natural gas liquids decreased from $29.72 per Bbl and $28.68 per Bbl during the three and six months ended June 30, 2018, respectively, to $20.16 per Bbl and $22.15 per Bbl during the three and six months ended June 30, 2019, respectively.
|
|
Three Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Lease operating expenses
|
$
|
177
|
|
|
$
|
5.93
|
|
|
$
|
121
|
|
|
$
|
5.81
|
|
Workover costs
|
11
|
|
|
0.38
|
|
|
9
|
|
|
0.43
|
|
||||
Total oil and natural gas production expenses
|
$
|
188
|
|
|
$
|
6.31
|
|
|
$
|
130
|
|
|
$
|
6.24
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Lease operating expenses
|
$
|
343
|
|
|
$
|
5.76
|
|
|
$
|
242
|
|
|
$
|
5.84
|
|
Workover costs
|
19
|
|
|
0.33
|
|
|
18
|
|
|
0.44
|
|
||||
Total oil and natural gas production expenses
|
$
|
362
|
|
|
$
|
6.09
|
|
|
$
|
260
|
|
|
$
|
6.28
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Production taxes
|
$
|
70
|
|
|
$
|
2.32
|
|
|
$
|
64
|
|
|
$
|
3.07
|
|
Ad valorem taxes
|
14
|
|
|
0.49
|
|
|
6
|
|
|
0.30
|
|
||||
Total production and ad valorem taxes
|
$
|
84
|
|
|
$
|
2.81
|
|
|
$
|
70
|
|
|
$
|
3.37
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Production taxes
|
$
|
140
|
|
|
$
|
2.35
|
|
|
$
|
128
|
|
|
$
|
3.10
|
|
Ad valorem taxes
|
30
|
|
|
0.51
|
|
|
12
|
|
|
0.29
|
|
||||
Total production and ad valorem taxes
|
$
|
170
|
|
|
$
|
2.86
|
|
|
$
|
140
|
|
|
$
|
3.39
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Gathering, processing and transportation costs
|
$
|
22
|
|
|
$
|
0.73
|
|
|
$
|
9
|
|
|
$
|
0.45
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Gathering, processing and transportation costs
|
$
|
48
|
|
|
$
|
0.80
|
|
|
$
|
20
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Geological and geophysical
|
$
|
3
|
|
|
$
|
2
|
|
|
$
|
9
|
|
|
$
|
7
|
|
Leasehold abandonments
|
12
|
|
|
4
|
|
|
42
|
|
|
14
|
|
||||
Other
|
2
|
|
|
2
|
|
|
13
|
|
|
5
|
|
||||
Total exploration and abandonments
|
$
|
17
|
|
|
$
|
8
|
|
|
$
|
64
|
|
|
$
|
26
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Depletion of proved oil and natural gas properties
|
$
|
470
|
|
|
$
|
15.69
|
|
|
$
|
303
|
|
|
$
|
14.59
|
|
Depreciation of other property and equipment
|
7
|
|
|
0.25
|
|
|
6
|
|
|
0.25
|
|
||||
Amortization of intangible assets
|
1
|
|
|
0.02
|
|
|
1
|
|
|
0.04
|
|
||||
Total depletion, depreciation and amortization
|
$
|
478
|
|
|
$
|
15.96
|
|
|
$
|
310
|
|
|
$
|
14.88
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
Depletion of proved oil and natural gas properties
|
$
|
927
|
|
|
$
|
15.58
|
|
|
$
|
614
|
|
|
$
|
14.86
|
|
Depreciation of other property and equipment
|
14
|
|
|
0.25
|
|
|
11
|
|
|
0.26
|
|
||||
Amortization of intangible assets
|
2
|
|
|
0.03
|
|
|
2
|
|
|
0.04
|
|
||||
Total depletion, depreciation and amortization
|
$
|
943
|
|
|
$
|
15.86
|
|
|
$
|
627
|
|
|
$
|
15.16
|
|
|
June 30, 2019
|
|
June 30, 2018
|
||||
Oil price used to estimate proved oil reserves at period end
|
$
|
57.90
|
|
|
$
|
54.15
|
|
Natural gas price used to estimate proved natural gas reserves at period end
|
$
|
3.02
|
|
|
$
|
2.92
|
|
|
|
|
|
|
Three Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
General and administrative expenses
|
$
|
69
|
|
|
$
|
2.25
|
|
|
$
|
59
|
|
|
$
|
2.71
|
|
Less: Operating fee reimbursements
|
(4
|
)
|
|
(0.14
|
)
|
|
(5
|
)
|
|
(0.21
|
)
|
||||
Non-cash stock-based compensation
|
23
|
|
|
0.78
|
|
|
18
|
|
|
0.87
|
|
||||
Total general and administrative expenses
|
$
|
88
|
|
|
$
|
2.89
|
|
|
$
|
72
|
|
|
$
|
3.37
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
(in millions, except per unit amounts)
|
Amount
|
|
Per Boe
|
|
Amount
|
|
Per Boe
|
||||||||
General and administrative expenses
|
$
|
140
|
|
|
$
|
2.33
|
|
|
$
|
111
|
|
|
$
|
2.70
|
|
Less: Operating fee reimbursements
|
(8
|
)
|
|
(0.14
|
)
|
|
(9
|
)
|
|
(0.21
|
)
|
||||
Non-cash stock-based compensation
|
47
|
|
|
0.79
|
|
|
35
|
|
|
0.86
|
|
||||
Total general and administrative expenses
|
$
|
179
|
|
|
$
|
2.98
|
|
|
$
|
137
|
|
|
$
|
3.35
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Gain (loss) on derivatives:
|
|
|
|
|
|
|
|
||||||||
Oil derivatives
|
$
|
195
|
|
|
$
|
(128
|
)
|
|
$
|
(861
|
)
|
|
$
|
(161
|
)
|
Natural gas derivatives
|
22
|
|
|
(5
|
)
|
|
19
|
|
|
(7
|
)
|
||||
Total
|
$
|
217
|
|
|
$
|
(133
|
)
|
|
$
|
(842
|
)
|
|
$
|
(168
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net cash receipts from (payments on) derivatives:
|
|
|
|
|
|
|
|
|
|||||||
Oil derivatives
|
$
|
(54
|
)
|
|
$
|
(86
|
)
|
|
$
|
(51
|
)
|
|
$
|
(199
|
)
|
Natural gas derivatives
|
4
|
|
|
4
|
|
|
1
|
|
|
5
|
|
||||
Total
|
$
|
(50
|
)
|
|
$
|
(82
|
)
|
|
$
|
(50
|
)
|
|
$
|
(194
|
)
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Interest expense, as reported
|
$
|
48
|
|
|
$
|
27
|
|
|
$
|
95
|
|
|
$
|
57
|
|
Capitalized interest
|
5
|
|
|
2
|
|
|
9
|
|
|
3
|
|
||||
Interest expense, excluding impact of capitalized interest
|
$
|
53
|
|
|
$
|
29
|
|
|
$
|
104
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average interest rate - credit facility
|
4.3
|
%
|
|
5.3
|
%
|
|
4.4
|
%
|
|
4.5
|
%
|
||||
Weighted average interest rate - senior notes
|
4.4
|
%
|
|
4.3
|
%
|
|
4.4
|
%
|
|
4.3
|
%
|
||||
Total weighted average interest rate
|
4.4
|
%
|
|
4.3
|
%
|
|
4.4
|
%
|
|
4.3
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Weighted average credit facility balance
|
$
|
630
|
|
|
$
|
50
|
|
|
$
|
567
|
|
|
$
|
130
|
|
Weighted average senior notes balance
|
4,000
|
|
|
2,400
|
|
|
4,000
|
|
|
2,400
|
|
||||
Total weighted average debt balance
|
$
|
4,630
|
|
|
$
|
2,450
|
|
|
$
|
4,567
|
|
|
$
|
2,530
|
|
|
|
|
|
|
|
|
|
•
|
$155 million increase in long-term debt due to additional borrowings under our Credit Facility;
|
•
|
$138 million increase in our derivative liability position; and
|
•
|
a marketing contract as described below.
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
1,402
|
|
|
$
|
1,090
|
|
Net cash used in investing activities
|
(1,473
|
)
|
|
(565
|
)
|
||
Net cash provided by (used in) financing activities
|
71
|
|
|
(470
|
)
|
||
Net increase in cash and cash equivalents
|
$
|
—
|
|
|
$
|
55
|
|
|
|
|
|
(i)
|
an alternative base rate (“ABR”), which is equal to the highest of
|
(a)
|
the prime rate of JPMorgan Chase Bank (5.5 percent at June 30, 2019),
|
(b)
|
the federal funds effective rate plus 0.5 percent, and
|
(c)
|
the London Interbank Offered Rate (“LIBOR”) plus 1.0 percent; or
|
(ii)
|
LIBOR plus 1.5 percent.
|
(in millions)
|
Increase of
$5.00 per Bbl and $0.50 per MMBtu |
|
Decrease of
$5.00 per Bbl and $0.50 per MMBtu |
||||
Gain (loss):
|
|
|
|
||||
Oil derivatives
|
$
|
(403
|
)
|
|
$
|
403
|
|
Natural gas derivatives
|
(26
|
)
|
|
26
|
|
||
Total
|
$
|
(429
|
)
|
|
$
|
429
|
|
|
|
|
|
(in millions)
|
Commodity Derivative Instruments
Net Assets (Liabilities)
|
||
Fair value of contracts outstanding at December 31, 2018
|
$
|
695
|
|
Changes in fair values (a)
|
(842
|
)
|
|
Contract maturities
|
50
|
|
|
Fair value of contracts outstanding at June 30, 2019 (b)
|
$
|
(97
|
)
|
|
|
||
(a) At inception, new derivative contracts entered into by us have no intrinsic value.
|
|||
(b) Represents the fair value of open derivative contracts subject to market risk.
|
Period
|
Total number of shares
withheld (a)
|
Average price per share
|
Total number of shares
purchased as part of
publicly announced plans
|
Maximum number of
shares that may yet be
purchased under the plan
|
|||||
April 1, 2019 - April 30, 2019
|
458
|
|
$
|
115.42
|
|
—
|
|
—
|
|
May 1, 2019 - May 31, 2019
|
133
|
|
$
|
112.49
|
|
—
|
|
—
|
|
June 1, 2019 - June 30, 2019
|
9,922
|
|
$
|
105.76
|
|
—
|
|
—
|
|
|
|
|
|
|
|||||
(a) Represents shares that were withheld by us to satisfy tax withholding obligations of certain employees that arose upon the lapse of restrictions on share-based awards.
|
CONCHO RESOURCES INC.
|
|||
|
|
|
|
Date:
|
August 1, 2019
|
By
|
/s/ Timothy A. Leach
|
|
|
|
|
|
|
|
Timothy A. Leach
|
|
|
|
Chairman of the Board of Directors and Chief
|
|
|
|
Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Brenda R. Schroer
|
|
|
|
|
|
|
|
Brenda R. Schroer
|
|
|
|
Senior Vice President, Chief Financial Officer and
|
|
|
|
Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
By
|
/s/ Jacob P. Gobar
|
|
|
|
|
|
|
|
Jacob P. Gobar
|
|
|
|
Vice President and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
Title:
|
Senior Vice President, Chief Financial Officer and Treasurer
|
By:
|
/s/ Darren Vanek
|
Name:
|
Darren Vanek
|
Title:
|
Authorized Officer
|
By:
|
/s/ Alia Qaddumi
|
Name:
|
Alia Qaddumi
|
Title:
|
Director
|
By:
|
/s/ Matthew Persky
|
Name:
|
Matthew Persky
|
Title:
|
Vice President
|
By:
|
/s/ Gumaro Tijerina
|
Name:
|
Gumaro Tijerina
|
Title:
|
Managing Director
|
By:
|
/s/ Mark Brewster
|
Name:
|
Mark Brewster
|
Title:
|
Vice President
|
By:
|
/s/ Peter Kardos
|
Name:
|
Peter Kardos
|
Title:
|
Vice President
|
By:
|
/s/ Doreen Barr
|
Name:
|
Doreen Barr
|
Title:
|
Authorized Signatory
|
By:
|
/s/ Christopher Zybrick
|
Name:
|
Christopher Zybrick
|
Title:
|
Authorized Signatory
|
By:
|
/s/ Juli Bieser
|
Name:
|
Juli Bieser
|
Title:
|
Managing Director
|
By:
|
/s/ Michael Price
|
Name:
|
Michael Price
|
Title:
|
Managing Director
|
By:
|
/s/ Stephen W. Warfel
|
Name:
|
Stephen W. Warfel
|
Title:
|
Managing Director
|
By:
|
/s/ Sandra Salazar
|
Name:
|
Sandra Salazar
|
Title:
|
Managing Director
|
By:
|
/s/ Emilee Scott
|
Name:
|
Emilee Scott
|
Title:
|
Authorized Signatory
|
By:
|
/s/ Tara R. McLean
|
Name:
|
Tara R. McLean
|
Title:
|
Senior Vice President
|
By:
|
/s/ James Giordano
|
Name:
|
James Giordano
|
Title:
|
Senior Vice President
|
By:
|
/s/ Scott W. Danvers
|
Name:
|
Scott W. Danvers
|
Title:
|
Authorized Signatory
|
By:
|
/s/ Donovan C. Broussard
|
Name:
|
Donovan C. Broussard
|
Title:
|
Authorized Signatory
|
By:
|
/s/ Mark Fuqua
|
Name:
|
Mark Fuqua
|
Title:
|
Executive Vice President
|
By:
|
/s/ Mark H. Wolf
|
Name:
|
Mark H. Wolf
|
Title:
|
Senior Vice President
|
By:
|
/s/ James Dee Grubb
|
Name:
|
James Dee Grubb
|
Title:
|
First Vice President
|
By:
|
/s/ Einar Gulstad
|
Name:
|
Einar Gulstad
|
Title:
|
Senior Vice President
|
By:
|
/s/ David M. Bornstein
|
Name:
|
David M. Bornstein
|
Title:
|
Senior Vice President
|
By:
|
/s/ Miles Matter
|
Name:
|
Miles Matter
|
Title:
|
Vice President
|
1.
|
I have reviewed this quarterly report of Concho Resources Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 1, 2019
|
|
/s/ Timothy A. Leach
|
|
|
|
|
|
|
|
Timothy A. Leach
|
|
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report of Concho Resources Inc. (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
August 1, 2019
|
|
/s/ Brenda R. Schroer
|
|
|
|
|
|
|
|
Brenda R. Schroer
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 1, 2019
|
|
/s/ Timothy A. Leach
|
|
|
|
|
|
|
|
Timothy A. Leach
|
|
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
August 1, 2019
|
|
/s/ Brenda R. Schroer
|
|
|
|
|
|
|
|
Brenda R. Schroer
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|