News Release

MIDLAND, Texas, Feb 23, 2011 (BUSINESS WIRE) --

Concho Resources Inc. (NYSE: CXO) ("Concho" or the "Company") today reported financial and operating results for the three months and year ended December 31, 2010. Highlights for the year ended December 31, 2010 include:

• Production of 15.6 million barrels of oil equivalents ("MMBoe"), a 42% increase over 2009
• Net income of $204.4 million, or $2.18 per diluted share as compared to a net loss of $9.8 million, or $0.12 per diluted share, in 2009
• Adjusted net income (non-GAAP)¹ of $254.1 million, or $2.71 per diluted share, as compared to $143.5 million, or $1.67 per diluted share, for 2009
• EBITDAX² of $743.0 million for 2010, a 56% increase over 2009

¹ Adjusted net income (non-GAAP) is comparable to securities analyst estimates. For an explanation of how we calculate adjusted net income (non-GAAP) and a reconciliation of net income (loss) (GAAP) to adjusted net income (non-GAAP), please see "Supplemental Non-GAAP Financial Measures" below.

² For an explanation of how we calculate and use EBITDAX and a reconciliation of net income (loss) to EBITDAX, please see "Supplemental Non-GAAP Financial Measures" below.

Year End 2010 Financial Results

Production for 2010 totaled 15.6 MMBoe (10.3 million barrels of oil ("MMBbls") and 31.4 billion cubic feet of natural gas ("Bcf"), an increase of 42% as compared to 10.9 MMBoe (7.3 MMBbls of oil and 21.6 Bcf of natural gas) produced in 2009. Production in 2010 increased 32% over 2009 production, excluding the properties acquired from Marbob Energy Corporation and the acquisition of certain properties in connection with the Marbob preferential purchase right dispute in 2010. The Company's 2010 production includes production from its non-core Permian asset divestiture that is now being reflected in discontinued operations in our historical results. For more information, please see the "summary production and price data" tables at the end of this press release.

Timothy A. Leach, Concho's Chairman, CEO and President commented, "This past year was exceptional for Concho. During the year, we closed the largest, most strategic acquisition in the history of the Company and continued to develop our core assets. The acquisition, coupled with our leasing efforts, established a new core area targeting various intervals in the Delaware Basin. Today, we are a larger version of the same company we were last year; with core philosophies of reinvesting our cash flow into drilling projects in our core areas of operation and pursuing opportunistic acquisitions."

For 2010, the Company reported net income of $204.4 million, or $2.18 per diluted share, as compared to net loss of $9.8 million, or $0.12 per diluted share, for 2009. The Company's 2010 results were impacted by several non-cash items. These non-cash items recorded in 2010, included $73.5 million non-cash mark-to-market unrealized loss on commodity and interest rate derivatives, $11.6 million impairment of long-lived assets, $8.3 million loss due to a change in the state statutory effective tax rate, $7.6 million of leasehold abandonments and $25.5 million in other non-cash items related to discontinued operations. Excluding these items and assuming a normalized tax rate of 38%, 2010 adjusted net income would have been $254.1 million, or $2.71 per diluted share. Excluding similar non-cash items and their tax impact for 2009, adjusted net income would have been $143.5 million, or $1.67 per diluted share. For a description of the use of adjusted net income (non-GAAP), see footnote 1 above. For a reconciliation of net income (loss) (GAAP) to adjusted net income (non-GAAP) for the three and twelve months ended December 31, 2010 and 2009, please refer to the attached tables.

EBITDAX (defined as net income (loss), plus (1) exploration and abandonments expense, (2) depreciation, depletion and amortization expense, (3) accretion expense, (4) impairments of long-lived assets, (5) non-cash stock-based compensation expense, (6) bad debt expense, (7) unrealized (gain) loss on derivatives not designated as hedges, (8) (gain) loss on sale of assets, net, (9) interest expense, (10) federal and state income taxes, and (11) similar items listed above that are presented in discontinued operations) increased to $743.0 million in 2010, as compared to $475.2 million in 2009.

Oil and gas production expense from continuing operations for 2010, including taxes, totaled $170.8 million, or $11.35 per barrel of oil equivalent ("Boe"), a 19% increase per Boe from 2009. This increase was due primarily to higher commodity prices, resulting in higher production taxes, (which averaged $5.52 per Boe in 2010 as compared to $4.10 per Boe in 2009).

Depletion, depreciation and amortization expense ("DD&A") from continuing operations for 2010 totaled $249.9 million, or $16.59 per Boe, a 13% decrease per Boe from 2009. This decrease was due, in part, to additional proved reserves added in the 4^th quarter of 2009 associated with the adoption of the new reserve rules, improved oil prices at which our proved reserves determined in 2010, which increased proved reserves and additional proved reserves associated with new wells that were successfully drilled and completed.

General and administrative expense ("G&A") from continuing operations for 2010 totaled $64.3 million, or $4.23 per Boe, as compared to $53.2 million, or $5.13 per Boe for 2009. Recurring cash G&A for 2010 totaled $46.3 million, stock-based compensation (non-cash) totaled $12.9 million, and $5.1 million was attributable to amounts owed to certain employees of Henry Petroleum for which the final payment was made in July 2010 under the terms of the Henry Petroleum purchase agreement.

The Company's 2010 cash flow from operating activities (GAAP) was $651.6 million, as compared to $359.5 million in 2009. Cash flow from operating activities for the twelve months ended December 31, 2010, adjusted for settlements received from (paid on) derivatives not designated as hedges (non-GAAP) was $637.8 million, which is a 44% increase over 2009, which totaled $442.0 million. For a description of the use of cash flow from operating activities adjusted for settlements received from (paid on) derivatives not designated as hedges (non-GAAP) and for a reconciliation of cash flow from operating activities (GAAP) to cash flow from operating activities adjusted for settlements received from (paid on) derivatives not designated as hedges (non-GAAP) for the twelve months ended December 31, 2010 and 2009, please refer to the attached tables.

In 2010, the Company made cash payments for settlements on derivatives contracts not designated as hedges of $13.8 million and the non-cash mark-to-market unrealized loss for the derivatives contracts not designated as hedges was $73.5 million. This is compared to cash receipts of $82.4 million on derivatives contracts not designated as hedges and a $239.3 million non-cash mark-to-market unrealized loss on contracts not designated as hedges in 2009. To better understand the Company's derivatives positions and their impact on the Company's statement of operations, please see the "summary production and price data" and "derivatives information" tables at the end of this press release.

Liquidity

At December 31, 2010, the Company's total debt balance was approximately $1.7 billion, of which $613.5 million was outstanding under the Company's credit facility. The Company's borrowing base under its credit facility is $2.0 billion, and approximately $1.4 billion was available to be borrowed at December 31, 2010.

Operations

During 2010, the Company commenced the drilling of or participated in a total of 662 gross wells (565 operated), of which 503 had been completed as producers, 158 of which were in progress and one of which was an unsuccessful exploratory dry hole at December 31, 2010. Currently, the Company is operating 31 drilling rigs, all in the Permian Basin. Twelve of these rigs are drilling Yeso wells on the New Mexico Shelf, thirteen are drilling Wolfberry wells in the Texas Permian, five are drilling Bone Spring wells in the Delaware Basin and one is drilling Lower Abo wells on the New Mexico Shelf.

New Mexico Shelf

During the fourth quarter of 2010, the Company drilled 75 wells (69 operated) on its New Mexico Shelf assets, which includes both the Yeso and the Lower Abo, with a 100% success rate on the 32 wells that had been completed by December 31, 2010. During 2010, the Company drilled 270 wells (248 operated) on the New Mexico Shelf.

Texas Permian

During the fourth quarter of 2010, the Company drilled 87 wells (all operated) on its Texas Permian assets, with a 100% success rate on the 6 wells that had been completed by December 31, 2010. During 2010, the Company drilled 313 wells (301 operated) in the Texas Permian.

Delaware Basin

During the fourth quarter of 2010, the Company drilled 19 wells (15 operated) on its Delaware Basin assets. Prior to the acquisition, the Company drilled 6 wells (1 operated) and Marbob drilled 21 wells (19 operated) on its Delaware Basin assets in 2010. During 2010, the Company and Marbob drilled 46 wells (35 operated) on its Delaware Basin assets with a 100% success rate on the 14 wells completed by year end.

Bakken

During the first quarter of 2011, the Company initiated a divestment process on its Bakken assets, which it expects to conclude during the first half of 2011. The Company participated in 11 Bakken wells during the fourth quarter of 2010, and 52 Bakken wells during 2010.

Non-Core Permian Asset Divestiture

Fourth quarter 2010 production included approximately 1,400 Boe per day of production associated with our divestiture of non-core Permian Basin assets. Excluding this divested production, fourth quarter 2010 total production would have been approximately 4.9 MMBoe. In addition, oil and gas production expense, excluding these properties, would have been lower in the fourth quarter 2010 since these properties have a higher lease operating expense than our current properties. The historical results of operations, including the gain on the sale, are reflected as discontinued operations in the statements of operations.

Derivative Update

During the fourth quarter and early into the first quarter, the Company has continued to add to its oil derivative positions. For 2011, the Company has 10.4 MMBbls of oil and 12.3 Bcf of natural gas hedged. For 2012, the Company currently has 8.0 MMBbls of oil and 0.3 Bcf of natural gas hedged. Please refer to the attached table for more detailed information about the Company's current derivative positions.

Conference Call Information

The Company will host a conference call on Thursday, February 24, 2011, at 9:00 a.m. CST (10:00 a.m. EST) to discuss its fourth quarter and full year 2010 financial and operating results. Interested parties may listen to the conference call via the Company's website at http://www.conchoresources.com or by dialing (866) 700-0133 (passcode: 50400949). A replay of the conference call will be available on the Company's website or by dialing (888) 286-8010 (passcode: 83572946).

Forward-Looking Statements and Cautionary Statements

The foregoing contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include statements, estimates and projections regarding the Company's future financial position, liquidity and capital resources, operations, performance, business strategy, returns, capital expenditure budgets, oil and natural gas reserves, number of identified drilling locations, the timing and success of specific projects, outcomes and effects of litigation, claims and disputes, potential financing, levels of production, drilling program, derivative activities, costs and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the factors discussed or referenced in the "Risk Factors" section of the Company's most recent Form 10-K and Form 10-Q filings and risks relating to sustained or further declines in the prices we receive for our oil and natural gas; uncertainties about the estimated quantities of oil and natural gas reserves; risks related to the integration of the Marbob assets and employees with our operations; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing; drilling and operating risks; the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing capacity under our credit facility; difficult and adverse conditions in the domestic and global capital and credit markets; risks related to the concentration of our operations in the Permian Basin of Southeast New Mexico and West Texas; potential financial losses or earnings reductions from our commodity price risk management program; shortages of oilfield equipment, services and qualified personnel and increases in costs for such equipment, services and personnel; risks and liabilities associated with acquired properties or businesses; uncertainties about our ability to successfully execute our business and financial plans and strategies; uncertainties about our ability to replace reserves and economically develop our current reserves; general economic and business conditions, either internationally or domestically or in the jurisdictions in which we operate; competition in the oil and natural gas industry; uncertainty concerning our assumed or possible future results of operations; our existing indebtedness, as well as the significant increase in our indebtedness as a result of the Marbob acquisition; and other important factors that could cause actual results to differ materially from those projected.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Concho Resources Inc.

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company's operations are focused in the Permian Basin of Southeast New Mexico and West Texas. In addition, the Company is involved in a number of emerging plays. For more information, visit Concho's website at www.conchoresources.com.

The following table sets forth summary information from our continuing and discontinued operations concerning our production and operating data for the periods indicated:

The presentation of average prices with derivatives is a non-GAAP measure as a result of including the cash payments on/receipts from commodity derivatives that are presented in gain (loss) on derivatives not designated as hedges in the statements of operations. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.

The following table sets forth summary information from our continuing operations concerning production and operating data for the periods indicated:

The presentation of average prices with derivatives is a non-GAAP measure as a result of including the cash payments on/receipts from commodity derivatives that are presented in gain (loss) on derivatives not designated as hedges in the statements of operations. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.

EBITDAX (as defined below) is presented herein, and reconciled from the generally accepted accounting principle ("GAAP") measure of net income because of its wide acceptance by the investment community as a financial indicator of a company's ability to internally fund exploration and development activities.

We define EBITDAX as net income (loss), plus (1) exploration and abandonments expense, (2) depreciation, depletion and amortization expense, (3) accretion expense, (4) impairments of long-lived assets, (5) non-cash stock-based compensation expense, (6) bad debt expense, (7) unrealized (gain) loss on derivatives not designated as hedges, (8) (gain) loss on sale of assets, (9) interest expense, (10) federal and state income taxes, and (11) similar items listed above that are presented in discontinued operations. EBITDAX is not a measure of net income or cash flow as determined by GAAP.

Our EBITDAX measure provides additional information which may be used to better understand our operations. EBITDAX is one of several metrics that we use as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to, or more meaningful than, net income, as an indicator of our operating performance. Certain items excluded from EBITDAX are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic cost of depreciable assets, none of which are components of EBITDAX. EBITDAX as used by us may not be comparable to similarly titled measures reported by other companies. We believe that EBITDAX is a widely followed measure of operating performance and is one of many metrics used by our management team and by other users of our consolidated financial statements. For example, EBITDAX can be used to assess our operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure, and to assess the financial performance of our assets and our company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of net income (loss) to EBITDAX:

The following tables provide information that the Company believes may be useful to investors who follow the practice of some industry analysts who adjust reported company earnings and cash flow from operating activities to match realizations to production settlement months and make other adjustments to exclude certain non-cash items. The following table provides a reconciliation of net income (loss) (GAAP) to adjusted net income (non-GAAP):

The following table provides a reconciliation of cash flow from operating activities (GAAP) to adjusted cash flow (non-GAAP):

The following table provides the costs incurred for the three and twelve months ended December 31, 2010 and 2009:

The table below provides data associated with our derivatives at February 23, 2011.

SOURCE: Concho Resources Inc.

Concho Resources Inc.
Toffee McAlister, 432-683-7443
Director, Investor Relations and Corporate Communication