Midland’s Concho Resources reported a rising profit and increased oil production for the third quarter, helping to right the ship after disastrous results earlier this year.
Photo: Daniel Acker, Bloomberg
Fairly or not, Concho was pegged as a poster child for weakening returns in the booming Permian Basin after its so-called Dominator project spaced 23 wells too closely together and led to disappointing production results. Concho’s stock price plunged by about 33 percent after July when the Dominator results were revealed.
But Concho’s third-quarter results are proving much healthier. The company posted a net profit of $558 million compared to a nearly $200 million loss during the same quarter last year.
Oil revenues ticked up slightly, but the natural gas revenues plummeted by 60 percent from last year. Total revenues of more than $1.1 billion fell by 6 percent.
Concho Chief Executive Tim Leach acknowledged the second quarter “undermined” Concho’s strong history and that the company has “course corrected” and will operate more conservatively moving forward with less risky experimentation.
“We’re going to run a steady ship,” Leach said Wednesday morning. “I’m confident that Concho hasn’t lost our ability to execute.”
He emphasized that – starting with this past summer – Concho is spacing its wells farther apart and not risking having the wells interfere with each other or even collapse into one another.
The industry, including Concho, has “gotten religion” regarding more conservative spending discipline in the Permian.
