e424b2
The
information in this preliminary prospectus supplement is not
complete and may be changed. This preliminary prospectus
supplement and the accompanying prospectus are part of an
effective registration statement filed with the Securities and
Exchange Commission. This preliminary prospectus supplement and
the accompanying prospectus are not an offer to sell nor do they
seek an offer to buy these securities in any jurisdiction where
the offer or sale is not permitted.
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Filed pursuant to Rule 424(b)(2)
Registration No. 333-161809
Subject to completion, dated
December 7, 2010
Preliminary prospectus supplement
(To prospectus dated September 9, 2009)
Concho Resources Inc.
2,300,000 Shares
Common Stock
We are offering 2,300,000 shares of our common stock.
Our common stock is listed on the New York Stock Exchange under
the symbol CXO. On December 6, 2010, the last
sale price of the shares as reported on the New York Stock
Exchange was $87.01 per share.
Investing in our common stock involves risk. See
Risk Factors beginning on
page S-10
of this prospectus supplement.
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Per Share
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Total
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Public offering price
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$
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$
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Underwriting discount
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$
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$
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Proceeds, before expenses, to us
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$
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$
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The underwriters also have the option to purchase up to an
additional 345,000 shares from us, at the public offering
price, less the underwriting discount, within 30 days from
the date of this prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The shares will be ready for delivery on or about
December , 2010.
Joint Book-Running
Managers
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Goldman,
Sachs & Co. |
Barclays Capital |
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J.P.
Morgan |
Raymond James |
December , 2010
TABLE OF
CONTENTS
Prospectus
Supplement
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S-ii
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S-ii
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S-iii
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S-1
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S-10
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S-12
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S-13
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S-14
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S-14
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S-15
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S-19
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S-24
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S-25
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S-25
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Prospectus
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2
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S-i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the prospectus
supplement and the documents incorporated by reference herein,
which describes the specific terms of this offering of our
common stock. The second part is the accompanying prospectus,
which gives more general information, some of which may not
apply to our common stock or this offering. If the information
relating to the offering varies between the prospectus
supplement and the accompanying prospectus, you should rely on
the information in this prospectus supplement.
You should rely only on the information contained in or
incorporated by reference into this prospectus supplement, the
accompanying prospectus and any related free writing prospectus.
We have not authorized any dealer, salesman or other person to
provide you with additional or different information. If anyone
provides you with different or inconsistent information, you
should not rely on it. This prospectus supplement and the
accompanying prospectus are not an offer to sell or the
solicitation of an offer to buy any securities other than the
securities to which they relate and are not an offer to sell or
the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make an
offer or solicitation in that jurisdiction. You should not
assume that the information contained in this prospectus
supplement is accurate as of any date other than the date on the
front cover of this prospectus supplement, or that the
information contained in any document incorporated by reference
is accurate as of any date other than the date of the document
incorporated by reference, regardless of the time of delivery of
this prospectus supplement or any sale of a security.
Unless otherwise indicated or the context otherwise requires,
all references in this prospectus supplement to we,
our, us, the Company or
Concho are to Concho Resources Inc., a Delaware
corporation, and its subsidiaries.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other
information with the Securities and Exchange Commission (the
SEC) (File
No. 001-33615)
pursuant to the Securities Exchange Act of 1934 (the
Exchange Act). You may read and copy any documents
that are filed at the SECs public reference room at
100 F Street, N.E., Washington, D.C. 20549. You
may also obtain copies of these documents at prescribed rates
from the public reference section of the SEC at its Washington
address. Please call the SEC at
1-800-SEC-0330
for further information.
Our filings are also available to the public through the
SECs website at
http://www.sec.gov.
The SEC allows us to incorporate by reference
information that we file with them, which means that we can
disclose important information to you by referring you to
documents previously filed with the SEC. The information
incorporated by reference is an important part of this
prospectus supplement, and the information that we later file
with the SEC will automatically update and supersede this
information. The following documents we filed with the SEC
pursuant to the Exchange Act are incorporated herein by
reference:
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our Annual Report on
Form 10-K
for the year ended December 31, 2009;
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our Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2010, June 30, 2010
and September 30, 2010; and
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our Current Reports on
Form 8-K
and
Form 8-K/A
filed on January 25, 2010, January 29, 2010,
March 1, 2010, April 29, 2010, May 11, 2010,
June 15, 2010, June 18, 2010, July 20, 2010,
September 29, 2010, October 13, 2010, November 8,
2010 and December 1, 2010 (excluding any information
furnished pursuant to Item 2.02 or Item 7.01 of any
such Current Report on
Form 8-K).
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These reports contain important information about us, our
financial condition and our results of operations.
S-ii
All future documents filed pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act (excluding any
information furnished pursuant to Item 2.02 or
Item 7.01 on any Current Report on
Form 8-K)
before the termination of the offering of securities under this
prospectus supplement shall be deemed to be incorporated in this
prospectus supplement by reference and to be a part hereof from
the date of filing of such documents. Any statement contained
herein, or in a document incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this prospectus supplement to the
extent that a statement contained herein or in any subsequently
filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of
this prospectus supplement.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address and telephone number:
Concho Resources Inc.
550 West Texas Avenue, Suite 100
Midland, Texas 79701
Attention: General Counsel
(432) 683-7443
We also maintain a website at
http://www.conchoresources.com.
However, the information on our website is not part of this
prospectus supplement.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in or incorporated by reference
into this prospectus supplement that express a belief,
expectation, or intention, or that are not statements of
historical fact, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 (the
Securities Act) and Section 21E of the Exchange
Act. These forward-looking statements include statements,
projections and estimates concerning our operations,
performance, business strategy, oil and natural gas reserves,
drilling program, capital expenditures, liquidity and capital
resources, the timing and success of specific projects, outcomes
and effects of litigation, claims and disputes, derivative
activities and potential financing. Forward-looking statements
are generally accompanied by words such as estimate,
project, predict, believe,
expect, anticipate,
potential, could, may,
foresee, plan, goal or other
words that convey the uncertainty of future events or outcomes.
Forward-looking statements are not guarantees of performance. We
have based these forward-looking statements on our current
expectations and assumptions about future events. These
statements are based on certain assumptions and analyses made by
us in light of our experience and our perception of historical
trends, current conditions and expected future developments as
well as other factors we believe are appropriate under the
circumstances. Actual results may differ materially from those
implied or expressed by the forward-looking statements. These
forward-looking statements speak only as of the date of this
prospectus supplement, or if earlier, as of the date they were
made. We disclaim any obligation to update or revise these
statements unless required by securities law, and we caution you
not to rely on them unduly. While our management considers these
expectations and assumptions to be reasonable, they are
inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and
uncertainties relating to, among other matters, the risks
discussed in Risk Factors, our Annual Report on
Form 10-K
for the year ended December 31, 2009, our Quarterly Reports
on
Form 10-Q
for the quarters ended March 31, 2010, June 30, 2010
and September 30, 2010 and our subsequent SEC filings, as
well as those factors summarized below:
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sustained or further declines in the prices we receive for our
oil and natural gas;
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uncertainties about the estimated quantities of oil and natural
gas reserves;
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risks related to the integration of the assets of Marbob Energy
Corporation and its former employees with our operations;
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S-iii
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drilling and operating risks;
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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;
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the effects of government regulation, permitting and other legal
requirements, including new legislation or regulation of
hydraulic fracturing;
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difficult and adverse conditions in the domestic and global
capital and credit markets;
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risks related to the concentration of our operations in the
Permian Basin of Southeast New Mexico and West Texas;
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potential financial losses or earnings reductions from our
commodity price risk management program;
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shortages of oilfield equipment, services and qualified
personnel and increased costs for such equipment, services and
personnel;
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risks and liabilities associated with acquired properties or
businesses, including the assets acquired in connection with
each of our recent acquisitions;
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uncertainties about our ability to successfully execute our
business and financial plans and strategies;
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uncertainties about our ability to replace reserves and
economically develop our current reserves;
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general economic and business conditions, either internationally
or domestically or in the jurisdictions in which we operate;
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competition in the oil and natural gas industry;
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uncertainty concerning our assumed or possible future results of
operations; and
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our existing indebtedness, as well as the increase in our
indebtedness as a result of our recent acquisitions.
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Reserve engineering is a process of estimating underground
accumulations of oil and natural gas that cannot be measured in
an exact way. The accuracy of any reserve estimate depends on
the quality of available data, the interpretation of such data
and price and cost assumptions made by our reserve engineers. In
addition, the results of drilling, testing and production
activities may justify revisions of estimates that were made
previously. If significant, such revisions would change the
schedule of any further production and development drilling.
Accordingly, reserve estimates may differ from the quantities of
oil and natural gas that are ultimately recovered.
S-iv
SUMMARY
This summary highlights selected information contained
elsewhere in this prospectus supplement, the accompanying
prospectus and the documents we incorporate by reference. It
does not contain all of the information you should consider
before making an investment decision. You should read the entire
prospectus supplement, the accompanying prospectus, the
documents incorporated by reference and the other documents to
which we refer for a more complete understanding of our business
and this offering. Please read the section entitled Risk
Factors commencing on
page S-10
of this prospectus supplement and additional information
contained in our Annual Report on
Form 10-K
for the year ended December 31, 2009 and our Quarterly
Reports on
Form 10-Q
for the quarters ended March 31, 2010, June 30, 2010
and September 30, 2010 incorporated by reference in this
prospectus supplement for more information about important
factors you should consider before investing in our common stock
in this offering.
In this prospectus supplement, we present, on a pro
forma as adjusted basis, certain reserve, operating and
capitalization data giving effect to our recent acquisitions of
certain oil and natural gas properties from Marbob Energy
Corporation and certain related sellers and from Apache
Corporation. In addition, we also present certain financial,
operating and capitalization data on a pro forma
basis, giving effect to our acquisition from Marbob Energy
Corporation and certain related sellers (but not Apache
Corporation). Neither our presentation of information on a
pro forma as adjusted basis nor on a pro
forma basis gives effect to our pending disposition of oil
and natural gas properties to Legacy Reserves LP. For a
discussion of these acquisitions and divestitures, see
Recent Developments.
Our
Business
We are an independent oil and natural gas company engaged in the
acquisition, development and exploration of oil and natural gas
properties. Our core operating areas are located in the Permian
Basin region of Southeast New Mexico and West Texas, a large
onshore oil and natural gas basin in the United States. The
Permian Basin is one of the most prolific oil and natural gas
producing regions in the United States and is characterized by
an extensive production history, mature infrastructure, long
reserve life, multiple producing horizons and enhanced recovery
potential. We refer to our three core operating areas as the
(i) New Mexico Shelf, where we primarily target the Yeso
formation, (ii) Delaware Basin, where we primarily target
the Bone Spring formation, and (iii) Texas Permian, where
we primarily target the Wolfberry, a term applied to the
combined Wolfcamp and Spraberry horizons. We intend to grow our
reserves and production through development drilling and
exploration activities on our multi-year project inventory and
through acquisitions that meet our strategic and financial
objectives.
At June 30, 2010 and after giving pro forma as adjusted
effect to the acquisitions described below in
Recent Developments Recent
Acquisitions, we had estimated net proved oil and natural
gas reserves of 306.4 MMBoe. In addition, we have hedged
over 53 percent of our anticipated oil and natural gas
production for 2011. Our strong hedge position and our ability
to generate free cash flow enhance our ability to perform in
volatile economic conditions.
Important characteristics of our reserve base on a pro forma as
adjusted basis at June 30, 2010 include 64.7 percent
oil and 35.3 percent natural gas and standardized measure
of discounted future net cash flows of $3,479.5 million and
PV-10 of
$5,153.5 million. We set forth our definition of
PV-10 (a
non-GAAP financial measure) and a reconciliation of
PV-10 to the
standardized measure of discounted net cash flows under
Non-GAAP Financial Measures and
Reconciliations.
We seek to operate the wells in which we own an interest. We
operated wells that accounted for 91.6 percent of our net
proved developed producing
PV-10 and
64.9 percent of our 5,569 gross wells at June 30,
2010, on a pro forma as adjusted basis. By controlling
operations, we are able to more effectively manage the cost and
timing of exploration and development of our properties,
including the drilling and stimulation methods used.
S-1
The following table provides a summary of selected operating
information in our core operating areas and our other oil and
natural gas assets.
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Pro Forma As Adjusted at
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Pro Forma As Adjusted at
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20101, 2,
3
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September 30,
20101,
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Total Net Proved
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Reserves
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% Proved
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Gross Identified
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Total Gross
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Total Net
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(Mboe)
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% Oil
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Developed
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Drilling Locations
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Acreage
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Acreage
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Core operating areas:
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New Mexico Shelf
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190,272
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65.0
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57.8
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3,034
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202,143
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117,802
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Delaware Basin
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26,338
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41.4
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78.3
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862
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243,701
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145,082
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Texas Permian
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85,125
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70.7
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46.7
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1,755
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285,064
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89,808
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Other
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4,700
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74.7
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44.1
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%
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290
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212,230
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85,530
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Total
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306,435
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64.7
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56.3
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5,941
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4
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943,138
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438,222
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(1) |
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Gives pro forma effect to additional oil and natural gas
properties we acquired in the acquisitions described below in
Recent Developments Recent
Acquisitions. |
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Based on our internally-prepared reserve estimates at
June 30, 2010, which have not been reviewed or audited by
our independent reserve engineers. See Summary
Pro Forma As Adjusted Reserve and Pro Forma Operating Data. |
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Includes estimated reserves, drilling locations and acreage
associated with oil and natural gas properties to be sold to
Legacy Reserves LP. For more information, see
Recent Developments Permian Asset
Divestiture. |
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Of the 5,941 gross identified drilling locations, 1,897
locations were associated with proved reserves, based on our
internally-generated reserve estimates at June 30, 2010. |
For more information about our proved reserves on a pro forma as
adjusted basis giving effect to the acquisitions described
below, see Summary Pro Forma As Adjusted
Reserve and Pro Forma Operating Data.
Recent
Developments
Recent
Acquisitions
Marbob Acquisition. On July 19, 2010, we
entered into an asset purchase agreement with Marbob Energy
Corporation and certain related sellers (collectively,
Marbob) to acquire (the Marbob
Acquisition, and together with the concurrent credit
facility amendment and private placement described below, the
Marbob Transactions) substantially all of
Marbobs oil and natural gas leases, interests, properties
and related assets. In October 2010, we closed the Marbob
Acquisition for aggregate consideration of approximately
$1.4 billion. The properties acquired in the Marbob
Acquisition are primarily located in the Permian Basin of
Southeast New Mexico, including a large acreage position
contiguous to our core Yeso play on the Southeast New Mexico
Shelf and a significant acreage position in the Bone Spring play
in the Delaware Basin.
Aggregate consideration paid to Marbob consisted of
approximately $1.1 billion of cash, the issuance of
approximately 1.1 million shares of our common stock and a
$150 million 8.0% senior unsecured note issued to
Marbob due in 2018. The cash consideration was funded with
borrowings under our credit facility and with proceeds from a
concurrent $300 million private placement of our common
stock.
Settlement Acquisition. Subsequently in
October 2010, in connection with the settlement of our
litigation with BP America Production Company and Apache
Corporation (Apache) related to certain preferential
purchase rights associated with the Marbob Acquisition, we
acquired from Apache (the Settlement Acquisition,
and together with the Marbob Transactions, the
Acquisitions) additional oil and natural gas assets
in the Permian Basin of Southeast New Mexico for approximately
$286 million. As a result of this acquisition, Apache will
be our partner in, and will serve as the operator on,
substantially all of the properties acquired in the Settlement
Acquisition.
S-2
Credit
Agreement Amendment and Borrowing Base Increase
On October 7, 2010, we and our bank lenders entered into an
amendment to our credit agreement. The amendment increased each
of the borrowing base and the lenders aggregate commitment
from $1.2 billion to $2.0 billion.
At September 30, 2010, on a pro forma as adjusted basis
after giving effect to the Acquisitions, we would have had
approximately $1.5 billion of secured indebtedness
outstanding under our credit facility and we would have been
able to incur an additional $0.5 billion of indebtedness
under our credit facility. At November 30, 2010, we had
approximately $1.5 billion of indebtedness outstanding
under our credit facility.
In November 2010, we further amended our credit agreement to
(i) allow us to issue up to an additional $600 million
of senior unsecured notes, which will include the
$350 million of notes discussed below under
The Offering Registered Senior
Notes Offering and (ii) provide that our borrowing
base will not be reduced as a result of the issuance of up to
$600 million of senior unsecured notes, including the notes
discussed in The Offering
Registered Senior Notes Offering.
2011
Capital Budget
In November 2010, we announced a capital budget for 2011 of
approximately $1.1 billion. Of the approximately
$940 million dedicated to drilling and recompletion
projects in our core areas, approximately $580 million will
be dedicated to our New Mexico Shelf assets (primarily in the
Yeso play), approximately $220 million will be dedicated to
our Texas Permian assets (primarily in the Wolfberry play) and
approximately $140 million will be dedicated to our
Delaware Basin assets (primarily in the Bone Spring play). On
our New Mexico Shelf assets, we plan to drill approximately 540
Yeso wells and 13 Lower Abo wells. On our Texas Permian assets,
we plan to drill approximately 210 Wolfberry wells. On our
Delaware Basin assets, we plan to drill approximately 50 Bone
Spring wells. The remaining approximately $160 million of
capital will be allocated between leasehold acquisition,
geological and geophysical costs and other costs (approximately
$60 million) and facilities (approximately
$100 million).
Permian
Asset Divestiture
On November 5, 2010, we entered into an agreement to sell
certain of our Permian Basin oil and natural gas properties to
Legacy Reserves LP for cash consideration of $105 million.
We expect to use the net proceeds from this asset divestiture to
repay a portion of the outstanding borrowings under our credit
facility. For the three months ended September 30, 2010,
the properties to be sold produced an average of approximately
1,500 Boe per day, of which approximately 45 percent was
crude oil. Based on our internal estimates at June 30,
2010, the properties to be sold included net proved reserves of
approximately 6.0 MMBoe. This divestiture, which we expect
to close in December 2010, is subject to customary closing
conditions, and we can provide no certainty that it will close.
Corporate
Information
We are a Delaware corporation formed in February 2006. Our
principal executive offices are located at 550 West Texas
Avenue, Suite 100, Midland, Texas 79701. Our common stock
is listed on the New York Stock Exchange under the symbol
CXO. We maintain a web site at
http://www.conchoresources.com.
However, the information on our website is not part of this
prospectus supplement, and you should rely only on the
information contained in this prospectus supplement and in the
documents incorporated herein by reference when making a
decision as to whether to buy our common stock in this offering.
S-3
THE
OFFERING
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Issuer |
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Concho Resources Inc. |
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Shares of common stock offered |
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2,300,000 shares. |
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Option to purchase additional shares |
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The underwriters also have the option to purchase up to an
additional 345,000 shares from us, at the public offering
price, less the underwriting discount, within 30 days from
the date of this prospectus supplement. |
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Shares of common stock outstanding following this
offering1 |
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102,192,421 shares (102,537,421 shares if the
underwriters exercise their option to purchase additional shares
in full). |
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Use of proceeds |
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We will use the estimated net proceeds from this offering of
approximately $ million (or
$ million if the underwriters
exercise their option to purchase additional shares in full) to
repay a portion of the outstanding borrowings under our credit
facility. For more information about our use of proceeds from
this offering and the registered senior notes offering, see
Use of Proceeds. |
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Conflicts of interest |
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We intend to use at least 5% of the net proceeds of this
offering to repay indebtedness owed by us to certain affiliates
of the underwriters who are lenders under our credit facility.
See Use of Proceeds. Accordingly, this offering is
being made in compliance with the requirements of NASD Conduct
Rule 2720 of the Financial Industry Regulatory Authority.
In accordance with that rule, no qualified independent
underwriter is required, because a bona fide public market
exists in the shares, as that term is defined in the rule. For
more information, see Conflicts of Interest. |
|
|
|
(1) |
|
Based on 99,892,421 shares outstanding as of
November 30, 2010. |
Unless we indicate otherwise or the context otherwise requires,
all of the information in this prospectus supplement:
|
|
|
|
|
assumes no exercise of the underwriters option to purchase
additional shares; and
|
|
|
|
does not reflect as of November 30, 2010: (i)
1,623,930 shares of our common stock potentially issuable
pursuant to the exercise of outstanding stock options held by
our directors, officers and employees or (ii)
1,084,029 shares available for issuance under our 2006
Stock Incentive Plan.
|
Registered
Senior Notes Offering
Shortly following the pricing of this offering, subject to
market conditions, we expect to offer approximately
$350 million aggregate principal amount of our senior notes
due 2021 in a registered public offering. The size of the senior
notes offering may be increased or decreased depending on market
conditions, or we may decide not to undertake the offering at
all. We intend to use the net proceeds from the senior notes
offering to repay outstanding borrowings under our credit
facility. The completion of this common stock offering is not
conditioned upon the completion of the public offering of senior
notes, and vice versa. We cannot give any assurance that the
senior notes offering will be completed. Please see Use of
Proceeds and Capitalization.
S-4
RISK
FACTORS
Investing in our common stock involves substantial risk. You
should carefully consider the risk factors set forth in the
section entitled Risk Factors and the other
information contained in this prospectus supplement and the
accompanying prospectus and the documents incorporated by
reference therein, prior to making an investment in our common
stock. See Risk Factors beginning on
page S-10.
S-5
Summary
Consolidated Historical and Pro Forma Financial Data
Set forth below is our summary consolidated historical and pro
forma financial data for the periods indicated. The historical
financial data for the fiscal years ended December 31,
2009, 2008 and 2007 and the balance sheet data at
December 31, 2009 and 2008 have been derived from our
audited financial statements incorporated by reference in this
prospectus supplement. The balance sheet data at
December 31, 2007 has been derived from our audited
financial statements that are not incorporated by reference in
this prospectus supplement. The historical financial data for
the nine months ended September 30, 2010 and 2009 and the
balance sheet data at September 30, 2010 have been derived
from our unaudited financial statements incorporated by
reference in this prospectus supplement and include all
adjustments, consisting of normal recurring adjustments,
necessary for a fair statement of this information. The balance
sheet data at September 30, 2009 was derived from our
unaudited financial statements that are not incorporated by
reference in this prospectus supplement and includes all
adjustments, consisting of normal recurring adjustments,
necessary for a fair statement of this information. The
unaudited pro forma balance sheet data at September 30,
2010 gives effect to the Marbob Transactions as if they had
occurred on September 30, 2010, and the unaudited pro forma
financial data for the nine months ended September 30, 2010
and the year ended December 31, 2009 gives effect to the
Marbob Transactions as if they had occurred on January 1,
2009, each of which is incorporated by reference in this
prospectus supplement. You should read the following summary
financial data in conjunction with Recent
Developments included elsewhere in this prospectus
supplement and Managements Discussion and Analysis
of Financial Condition and Results of Operations in our
Annual Report on
Form 10-K
for the year ended December 31, 2009 and our Quarterly
Report on
Form 10-Q
for the three months ended September 30, 2010, each of
which is incorporated by reference herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
|
|
|
|
|
|
|
|
|
|
|
Forma Nine
|
|
|
|
|
|
|
|
|
Forma Year
|
|
|
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
Nine Months
|
|
|
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
Ended September 30,
|
|
|
December 31,
|
|
|
Year Ended December 31,
|
|
|
|
20101
|
|
|
2010
|
|
|
2009
|
|
|
20091
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil sales
|
|
$
|
642,742
|
|
|
$
|
528,129
|
|
|
$
|
287,786
|
|
|
$
|
532,453
|
|
|
$
|
425,361
|
|
|
$
|
390,945
|
|
|
$
|
195,596
|
|
Natural gas sales
|
|
|
202,654
|
|
|
|
140,077
|
|
|
|
79,042
|
|
|
|
173,109
|
|
|
|
119,086
|
|
|
|
142,844
|
|
|
|
98,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenues
|
|
|
845,396
|
|
|
|
668,206
|
|
|
|
366,828
|
|
|
|
705,562
|
|
|
|
544,447
|
|
|
|
533,789
|
|
|
|
294,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and natural gas production
|
|
|
162,208
|
|
|
|
122,220
|
|
|
|
76,022
|
|
|
|
142,384
|
|
|
|
108,118
|
|
|
|
91,234
|
|
|
|
54,267
|
|
Exploration and abandonments
|
|
|
5,798
|
|
|
|
5,798
|
|
|
|
10,195
|
|
|
|
10,763
|
|
|
|
10,660
|
|
|
|
38,468
|
|
|
|
29,098
|
|
Depreciation, depletion and amortization
|
|
|
249,351
|
|
|
|
169,844
|
|
|
|
157,985
|
|
|
|
273,549
|
|
|
|
206,143
|
|
|
|
123,912
|
|
|
|
76,779
|
|
Accretion of discount on asset retirement obligations
|
|
|
1,520
|
|
|
|
1,177
|
|
|
|
799
|
|
|
|
1,583
|
|
|
|
1,058
|
|
|
|
889
|
|
|
|
444
|
|
Impairments of long-lived assets
|
|
|
9,234
|
|
|
|
9,234
|
|
|
|
9,686
|
|
|
|
13,065
|
|
|
|
12,197
|
|
|
|
18,417
|
|
|
|
7,267
|
|
General and administrative
|
|
|
63,369
|
|
|
|
46,141
|
|
|
|
38,633
|
|
|
|
63,467
|
|
|
|
52,277
|
|
|
|
40,776
|
|
|
|
25,177
|
|
Bad debt expense
|
|
|
578
|
|
|
|
578
|
|
|
|
|
|
|
|
(1,035
|
)
|
|
|
(1,035
|
)
|
|
|
2,905
|
|
|
|
|
|
Contract drilling fees stacked rigs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,269
|
|
Ineffective portion of cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,336
|
)
|
|
|
821
|
|
(Gain) loss on derivatives not designated as hedges
|
|
|
(62,229
|
)
|
|
|
(62,229
|
)
|
|
|
94,435
|
|
|
|
156,857
|
|
|
|
156,857
|
|
|
|
(249,870
|
)
|
|
|
20,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
|
|
429,829
|
|
|
|
292,763
|
|
|
|
387,755
|
|
|
|
660,633
|
|
|
|
546,275
|
|
|
|
65,395
|
|
|
|
218,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
415,567
|
|
|
|
375,443
|
|
|
|
(20,927
|
)
|
|
|
44,929
|
|
|
|
(1,828
|
)
|
|
|
468,394
|
|
|
|
75,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(66,762
|
)
|
|
|
(34,293
|
)
|
|
|
(17,379
|
)
|
|
|
(69,072
|
)
|
|
|
(28,292
|
)
|
|
|
(29,039
|
)
|
|
|
(36,042
|
)
|
Other, net
|
|
|
(435
|
)
|
|
|
(3,898
|
)
|
|
|
(348
|
)
|
|
|
(412
|
)
|
|
|
(414
|
)
|
|
|
1,432
|
|
|
|
1,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
|
(67,197
|
)
|
|
|
(38,191
|
)
|
|
|
(17,727
|
)
|
|
|
(69,484
|
)
|
|
|
(28,706
|
)
|
|
|
(27,607
|
)
|
|
|
(34,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
|
|
|
|
|
|
|
|
|
|
|
Forma Nine
|
|
|
|
|
|
|
|
|
Forma Year
|
|
|
|
|
|
|
|
|
|
|
|
|
Months Ended
|
|
|
Nine Months
|
|
|
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
Ended September 30,
|
|
|
December 31,
|
|
|
Year Ended December 31,
|
|
|
|
20101
|
|
|
2010
|
|
|
2009
|
|
|
20091
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Income (loss) before income taxes
|
|
|
348,370
|
|
|
|
337,252
|
|
|
|
(38,654
|
)
|
|
|
(24,555
|
)
|
|
|
(30,534
|
)
|
|
|
440,787
|
|
|
|
41,379
|
|
Income tax (expense) benefit
|
|
|
(129,202
|
)
|
|
|
(124,766
|
)
|
|
|
11,973
|
|
|
|
18,346
|
|
|
|
20,732
|
|
|
|
(162,085
|
)
|
|
|
(16,019
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
219,168
|
|
|
|
212,486
|
|
|
|
(26,681
|
)
|
|
|
(6,209
|
)
|
|
|
(9,802
|
)
|
|
|
278,702
|
|
|
|
25,360
|
|
Preferred stock dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) applicable to common shareholders
|
|
$
|
219,168
|
|
|
$
|
212,486
|
|
|
$
|
(26,681
|
)
|
|
$
|
(6,209
|
)
|
|
$
|
(9,802
|
)
|
|
$
|
278,702
|
|
|
$
|
25,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
|
$
|
402,756
|
|
|
$
|
232,078
|
|
|
|
|
|
|
$
|
359,546
|
|
|
$
|
391,397
|
|
|
$
|
169,769
|
|
Net cash used in investing activities
|
|
|
|
|
|
|
(512,824
|
)
|
|
|
(241,878
|
)
|
|
|
|
|
|
|
(586,148
|
)
|
|
|
(946,050
|
)
|
|
|
(160,353
|
)
|
Net cash provided by financing activities
|
|
|
|
|
|
|
107,191
|
|
|
|
7,743
|
|
|
|
|
|
|
|
212,084
|
|
|
|
541,981
|
|
|
|
19,886
|
|
Capital expenditures on oil and natural gas properties
|
|
|
|
|
|
$
|
486,903
|
|
|
$
|
316,756
|
|
|
|
|
|
|
$
|
403,798
|
|
|
$
|
347,702
|
|
|
$
|
162,378
|
|
|
|
|
(1) |
|
Gives pro forma effect to the Marbob Transactions, but does not
give pro forma effect to the Settlement Acquisition. See
Recent Developments Recent
Acquisitions. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited Pro
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
20101
|
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
357
|
|
|
$
|
357
|
|
|
$
|
15,695
|
|
|
$
|
3,234
|
|
|
$
|
17,752
|
|
|
$
|
30,424
|
|
Property and equipment, net
|
|
|
4,546,218
|
|
|
|
3,195,898
|
|
|
|
2,528,172
|
|
|
|
2,856,289
|
|
|
|
2,401,404
|
|
|
|
1,394,994
|
|
Total assets
|
|
|
4,927,630
|
|
|
|
3,541,675
|
|
|
|
2,821,526
|
|
|
|
3,171,085
|
|
|
|
2,815,203
|
|
|
|
1,508,229
|
|
Long-term debt, including current maturities
|
|
|
1,708,3342
|
|
|
|
688,620
|
|
|
|
645,747
|
|
|
|
845,836
|
|
|
|
630,000
|
|
|
|
327,404
|
|
Stockholders equity
|
|
|
2,147,262
|
|
|
|
1,788,622
|
|
|
|
1,312,700
|
|
|
|
1,335,428
|
|
|
|
1,325,154
|
|
|
|
775,398
|
|
|
|
|
(1) |
|
Gives pro forma effect to the Marbob Transactions, but does not
give pro forma effect to the Settlement Acquisition. See
Recent Developments Recent
Acquisitions. |
|
(2) |
|
After giving pro forma as adjusted effect to the Acquisitions,
long-term debt, including current maturities, would have been
approximately $2.0 billion at September 30, 2010. |
S-7
Summary
Pro Forma As Adjusted Reserve and Pro Forma Operating
Data
Pro Forma
As Adjusted Reserve Data
The following table presents summary data with respect to our
internally estimated net proved oil and natural gas reserves at
June 30, 2010 on a pro forma as adjusted basis, giving
effect to the Acquisitions described in Recent
Developments Recent Acquisitions. The
estimates of net proved reserves at June 30, 2010 below
present:
|
|
|
|
|
our historical estimated net proved reserves;
|
|
|
|
the estimated net proved reserves we acquired in the Marbob
Acquisition;
|
|
|
|
the estimated net proved reserves we acquired in the Settlement
Acquisition; and
|
|
|
|
our estimated net proved reserves on a pro forma as adjusted
basis including the reserves we acquired in the Acquisitions.
|
The reserve estimates at June 30, 2010 presented in the
table below are based on evaluations prepared by our internal
reserve engineers, which have not been prepared or audited by
Cawley, Gillespie & Associates, Inc. or Netherland,
Sewell & Associates, Inc., our independent reserve
engineers. The historical and pro forma as adjusted reserve
estimates presented below do not reflect our pending disposition
of reserves associated with oil and natural gas properties to be
sold to Legacy Reserves LP, as described in
Recent Developments Permian Asset
Divestiture. Estimates of net proved oil and natural gas
reserves are inherently uncertain, and any material inaccuracies
in the estimates prepared by our internal reserve engineers will
materially affect the quantities and values of our reserves. Our
internal net proved reserve estimates are based upon various
assumptions, including assumptions related to oil and natural
gas prices, drilling and operating expenses, capital
expenditures, taxes and availability of funds. These reserve
estimates were prepared in accordance with the SECs rules
regarding oil and natural gas reserve reporting that are
currently in effect. You should refer to Risk
Factors and Managements Discussion and
Analysis of Financial Condition and Results of Operations
in our Annual Report on
Form 10-K
for the year ended December 31, 2009 and our Quarterly
Report on
Form 10-Q
for the three months ended September 30, 2010 and
Business in our Annual Report on
Form 10-K
for the year ended December 31, 2009, each of which is
incorporated by reference herein, in evaluating the material
presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2010
|
|
|
|
|
|
|
Marbob
|
|
|
Settlement
|
|
|
Pro Forma As
|
|
|
|
Historical
|
|
|
Acquisition
|
|
|
Acquisition
|
|
|
Adjusted
|
|
|
Net Proved Reserves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil (MBbl)
|
|
|
156,634
|
|
|
|
34,172
|
|
|
|
7,515
|
|
|
|
198,321
|
|
Natural gas (MMcf)
|
|
|
466,634
|
|
|
|
159,127
|
|
|
|
22,924
|
|
|
|
648,685
|
|
Total (MBoe)
|
|
|
234,406
|
|
|
|
60,693
|
|
|
|
11,336
|
|
|
|
306,435
|
|
Proved developed reserves percentage
|
|
|
53.3
|
%
|
|
|
68.5
|
%
|
|
|
51.8
|
%
|
|
|
56.3
|
%
|
S-8
Historical
and Pro Forma Production and Operating Data
The following table presents summary information concerning our
production and operating data for the nine months ended
September 30, 2010 on a historical basis and on a pro forma
basis, giving effect to the Marbob Acquisition as if it had
occurred on January 1, 2010.
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2010
|
|
|
|
Historical
|
|
|
Pro
Forma1
|
|
|
Production and operating data:
|
|
|
|
|
|
|
|
|
Net production volumes:
|
|
|
|
|
|
|
|
|
Oil (MBbl)
|
|
|
7,163
|
|
|
|
8,759
|
|
Natural gas (MMcf)
|
|
|
20,393
|
|
|
|
31,857
|
|
Total (MBoe)
|
|
|
10,562
|
|
|
|
14,069
|
|
Average daily production volumes:
|
|
|
|
|
|
|
|
|
Oil (MBbl)
|
|
|
26,238
|
|
|
|
32,084
|
|
Natural gas (MMcf)
|
|
|
74,700
|
|
|
|
116,692
|
|
Total (MBoe)
|
|
|
38,688
|
|
|
|
51,533
|
|
Operating costs and expenses per Boe:
|
|
|
|
|
|
|
|
|
Lease operating expenses and workover costs
|
|
$
|
6.07
|
|
|
$
|
6.17
|
|
Oil and natural gas taxes
|
|
$
|
5.50
|
|
|
$
|
5.39
|
|
Depletion, depreciation and amortization
|
|
$
|
16.08
|
|
|
$
|
17.72
|
|
General and administrative
|
|
$
|
4.37
|
|
|
$
|
4.50
|
|
|
|
|
(1) |
|
Gives pro forma effect to the Marbob Acquisition, but does not
give pro forma effect to the Settlement Acquisition. See
Recent Developments Recent
Acquisitions. |
Non-GAAP Financial
Measures and Reconciliations
PV-10
PV-10 is
derived from the standardized measure of discounted future net
cash flows, which is the most directly comparable GAAP financial
measure.
PV-10 is a
computation of the standardized measure of discounted future net
cash flows on a pre-tax basis.
PV-10 is
equal to the standardized measure of discounted future net cash
flows at the applicable date, before deducting future income
taxes, discounted at 10%. We believe that the presentation of
the PV-10 is
relevant and useful to investors because it presents the
discounted future net cash flows attributable to our estimated
net proved reserves prior to taking into account future
corporate income taxes, and it is a useful measure for
evaluating the relative monetary significance of our oil and
natural gas properties. Further, investors may utilize the
measure as a basis for comparison of the relative size and value
of our reserves to other companies. We use this measure when
assessing the potential return on investment related to our oil
and natural gas properties.
PV-10,
however, is not a substitute for the standardized measure of
discounted future net cash flows. Our
PV-10
measure and the standardized measure of discounted future net
cash flows do not purport to present the fair value of our oil
and natural gas reserves.
Our calculations of
PV-10 and
standardized measure of discounted future net cash flows at
June 30, 2010, after giving pro forma as adjusted effect to
the Acquisitions, are based on our internal reserve estimates,
which have not been reviewed or audited by our independent
reserve engineers. The following table provides a reconciliation
of the standardized measure of future net cash flows to
PV-10 at
June 30, 2010.
|
|
|
|
|
|
|
Pro Forma as
|
|
|
|
Adjusted at
|
|
|
|
June 30,
|
|
|
|
2010
|
|
|
|
(In millions)
|
|
|
PV-10
|
|
$
|
5,153.5
|
|
Present value of future income tax discounted at 10%
|
|
|
(1,674.0
|
)
|
|
|
|
|
|
Standardized measure of discounted future net cash flows
|
|
$
|
3,479.5
|
|
|
|
|
|
|
S-9
RISK
FACTORS
An investment in our common stock involves risk. In addition
to the risks described below, you should also carefully read all
of the other information included in this prospectus supplement,
the accompanying prospectus and the documents we have
incorporated by reference into this prospectus supplement in
evaluating an investment in our common stock. If any of the
described risks actually were to occur, our business, financial
condition or results of operations could be affected materially
and adversely. In that case, the trading price of our common
stock could decline and you could lose all or part of your
investment.
The risks described below are not the only ones facing our
company. Additional risks not presently known to us or that we
currently deem immaterial individually or in the aggregate may
also impair our business operations.
This prospectus supplement and documents incorporated by
reference also contain forward-looking statements that involve
risks and uncertainties, some of which are described in the
documents incorporated by reference in this prospectus
supplement and the accompanying prospectus. Our actual results
could differ materially from those anticipated in these
forward-looking statements as a result of various factors,
including the risks and uncertainties faced by us described
below or incorporated by reference in this prospectus supplement
and the accompanying prospectus.
Risks
Related to Our Common Stock
Our
restated certificate of incorporation, our bylaws and Delaware
law contain provisions that could discourage acquisition bids or
merger proposals, which may adversely affect the market price of
our common stock.
Our restated certificate of incorporation authorizes our board
of directors to issue preferred stock without stockholder
approval. If our board of directors elects to issue preferred
stock, it could be more difficult for a third party to acquire
us. In addition, some provisions of our certificate of
incorporation, our bylaws and Delaware law could make it more
difficult for a third party to acquire control of us, even if
the change of control would be beneficial to our stockholders,
including:
|
|
|
|
|
the organization of our board of directors as a classified
board, which allows no more than approximately one-third of our
directors to be elected each year;
|
|
|
|
stockholders cannot remove directors from our board of directors
except for cause and then only by the holders of not less than
662/3
percent of the voting power of all outstanding voting stock;
|
|
|
|
the prohibition of stockholder action by written
consent; and
|
|
|
|
limitations on the ability of our stockholders to call special
meetings and establish advance notice provisions for stockholder
proposals and nominations for elections to the board of
directors to be acted upon at meetings of stockholders.
|
Because
we have no plans to pay dividends on our common stock, investors
must look solely to stock appreciation for a return on their
investment in us.
We do not anticipate paying any cash dividends on our common
stock in the foreseeable future. We currently intend to retain
all future earnings to fund the development and growth of our
business. Any payment of future dividends will be at the
discretion of our board of directors and will depend on, among
other things, our earnings, financial condition, capital
requirements, level of indebtedness, statutory and contractual
restrictions applying to the payment of dividends and other
considerations that our board of directors deems relevant.
Covenants contained in our credit facility and the indenture
governing our 8.625% senior notes due 2017 restrict the
payment of dividends. Investors must rely on sales of their
common stock after price appreciation, which may never occur, as
the only way to realize a return on their investment. Investors
seeking cash dividends should not purchase our common stock.
S-10
The
availability of shares for sale in the future could reduce the
market price of our common stock.
In the future, we may issue securities to raise cash for
acquisitions or other corporate purposes. We may also acquire
interests in other companies by using a combination of cash and
our common stock or just our common stock. We may also issue
securities convertible into, or exchangeable for, or that
represent the right to receive, our common stock. Any of these
events may dilute your ownership interest in our company, reduce
our earnings per share and have an adverse impact on the price
of our common stock.
In addition, sales of a substantial amount of our common stock
in the public market, or the perception that such sales may
occur, could reduce the market price of our common stock. This
could also impair our ability to raise additional capital
through the sale of our securities.
S-11
USE OF
PROCEEDS
We expect the net proceeds from this offering to be
approximately $ million (or
approximately $ million if
the underwriters exercise their option to purchase additional
shares in full), after deducting estimated fees and expenses
(including underwriting discounts and commissions). We intend to
use the net proceeds from this offering to repay a portion of
the outstanding borrowings under our credit facility.
Shortly following the pricing of this offering, subject to
market conditions, we expect to offer approximately
$350 million aggregate principal amount of our senior notes
due 2021 in a registered public offering. The size of the senior
notes offering may be increased or decreased depending on market
conditions, or we may decide not to undertake the offering at
all. The completion of this offering is not conditioned upon the
completion of the public offering of senior notes, and vice
versa. We cannot give any assurance that the senior notes
offering will be completed. Please see
Capitalization.
Our credit facility matures on July 31, 2013. At
September 30, 2010, we had outstanding borrowings
thereunder of approximately $392.5 million, which bore
interest at a rate of approximately 4.6 percent. Borrowings
under the credit facility are incurred for general corporate
purposes, including the funding of our capital budget and to
consummate the Acquisitions. Any amounts repaid with the
proceeds from this offering or the registered senior notes
offering may be reborrowed in the future. At September 30,
2010, after giving effect to: (i) the Acquisitions,
(ii) the issuance and sale of the senior notes due 2021 and
the application of the estimated net proceeds therefrom as
described in Summary The Offering
Registered Senior Notes Offering, and (iii) the
issuance and sale of the common stock offered hereby and the
application of the estimated net proceeds therefrom, we would
have been able to incur an additional $1.0 billion of
indebtedness under our credit facility. If we do not consummate
the registered senior notes offering, we would have been able to
incur an additional $0.7 billion of indebtedness under our
credit facility.
S-12
CAPITALIZATION
The following table sets forth our capitalization at
September 30, 2010:
|
|
|
|
|
on an actual basis;
|
|
|
|
on a pro forma as adjusted basis to reflect the completion of
the Acquisitions, as if they occurred on September 30, 2010;
|
|
|
|
on a pro forma as further adjusted basis to give effect to
(i) the completion of this common stock offering and
(ii) our application of the estimated net proceeds from
this offering in the manner described in Use of
Proceeds; and
|
|
|
|
on a pro forma as finally adjusted basis to give effect to
(i) the completion of our registered senior notes offering
described under Summary The
Offering Registered Senior Notes Offering and
(ii) our application of the estimated net proceeds from the
registered senior notes offering at par in the manner as
described in Summary The Offering
Registered Senior Notes Offering.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010 (Unaudited)
|
|
|
|
|
|
|
|
|
|
Pro Forma as
|
|
|
Pro Forma
|
|
|
|
|
|
|
Pro Forma as
|
|
|
Further
|
|
|
as Finally
|
|
|
|
Actual
|
|
|
Adjusted
|
|
|
Adjusted
|
|
|
Adjusted
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
357
|
|
|
$
|
357
|
|
|
$
|
357
|
|
|
$
|
357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit facility
|
|
$
|
392,500
|
|
|
$
|
1,539,444
|
|
|
$
|
1,348,444
|
|
|
$
|
1,006,444
|
1
|
8.625% senior notes due
20172
|
|
|
296,120
|
|
|
|
296,120
|
|
|
|
296,120
|
|
|
|
296,120
|
|
8.0% senior note due
20183
|
|
|
|
|
|
|
159,000
|
|
|
|
159,000
|
|
|
|
159,000
|
|
Senior notes due
20214
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total long-term debt
|
|
|
688,620
|
|
|
|
1,994,564
|
|
|
|
1,803,564
|
|
|
|
1,811,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 300,000,000 authorized;
(i) 91,908,877 actual shares issued,
(ii) 99,635,146 pro forma as adjusted shares issued and
(iii) 101,935,146 pro forma as further adjusted and pro
forma as finally adjusted shares issued, each at
September 30, 2010
|
|
|
92
|
|
|
|
100
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
1,270,887
|
|
|
|
1,635,921
|
|
|
|
|
|
|
|
|
|
Retained earnings
|
|
|
518,853
|
|
|
|
512,451
|
|
|
|
|
|
|
|
|
|
Treasury stock, at cost; 27,044 shares at
September 30, 2010
|
|
|
(1,210
|
)
|
|
|
(1,210
|
)
|
|
|
(1,210
|
)
|
|
|
(1,210
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
1,788,622
|
|
|
|
2,147,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
2,477,242
|
|
|
$
|
4,141,826
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
At September 30, 2010, after giving effect to (i) the
Acquisitions and (ii) the issuance and sale of the common
stock offered hereby and our registered senior notes offering
and the application of the estimated net proceeds therefrom, we
would have been able to incur an additional $1.0 billion of
indebtedness under our credit facility. We expect our registered
senior notes offering to close following the closing of this
common stock offering. If we do not consummate the registered
senior notes offering, approximately $1.3 billion in
borrowings under our credit facility will remain outstanding. |
|
(2) |
|
The $300 million of senior notes are recorded at their
discounted amount, with the discount to be amortized over the
life of the senior notes. |
|
(3) |
|
The $150 million senior note is recorded at its fair value,
which at September 30, 2010 was estimated to be
approximately $159 million. The premium on this senior note
will be accreted over the life of the senior note. |
|
(4) |
|
Assumes the $350 million of senior notes will be issued at
par. See Summary The Offering
Registered Senior Notes Offering. |
S-13
PRICE
RANGE OF COMMON STOCK
Our common stock is listed on the New York Stock Exchange under
the symbol CXO. The following table shows, for the
periods indicated, the high and low reported sale prices for our
common stock, as reported on the New York Stock Exchange.
|
|
|
|
|
|
|
|
|
|
|
Sales Price
|
|
|
|
High
|
|
|
Low
|
|
|
2008:
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
26.44
|
|
|
$
|
17.33
|
|
Second quarter
|
|
$
|
40.97
|
|
|
$
|
25.12
|
|
Third quarter
|
|
$
|
39.07
|
|
|
$
|
22.31
|
|
Fourth quarter
|
|
$
|
27.79
|
|
|
$
|
14.71
|
|
2009:
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
28.10
|
|
|
$
|
17.29
|
|
Second quarter
|
|
$
|
33.57
|
|
|
$
|
23.50
|
|
Third quarter
|
|
$
|
38.70
|
|
|
$
|
25.17
|
|
Fourth quarter
|
|
$
|
47.00
|
|
|
$
|
33.71
|
|
2010:
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
51.62
|
|
|
$
|
42.60
|
|
Second quarter
|
|
$
|
61.65
|
|
|
$
|
44.30
|
|
Third quarter
|
|
$
|
66.49
|
|
|
$
|
51.51
|
|
Fourth quarter (through December 6, 2010)
|
|
$
|
87.29
|
|
|
$
|
65.95
|
|
On December 6, 2010, the last sales price of our common
stock as reported on the New York Stock Exchange was $87.01 per
share.
As of November 30, 2010, there were approximately
500 holders of record of our common stock.
DIVIDEND
POLICY
We have not paid, and do not intend to pay in the foreseeable
future, cash dividends on our common stock. Covenants contained
in our credit facility and the indenture governing our
8.625% senior notes due 2017 restrict the payment of
dividends on our common stock. We currently intend to retain all
future earnings to fund the development and growth of our
business. Any payment of future dividends will be at the
discretion of our board of directors and will depend on, among
other things, our earnings, financial condition, capital
requirements, level of indebtedness, statutory and contractual
restrictions applying to the payment of dividends and other
considerations that our board of directors deems relevant.
S-14
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR
NON-U.S.
HOLDERS OF OUR COMMON STOCK
The following is a summary of certain United States federal
income tax consequences to
Non-U.S. holders
with respect to the acquisition, ownership and disposition of
our common stock. A
Non-U.S. holder
for purposes of this discussion is any beneficial owner of our
common stock who acquires such stock for cash pursuant to the
terms of this prospectus supplement and who is not:
|
|
|
|
|
an individual citizen or resident of the United States,
including an alien individual who is a lawful permanent resident
of the United States or meets the substantial
presence test under section 7701(b)(3) of the
Internal Revenue Code of 1986, as amended (the Code);
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a corporation (including an entity treated as a corporation for
United States federal income tax purposes) created or organized
in the United States or under the laws of the United States, any
state thereof, or the District of Columbia;
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a partnership (or an entity treated as a partnership for United
States federal income tax purposes);
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an estate, the income of which is subject to United States
federal income tax regardless of its source; or
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a trust (i) if a United States court can exercise primary
supervision over the administration of the trust and one or more
United States persons can control all substantial decisions of
the trust, or (ii) that has a valid election in effect
under applicable Treasury Regulations to be treated as a United
States person.
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This discussion is based on current provisions of the Code,
final, temporary and proposed Treasury Regulations, judicial
opinions, published positions of the Internal Revenue Service
(the IRS) and administrative and judicial
authorities, all of which are subject to change, possibly with
retroactive effect, or are subject to different interpretations.
This discussion assumes that a
Non-U.S. holder
holds our common stock as a capital asset (generally, property
held for investment). This discussion does not address all
aspects of United States federal income taxation, any United
States federal tax laws other than federal income tax laws
(e.g., estate or gift tax laws) or any aspects of state, local,
or
non-U.S. taxation,
nor does it consider any specific facts or circumstances that
may apply to particular
Non-U.S. holders
that may be subject to special treatment under the United States
federal income tax laws, such as (without limitation):
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certain United States expatriates;
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shareholders that hold our common stock as part of a straddle,
constructive sale transaction, synthetic security, hedge,
conversion transaction or other integrated investment or risk
reduction transaction;
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shareholders that acquired our common stock through the exercise
of employee stock options or otherwise as compensation or
through a tax-qualified retirement plan;
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shareholders that are partnerships or other pass-through
entities or holders of interests therein;
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financial institutions;
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insurance companies;
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tax-exempt entities;
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dealers in securities or foreign currency; and
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traders in securities that use a
mark-to-market
method of accounting for United States federal income tax
purposes.
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If a partnership (including an entity treated as a partnership
for United States federal income tax purposes) holds our common
stock, the tax treatment of a partner of the partnership
generally will depend upon the status of the partner and the
activities of the partnership. If you are a partner of a
partnership (including an entity treated as a partnership for
United States federal income tax purposes) holding our common
stock, you should consult your tax advisor.
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THIS DISCUSSION DOES NOT CONSTITUTE LEGAL ADVICE TO ANY
PROSPECTIVE PURCHASER OF OUR COMMON STOCK. INVESTORS CONSIDERING
THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF UNITED STATES
FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL
AS ANY TAX CONSEQUENCES ARISING UNDER U.S. ESTATE AND GIFT
TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
Dividends
We do not expect to pay any cash distributions on our common
stock in the foreseeable future. However, in the event we do
make cash distributions, such distributions will be treated as
dividends to the extent of our current and accumulated earnings
and profits as determined under the Code and will be subject to
withholding as discussed below. Any portion of a distribution
that exceeds our current and accumulated earnings and profits
will first be applied to reduce the
Non-U.S. holders
basis in the common stock and, to the extent such portion
exceeds the
Non-U.S. holders
basis, the excess will be treated as gain from the disposition
of the common stock, the tax treatment of which is discussed
below under Gain on Sale or Other Disposition
of Common Stock
Dividends paid to a
Non-U.S. holder
on our common stock will generally be subject to United States
withholding tax at a rate of 30% or such lower rate as may be
specified by an applicable income tax treaty. A
Non-U.S. holder
of our common stock that wishes to claim the benefit of an
applicable treaty rate for dividends will be required to
(i) complete IRS
Form W-8BEN
(or other applicable form) and certify under penalties of
perjury that such holder is not a United States person as
defined under the Code and is eligible for treaty benefits, or
(ii) if our common stock is held through certain foreign
intermediaries, satisfy the relevant certification requirements
of applicable Treasury Regulations. A
Non-U.S. holder
of our common stock that is eligible for a reduced rate of
United States withholding tax pursuant to an income tax treaty
may obtain a refund of any excess amounts withheld by timely
filing an appropriate claim for refund with the IRS.
Dividends that are effectively connected with the conduct of a
trade or business by the
Non-U.S. holder
within the United States (and, where a tax treaty so requires,
are attributable to a permanent establishment maintained by the
Non-U.S. holder
in the United States) are not subject to United States
withholding tax, provided certain certification and disclosure
requirements are satisfied (which generally may be met by
providing an IRS
Form W-8ECI).
Instead, such dividends are subject to United States federal
income tax on a net income basis in the same manner as if the
Non-U.S. holder
were a United States person as defined under the Code, unless an
applicable income tax treaty provides otherwise. Any such
effectively connected dividends received by a foreign
corporation may be subject to an additional branch profits
tax at a 30% rate or such lower rate as may be specified
by an applicable income tax treaty.
Gain on
Sale or Other Disposition of Common Stock
In general, a
Non-U.S. holder
will not be subject to United States federal income tax on any
gain realized upon the sale, exchange, redemption, retirement or
other taxable disposition of the
Non-U.S. holders
shares of common stock unless:
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the gain is effectively connected with a trade or business
carried on by the
Non-U.S. holder
within the United States (and, where an income tax treaty so
requires, is attributable to a United States permanent
establishment maintained by the
Non-U.S. holder);
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the
Non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of disposition and
certain other conditions are met; or
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we are or have been a United States real property holding
corporation or USRPHC for United States federal
income tax purposes at any time during the shorter of the period
during which such
Non-U.S. holder
holds our stock or the five-year period ending on the date such
Non-U.S. holder
disposes of our stock.
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A
Non-U.S. holder
described in the first bullet point above will be subject to tax
on the net gain realized from the sale or other disposition
under regular graduated U.S. federal income tax rates in
the same manner as if it were a United States person (as defined
in the Code), and if the
Non-U.S. holder
is a corporation, it may
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also be subject to the branch profits tax at a rate of 30% of
its effectively connected earnings and profits or at such lower
rate as may be specified by an applicable income tax treaty.
An individual
Non-U.S. holder
described in the second bullet point above will be subject to a
flat 30% tax on the gain derived from the sale or other
disposition, which may be offset by U.S. source capital
losses, even though the individual is not considered a resident
of the United States.
Because of the oil and natural gas properties and other real
property assets we own, we believe that we are and will remain a
USRPHC. However, so long as our common stock continues to be
regularly traded on an established securities market, only a
Non-U.S. holder
who owns or has owned (actually or by applying certain
constructive ownership rules) at any time during the shorter of
the five-year period preceding the date of disposition or the
holders holding period more than 5% of our common stock
will be subject to United States federal income tax on the
disposition of such common stock by reason of our status as a
USRPHC.
Information
Reporting and Backup Withholding
We must report annually to the IRS and to a
Non-U.S. holder
the amount of dividends paid to such holder and any tax withheld
with respect to those dividends, regardless of whether
withholding is required. Copies of the information returns
reporting such dividends and withholding may also be made
available to the tax authorities in the country in which the
Non-U.S. holder
resides under the provisions of an applicable income tax treaty.
United States backup withholding tax will be imposed on certain
payments to persons that fail to furnish the information
required under the United States information reporting
requirements. A
Non-U.S. holder
will be exempt from this backup withholding if such holder
properly provides a
Form W-8BEN (or
valid substitute or successor form) certifying that it is not a
United States person (as defined in the Code) or otherwise meets
documentary evidence requirements for establishing that it is
not a United States person or otherwise establishes an exemption.
The gross proceeds from the disposition of our common stock may
be subject to information reporting and backup withholding. If a
Non-U.S. holder
sells our common stock outside the United States through a
non-U.S. office
of a
non-U.S. broker
and the sales proceeds are paid to the
Non-U.S. holder
outside the United States, then the United States backup
withholding and information reporting requirements generally
will not apply to that payment. However, unless such a broker
has documentary evidence in its records that the
Non-U.S. holder
is not a United States person and certain other conditions are
met, or the
Non-U.S.
holder otherwise establishes an exemption, information reporting
will apply to a payment of the proceeds of the disposition of
our common stock effected outside the United States by such a
broker if it is:
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a United States person;
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a foreign person that derives 50% or more of its gross income
for certain periods from the conduct of a trade or business in
the United States;
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a controlled foreign corporation for U.S. federal income
tax purposes; or
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a foreign partnership that, at any time during its taxable year,
has more than 50% of its income or capital interests owned by
United States persons or is engaged in the conduct of a
U.S. trade or business.
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Backup withholding is not an additional tax. Any amount withheld
under the backup withholding rules is allowable as a credit
against the
Non-U.S. holders
U.S. federal income tax liability, if any, and a refund may
be obtained if the amounts withheld exceed such holders
actual U.S. federal income tax liability and the required
information or appropriate claim form is timely provided to the
IRS.
Additional
Withholding Requirements
Under recently enacted legislation, the relevant withholding
agent may be required to withhold 30% of any dividends paid by
us and the proceeds of a sale of our common stock paid after
December 31, 2012 to (i) a foreign financial
institution unless such foreign financial institution agrees to
verify, report and disclose its U.S. account holders and
meets certain other specified requirements or (ii) a
non-financial foreign entity
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that is the beneficial owner of the payment unless such entity
certifies that it does not have any substantial United States
owners or provides the name, address and taxpayer identification
number of each substantial United States owner and such entity
meets certain other specified requirements.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES FOR
NON-U.S. HOLDERS
OF OUR COMMON STOCK IS FOR GENERAL INFORMATION ONLY AND SHOULD
NOT BE CONSIDERED TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD
CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR UNITED
STATES FEDERAL, STATE, LOCAL AND
NON-U.S. TAX
CONSEQUENCES OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF
OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED
CHANGE IN APPLICABLE LAWS.
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UNDERWRITING
Subject to the terms and conditions stated in the underwriting
agreement among us and Goldman, Sachs & Co. as
representative of the underwriters named below, we have agreed
to sell to each underwriter and each underwriter named below has
severally agreed to purchase from us the number of shares of
common stock that appears opposite the name of the underwriters
in the table below.
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Underwriter
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Number of Shares
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Goldman, Sachs & Co.
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Barclays Capital Inc.
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J.P. Morgan Securities LLC
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Raymond James & Associates, Inc.
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Total
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2,300,000
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Subject to the terms and conditions set forth in the
underwriting agreement, the underwriters have agreed, severally
and not jointly, to purchase all of the shares sold under the
underwriting agreement if any of these shares are purchased. If
an underwriter defaults, the underwriting agreement provides
that the purchase commitments of the nondefaulting underwriters
may be increased or the underwriting agreement may be terminated.
We have agreed to indemnify the several underwriters against
certain liabilities, including liabilities under the Securities
Act, or to contribute to payments the underwriters may be
required to make in respect of those liabilities.
The underwriters are offering the shares, subject to prior sale,
when, as and if issued to and accepted by them, subject to
approval of legal matters by their counsel, including the
validity of the shares, and other conditions contained in the
underwriting agreement, such as the receipt by the underwriters
of officers certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
Commissions
and Discounts
The underwriters propose initially to offer the shares to the
public at the public offering price set forth on the cover page
of this prospectus supplement and to dealers at that price less
a concession not in excess of $
per share. The underwriters may allow, and the dealers may
reallow, a discount not in excess of
$ per share to other dealers.
After the initial offering, the public offering price,
concession, reallowance discount or any other term of the
offering may be changed.
The following table shows the public offering price,
underwriting discount and proceeds before expenses to us. The
information assumes either no exercise or full exercise by the
underwriters of their option to purchase additional shares.
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Per Share
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Without Option
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With Option
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Public offering price
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$
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$
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$
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Underwriting discount
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$
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$
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$
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Proceeds, before expenses, to us
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$
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$
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$
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The expenses of the offering, not including the underwriting
discount, are estimated to be approximately $300,000 and are
payable by us.
Option to
Purchase Additional Shares
We have granted an option to the underwriters to purchase up to
345,000 additional shares at the public offering price, less the
underwriting discount. The underwriters may exercise this option
for 30 days from the date of this prospectus supplement. If
the underwriters exercise this option, each will be obligated,
subject to
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conditions contained in the underwriting agreement, to purchase
a number of additional shares proportionate to that
underwriters initial amount reflected in the above table.
No Sales
of Similar Securities
We have agreed that we will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file
with the SEC a registration statement under the Securities Act
of 1933 relating to, any shares of our common stock or
securities convertible into or exchangeable or exercisable for
any shares of our common stock, or publicly disclose the
intention to make any offer, sale, pledge, disposition or
filing, without the prior written consent of Goldman,
Sachs & Co. for a period of 60 days after the
date of this prospectus supplement.
Our directors and executive officers have entered into lock up
agreements with the underwriters prior to the commencement of
this offering pursuant to which we and each of these persons or
entities, with limited exceptions, for a period of 60 days
after the date of this prospectus supplement, may not, without
the prior written consent of Goldman, Sachs & Co.,
(1) offer, pledge, announce the intention to sell, grant
any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of our common
stock (including, without limitation, common stock which may be
deemed to be beneficially owned by such directors, executive
officers, managers and members in accordance with the rules and
regulations of the SEC and securities which may be issued upon
exercise of a stock option or warrant) or (2) enter into
any swap or other agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the common
stock, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of common stock
or such other securities, in cash or otherwise or (3) make
any demand for or exercise any right with respect to the
registration of any shares of Stock or any security convertible
into or exercisable or exchangeable for Stock without the prior
written consent of Goldman, Sachs & Co.
Notwithstanding the foregoing, such persons may
(i) transfer any shares of common stock as a bona fide gift
or gifts, (ii) transfer any securities during the lock up
period in accordance with the directors or officers
existing
Rule 10b5-1
trading plans, (iii) enter into any new, or renew or amend
any existing,
Rule 10b5-1
trading plan, provided that in connection with the entry,
renewal or amendment of such plan no shares of common stock
shall be scheduled for sale thereunder during the lock up period
and (iv) forfeit shares of common stock to us for the
purposes of satisfying tax withholding obligations of the
officer associated with the vesting of certain restricted stock
awards granted pursuant to our 2006 Stock Incentive Plan. Under
these
Rule 10b5-1
trading plans, these individuals have contracted or will
contract with brokers to buy or sell our securities on a
periodic basis. Under these plans, a broker executes trades
pursuant to the parameters established by the executive officer
or director at the time of the creation of the plan, without
further direction from them.
New York
Stock Exchange
The shares are listed on the New York Stock Exchange under the
symbol CXO.
Price
Stabilization; Short Positions
Until the distribution of the shares is completed, SEC rules may
limit underwriters and selling group members from bidding for
and purchasing our common stock. However, the representative may
engage in transactions that stabilize the price of the common
stock, such as bids or purchases to peg, fix or maintain that
price.
In connection with the offering, the underwriters may purchase
and sell our common stock in the open market. These transactions
may include short sales, purchases on the open market to cover
positions created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater
number of shares than they are required to purchase in the
offering. Covered short sales are sales made in an
amount not greater than the underwriters option to
purchase additional shares described above. The underwriters may
close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the
open market. In determining the source of shares to close out
the covered short position, the underwriters will consider,
among other things, the price of shares available for purchase
in the open market as compared to the price at which they may
purchase shares through the option to purchase additional
shares. Naked short sales are sales in excess of the
option to purchase additional shares. The
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underwriters must close out any naked short position by
purchasing shares in the open market. A naked short position is
more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of our common stock
in the open market after pricing that could adversely affect
investors who purchase in the offering. Stabilizing transactions
consist of various bids for or purchases of shares of common
stock made by the underwriters in the open market prior to the
completion of the offering.
The underwriters may also impose a penalty bid. This occurs when
a particular underwriter repays to the underwriters a portion of
the underwriting discount received by it because the
representative has repurchased shares sold by or for the account
of such underwriter in stabilizing or short covering
transactions.
Similar to other purchase transactions, the underwriters
purchases to cover the syndicate short sales may have the effect
of raising or maintaining the market price of our common stock
or preventing or retarding a decline in the market price of our
common stock. As a result, the price of our common stock may be
higher than the price that might otherwise exist in the open
market. The underwriters may conduct these transactions on the
New York Stock Exchange, in the
over-the-counter
market or otherwise.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
our common stock. In addition, neither we nor any of the
underwriters make any representation that the representative
will engage in these transactions or that these transactions,
once commenced, will not be discontinued without notice.
Electronic
Offer, Sale and Distribution of Shares
In connection with the offering, certain of the underwriters or
securities dealers may distribute prospectuses by electronic
means, such as
e-mail. In
addition, one or more of the underwriters may facilitate
internet distribution for this offering to certain of its
internet subscription customers. Such underwriters may allocate
a limited number of shares for sale to its online brokerage
customers. Other than the prospectus in electronic format, the
information on the underwriters web sites is not part of
this prospectus.
Notice to
Prospective Investors in the EEA
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State) an offer to the public of any
shares which are the subject of the offering contemplated by
this prospectus may not be made in that Relevant Member State,
except that an offer to the public in that Relevant Member State
of any shares may be made at any time under the following
exemptions under the Prospectus Directive, if they have been
implemented in that Relevant Member State:
(a) to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in
securities;
(b) to any legal entity which has two or more of
(1) an average of at least 250 employees during the
last financial year; (2) a total balance sheet of more than
43,000,000 and (3) an annual net turnover of more
than 50,000,000, as shown in its last annual or
consolidated accounts;
(c) by the underwriters to fewer than 100 natural or legal
persons (other than qualified investors as defined
in the Prospectus Directive) subject to obtaining the prior
consent of the representative for any such offer; or
(d) in any other circumstances falling within
Article 3(2) of the Prospectus Directive;
provided that no such offer of shares shall result in a
requirement for the publication by us or any representative of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
Any person making or intending to make any offer of shares
within the EEA should only do so in circumstances in which no
obligation arises for us or any of the underwriters to produce a
prospectus for such offer. Neither we nor the underwriters have
authorized, nor do they authorize, the making of any offer of
shares through any financial intermediary, other than offers
made by the underwriters which constitute the final offering of
shares contemplated in this prospectus.
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For the purposes of this provision, and your representation
below, the expression an offer to the public in
relation to any shares in any Relevant Member State means the
communication in any form and by any means of sufficient
information on the terms of the offer and any shares to be
offered so as to enable an investor to decide to purchase any
shares, as the same may be varied in that Relevant Member State
by any measure implementing the Prospectus Directive in that
Relevant Member State and the expression Prospectus
Directive means Directive 2003/71/EC and includes any
relevant implementing measure in each Relevant Member State.
Each person in a Relevant Member State who receives any
communication in respect of, or who acquires any shares under,
the offer of shares contemplated by this prospectus will be
deemed to have represented, warranted and agreed to and with us
and each underwriter that:
(A) it is a qualified investor within the
meaning of the law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
(B) in the case of any shares acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the shares acquired by it in the
offering have not been acquired on behalf of, nor have they been
acquired with a view to their offer or resale to, persons in any
Relevant Member State other than qualified investors
(as defined in the Prospectus Directive), or in circumstances in
which the prior consent of the representative has been given to
the offer or resale; or (ii) where shares have been
acquired by it on behalf of persons in any Relevant Member State
other than qualified investors, the offer of those shares to it
is not treated under the Prospectus Directive as having been
made to such persons.
In addition, in the United Kingdom, this document is being
distributed only to, and is directed only at, and any offer
subsequently made may only be directed at persons who are
qualified investors (as defined in the Prospectus
Directive) (i) who have professional experience in matters
relating to investments falling within Article 19
(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the
Order)
and/or
(ii) who are high net worth companies (or persons to whom
it may otherwise be lawfully communicated) falling within
Article 49(2)(a) to (d) of the Order (all such persons
together being referred to as relevant persons).
This document must not be acted on or relied on in the United
Kingdom by persons who are not relevant persons. In the United
Kingdom, any investment or investment activity to which this
document relates is only available to, and will be engaged in
with, relevant persons.
Notice to
Prospective Investors in Switzerland
This document, as well as any other material relating to the
shares which are the subject of the offering contemplated by
this prospectus, do not constitute an issue prospectus pursuant
to Article 652a
and/or 1156
of the Swiss Code of Obligations. The shares will not be listed
on the SIX Swiss Exchange and, therefore, the documents relating
to the shares, including, but not limited to, this document, do
not claim to comply with the disclosure standards of the listing
rules of SIX Swiss Exchange and corresponding prospectus schemes
annexed to the listing rules of the SIX Swiss Exchange. The
shares are being offered in Switzerland by way of a private
placement, i.e., to a small number of selected investors only,
without any public offer and only to investors who do not
purchase the shares with the intention to distribute them to the
public. The investors will be individually approached by the
issuer from time to time. This document, as well as any other
material relating to the shares, is personal and confidential
and do not constitute an offer to any other person. This
document may only be used by those investors to whom it has been
handed out in connection with the offering described herein and
may neither directly nor indirectly be distributed or made
available to other persons without express consent of the
issuer. It may not be used in connection with any other offer
and shall in particular not be copied
and/or
distributed to the public in (or from) Switzerland.
Notice to
Prospective Investors in the Dubai International Financial
Centre
This document relates to an exempt offer in accordance with the
Offered Securities Rules of the Dubai Financial Services
Authority. This document is intended for distribution only to
persons of a type specified in those rules. It must not be
delivered to, or relied on by, any other person. The Dubai
Financial Services
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Authority has no responsibility for reviewing or verifying any
documents in connection with exempt offers. The Dubai Financial
Services Authority has not approved this document nor taken
steps to verify the information set out in it, and has no
responsibility for it. The shares which are the subject of the
offering contemplated by this prospectus may be illiquid
and/or
subject to restrictions on their resale. Prospective purchasers
of the shares offered should conduct their own due diligence on
the shares. If you do not understand the contents of this
document you should consult an authorised financial adviser.
Notice to
Prospective Investors in Hong Kong
The shares may not be offered or sold by means of any document
other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), or (ii) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the shares may be issued or
may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do
so under the laws of Hong Kong) other than with respect to
shares which are or are intended to be disposed of only to
persons outside Hong Kong or only to professional
investors within the meaning of the Securities and Futures
Ordinance (Cap. 571, Laws of Hong Kong) and any rules made
thereunder.
Notice to
Prospective Investors in Singapore
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
shares may not be circulated or distributed, nor may the shares
be offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the SFA),
(ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where the shares are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries rights and interest in
that trust shall not be transferable for 6 months after
that corporation or that trust has acquired the shares under
Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA;
(2) where no consideration is given for the transfer; or
(3) by operation of law.
Notice to
Prospective Investors in Japan
The securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and each underwriter has
agreed that it will not offer or sell any securities, directly
or indirectly, in Japan or to, or for the benefit of, any
resident of Japan (which term as used herein means any person
resident in Japan, including any corporation or other entity
organized under the laws of Japan), or to others for re-offering
or resale, directly or indirectly, in Japan or to a resident of
Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Financial
Instruments and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
S-23
CONFLICTS
OF INTEREST
The underwriters and their respective affiliates are full
service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. Certain of the underwriters or their affiliates may
perform various financial advisory, investment banking and
commercial banking services from time to time for us and our
affiliates under our credit facility. Specifically, Goldman
Sachs Bank USA, an affiliate of Goldman, Sachs & Co.,
serves as a lender; Barclays Bank PLC, an affiliate of Barclays
Capital Inc., serves as a lender; and JPMorgan Chase Bank,
N.A., an affiliate of J.P. Morgan Securities LLC, serves as
administrative agent, a lender, L/C issuer and swing line lender.
Amounts repaid under our credit facility may be reborrowed by
us. In addition, from time to time, the underwriters and their
affiliates may effect transactions for their own account or the
account of customers, and hold on behalf of themselves or their
customers, long or short positions in our debt or equity
securities or loans, and may do so in the future. In the
ordinary course of their various business activities, the
underwriters and their respective affiliates may make or hold a
broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial
instruments (including bank loans) for their own account and for
the accounts of their customers. Such investment and securities
activities may involve securities and instruments by us. The
underwriters and their respective affiliates may also make
investment recommendations
and/or
publish or express independent research views in respect of such
securities or instruments and may at any time hold, or recommend
to clients that they acquire, long
and/or short
positions in such securities and instruments.
We intend to use at least 5% of the net proceeds of this
offering to repay indebtedness owed by us to certain affiliates
of the underwriters who are lenders under our credit facility.
See Use of Proceeds. Accordingly, this offering is
being made in compliance with the requirements of NASD Conduct
Rule 2720 of the Financial Industry Regulatory Authority.
In accordance with that rule, no qualified independent
underwriter is required, because a bona fide public market
exists in the shares, as that term is defined in the rule.
Goldman, Sachs & Co., Barclays Capital Inc. and J.P.
Morgan Securities LLC will not confirm sales of the securities
to any account over which they exercise discretionary authority
without the prior written approval of the customer.
S-24
LEGAL
MATTERS
Certain legal matters in connection with the common stock will
be passed upon by Vinson & Elkins L.L.P., Houston,
Texas, as our counsel. Certain legal matters will be passed upon
for the underwriters by Simpson Thacher & Bartlett
LLP, New York, New York.
EXPERTS
The consolidated financial statements and managements
assessment of the effectiveness of internal control over
financial reporting incorporated in this prospectus supplement
by reference to the Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated by reference in reliance upon the reports of Grant
Thornton LLP, independent registered public accountants, upon
the authority of said firm as experts in auditing and accounting
in giving said reports.
The special-purpose combined financial statements of the Marbob
Group as of December 31, 2009 and 2008, and for each of the
years in the three-year period ended December 31, 2009 have
been incorporated by reference herein in reliance upon the
report of Grant Thornton LLP, independent registered public
accountants, upon the authority of said firm as experts in
auditing and accounting in giving said report.
Certain estimates of our net oil and natural gas reserves and
related information included or incorporated by reference in
this prospectus supplement have been derived from reports
prepared by Cawley, Gillespie & Associates, Inc. and
Netherland, Sewell & Associates, Inc. Certain
estimates of the Marbob Groups net oil and natural gas
reserves and related information included or incorporated by
reference in this prospectus supplement have been derived from
reports prepared by Cawley, Gillespie & Associates,
Inc. All such information has been so included or incorporated
by reference on the authority of such firms as experts regarding
the matters contained in their reports.
S-25
PROSPECTUS
Concho
Resources Inc.
Debt Securities
Preferred Stock
Common Stock
Depositary Shares
Warrants
Guarantee
of Debt Securities of Concho Resources Inc. by:
COG Operating LLC
COG Realty LLC
Concho Energy Services LLC
Quail Ranch LLC
We may offer and sell the securities listed above from time to
time in one or more offerings in one or more classes or series.
Any debt securities we offer pursuant to this prospectus may be
fully and unconditionally guaranteed by certain of our
subsidiaries, including COG Operating LLC, COG Realty LLC,
Concho Energy Services LLC, and Quail Ranch LLC.
This prospectus provides you with a general description of the
securities that may be offered. Each time securities are
offered, we will provide a prospectus supplement and attach it
to this prospectus. The prospectus supplement will contain more
specific information about the offering and the terms of the
securities being offered, including any guarantees by our
subsidiaries. A prospectus supplement may also add, update or
change information contained in this prospectus. This prospectus
may not be used to offer or sell securities without a prospectus
supplement describing the method and terms of the offering.
We may sell these securities directly or through agents,
underwriters or dealers, or through a combination of these
methods. See Plan of Distribution. The prospectus
supplement will list any agents, underwriters or dealers that
may be involved and the compensation they will receive. The
prospectus supplement will also show you the total amount of
money that we will receive from selling the securities being
offered, after the expenses of the offering. You should
carefully read this prospectus and any accompanying prospectus
supplement, together with the documents we incorporate by
reference, before you invest in any of our securities.
Investing in any of our securities involves
risk. Please read carefully the information included
and incorporated by reference in this prospectus and in any
applicable prospectus supplement for a discussion of the factors
you should consider before deciding to purchase our securities.
See Risk Factors beginning on page 4 of this
prospectus.
Our common stock is listed on the New York Stock Exchange under
the symbol CXO.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
This
prospectus is dated September 9, 2009.
TABLE OF
CONTENTS
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You should rely only on the information contained in or
incorporated by reference into this prospectus and any
prospectus supplement. We have not authorized any dealer,
salesman or other person to provide you with additional or
different information. If anyone provides you with different or
inconsistent information, you should not rely on it. This
prospectus and any prospectus supplement are not an offer to
sell or the solicitation of an offer to buy any securities other
than the securities to which they relate and are not an offer to
sell or the solicitation of an offer to buy securities in any
jurisdiction to any person to whom it is unlawful to make an
offer or solicitation in that jurisdiction. You should not
assume that the information contained in this prospectus is
accurate as of any date other than the date on the front cover
of this prospectus, or that the information contained in any
document incorporated by reference is accurate as of any date
other than the date of the document incorporated by reference,
regardless of the time of delivery of this prospectus or any
sale of a security.
i
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the Securities and Exchange Commission, which we
refer to as the SEC, using a shelf registration
process. Under this shelf registration process, we may offer and
sell any combination of the securities described in this
prospectus in one or more offerings. This prospectus provides
you with a general description of the securities we may offer.
Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the
terms of the offering and the offered securities. The prospectus
supplement may also add, update or change information contained
in this prospectus. Any statement that we make in this
prospectus will be modified or superseded by any inconsistent
statement made by us in a prospectus supplement. You should read
both this prospectus and any prospectus supplement together with
additional information described under the heading Where
You Can Find More Information.
Unless the context requires otherwise or unless otherwise noted,
all references in this prospectus or any accompanying prospectus
supplement to Concho, we or
our are to Concho Resources Inc. and its
subsidiaries.
THE
COMPANY
We are an independent oil and natural gas company engaged in the
acquisition, development, exploitation and exploration of oil
and natural gas properties. Our core operations are focused in
the Permian Basin of Southeast New Mexico and West Texas. These
core operating areas are complemented by activities in our
emerging plays. We intend to grow our reserves and production
through development drilling, exploitation and exploration
activities on our multi-year project inventory and through
acquisitions that meet our strategic and financial objectives.
We were formed in February 2006 as a result of the combination
of Concho Equity Holdings Corp. and a portion of the oil and
natural gas properties and related assets owned by Chase Oil
Corporation and certain of its affiliates. Concho Equity
Holdings Corp., which was subsequently merged into one of our
wholly-owned subsidiaries, was formed in April 2004 and
represented the third of three Permian Basin-focused companies
that have been formed since 1997 by certain members of our
current management team (the prior two companies were sold to
large domestic independent oil and gas companies).
Our principal executive offices are located at 550 West
Texas Avenue, Suite 100, Midland, Texas 79701. Our common
stock is listed on the New York Stock Exchange under the symbol
CXO.
1
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other
information with the SEC (File
No. 001-33615)
pursuant to the Securities Exchange Act of 1934 (the
Exchange Act). You may read and copy any documents
that are filed at the SECs public reference room at
100 F Street, N.E., Washington, D.C. 20549. You
may also obtain copies of these documents at prescribed rates
from the public reference section of the SEC at its Washington
address. Please call the SEC at
1-800-SEC-0330
for further information.
Our filings are also available to the public through the
SECs website at
http://www.sec.gov.
The SEC allows us to incorporate by reference
information that we file with it, which means that we can
disclose important information to you by referring you to
documents previously filed with the SEC. The information
incorporated by reference is an important part of this
prospectus, and the information that we later file with the SEC
will automatically update and supersede this information. The
following documents we filed with the SEC pursuant to the
Exchange Act are incorporated herein by reference:
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our Annual Report on
Form 10-K
for the year ended December 31, 2008;
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2009;
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our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2009;
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our Current Reports on
Form 8-K
and 8-K/A
filed on each of August 6, 2008, October 7, 2008,
January 28, 2009, March 4, 2009, April 9, 2009,
June 12, 2009, August 12, 2009 and September 9,
2009 (excluding any information furnished pursuant to
Item 2.02 or Item 7.01 of any such Current Report on
Form 8-K); and
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the description of our common stock contained in our
registration statement on
Form 8-A12B
filed on July 23, 2007, including any amendment to that
form that we may file in the future for the purpose of updating
the description of our common stock.
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These reports contain important information about us, our
financial condition and our results of operations.
All future documents filed pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act (excluding any
information furnished pursuant to Item 2.02 or
Item 7.01 on any Current Report on
Form 8-K)
before the termination of each offering under this prospectus
shall be deemed to be incorporated in this prospectus by
reference and to be a part hereof from the date of filing of
such documents. Any statement contained herein, or in a document
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed
to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address and telephone number:
Concho Resources Inc.
550 West Texas Avenue, Suite 100
Midland, Texas 79701
Attention: General Counsel
(432) 683-7443
We also maintain a website at
http://www.conchoresources.com.
However, the information on our website is not part of this
prospectus.
2
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in or incorporated by reference
into this prospectus, our filings with the SEC and our public
releases, including those that express a belief, expectation, or
intention, as well as those that are not statements of
historical fact, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 (the
Securities Act) and Section 21E of the Exchange
Act. These forward-looking statements may include projections
and estimates concerning capital expenditures, our liquidity and
capital resources, the timing and success of specific projects,
outcomes and effects of litigation, claims and disputes,
elements of our business strategy and other statements
concerning our operations, economic performance and financial
condition. Forward-looking statements are generally accompanied
by words such as estimate, project,
predict, believe, expect,
anticipate, potential,
could, may, foresee,
plan, goal or other words that convey
the uncertainty of future events or outcomes. We have based
these forward-looking statements on our current expectations and
assumptions about future events. These statements are based on
certain assumptions and analyses made by us in light of our
experience and our perception of historical trends, current
conditions and expected future developments as well as other
factors we believe are appropriate under the circumstances.
These forward-looking statements speak only as of the date of
this prospectus; we disclaim any obligation to update or revise
these statements unless required by securities law, and we
caution you not to rely on them unduly. While our management
considers these expectations and assumptions to be reasonable,
they are inherently subject to significant business, economic,
competitive, regulatory and other risks, contingencies and
uncertainties relating to, among other matters, the risks
discussed in our Annual Report on
Form 10-K
for the year ended December 31, 2008, our Quarterly Reports
on
Form 10-Q
for the quarters ended March 31, 2009 and June 30,
2009 and our subsequent SEC filings, as well as those factors
summarized below:
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our business and financial strategy;
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the estimated quantities of crude oil and natural gas reserves;
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our use of industry technology;
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our realized oil and natural gas prices;
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the timing and amount of the future production of our oil and
natural gas;
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the amount, nature and timing of our capital expenditures;
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the drilling of our wells;
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our competition and government regulations;
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the marketing of our oil and natural gas;
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our exploitation activities or property acquisitions;
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the costs of exploiting and developing our properties and
conducting other operations;
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general economic and business conditions;
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our cash flow and anticipated liquidity;
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hedging results;
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uncertainty regarding our future operating results;
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our plans, objectives, expectations and intentions contained in
this prospectus that are not historical; and
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our ability to integrate acquisitions.
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Reserve engineering is a process of estimating underground
accumulations of oil and natural gas that cannot be measured in
an exact way. The accuracy of any reserve estimate depends on
the quality of available data, the interpretation of such data
and price and cost assumptions made by our reserve engineers. In
addition, the results of drilling, testing and production
activities may justify revisions of estimates that were made
previously. If significant, such revisions would change the
schedule of any further production and development drilling.
Accordingly, reserve estimates may differ from the quantities of
oil and natural gas that are ultimately recovered.
3
RISK
FACTORS
An investment in our securities involves a significant degree of
risk. Before you invest in our securities you should carefully
consider those risk factors included in our most recent Annual
Report on
Form 10-K,
any Quarterly Reports on
Form 10-Q
and any Current Reports on
Form 8-K,
which are incorporated herein by reference, and those risk
factors that may be included in any applicable prospectus
supplement, together with all of the other information included
in this prospectus, any prospectus supplement and the documents
we incorporate by reference, in evaluating an investment in our
securities. If any of the risks discussed in the foregoing
documents were to occur, our business, financial condition,
results of operations and cash flows could be materially
adversely affected. Please read Cautionary Statement
Regarding Forward-Looking Statements.
RATIOS OF
EARNINGS TO FIXED CHARGES AND EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table contains our consolidated ratios of earnings
to fixed charges and earnings to fixed charges and preferred
stock dividends for the periods indicated.
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Concho Resources Inc.
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Inception
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Chase Group
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(April 21,
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Properties
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Six Months
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Years Ended
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2004) through
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Years Ended
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Ended June 30,
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December 31,
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December 31,
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December 31,
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2009
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2008
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2007
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2006
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2005
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2004
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Ratios of earnings to fixed charges(a)
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15.36
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2.00
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1.97
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2.01
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(c
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NM(d
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NM(d
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Ratios of earnings to fixed charges and preferred stock
dividends(b)
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15.36
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2.00
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1.90
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NM(d
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The ratio has been computed by dividing earnings by fixed
charges. For purposes of computing the ratio: |
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earnings include income (loss) before income taxes, adjusted for
interest expense and the portion of rental expense deemed to be
representative of the interest component of rental expense; and |
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fixed charges consist of interest expense, capitalized interest
and the portion of rental expense deemed to be representative of
the interest component of rental expense. |
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The ratio has been computed by dividing earnings by fixed
charges and preferred stock dividends. For purposes of computing
the ratio: |
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earnings include income (loss) before income taxes, adjusted for
interest expense and the portion of rental expense deemed to be
representative of the interest component of rental expense; and |
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fixed charges and preferred stock dividends consist of interest
expense, capitalized interest, the portion of rental expense
deemed to be representative of the interest component of rental
expense and preferred stock dividends. |
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Due to our net loss for the six months ended June 30, 2009
and from inception (April 21, 2004) through
December 31, 2004, the ratio coverage was less than 1:1. To
achieve ratio coverage of 1:1, we would have needed additional
earnings of approximately $80.3 million and
$3.6 million, respectively. |
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Not meaningful, as there were no fixed charges or preferred
stock dividends for these periods. |
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Due to our net loss for the six months ended June 30, 2009
and from inception (April 21, 2004) through
December 31, 2004, the ratio coverage was less than 1:1. To
achieve a ratio coverage of 1:1, we would have needed additional
earnings of approximately $80.3 million and
$4.4 million, respectively. |
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Due to the fixed charges and preferred stock dividends exceeding
earnings for the period, we would have needed additional
earnings of approximately $1.1 million to achieve a ratio
coverage of 1:1. |
4
USE OF
PROCEEDS
Except as may be stated in the applicable prospectus supplement,
we intend to use the net proceeds from any sales of securities
by us under this prospectus for general corporate purposes,
which may include repayment or refinancing of borrowings,
working capital, capital expenditures, investments and
acquisitions. Pending any specific application, we may initially
invest funds in short-term marketable securities or apply them
to repayments of indebtedness.
5
DESCRIPTION
OF DEBT SECURITIES
The Debt Securities will be either our senior debt securities
(Senior Debt Securities) or our subordinated debt
securities (Subordinated Debt Securities). The
Senior Debt Securities and the Subordinated Debt Securities will
be issued under separate indentures among us, the Subsidiary
Guarantors of such Debt Securities, if any, and a trustee to be
determined (the Trustee). Senior Debt Securities
will be issued under a Senior Indenture and
Subordinated Debt Securities will be issued under a
Subordinated Indenture. Together, the Senior
Indenture and the Subordinated Indenture are called
Indentures.
The Debt Securities may be issued from time to time in one or
more series. The particular terms of each series that are
offered by a prospectus supplement will be described in the
prospectus supplement.
Unless the Debt Securities are guaranteed by our subsidiaries as
described below, the rights of Concho and our creditors,
including holders of the Debt Securities, to participate in the
assets of any subsidiary upon the latters liquidation or
reorganization, will be subject to the prior claims of the
subsidiarys creditors, except to the extent that we may
ourself be a creditor with recognized claims against such
subsidiary.
We have summarized selected provisions of the Indentures below.
The summary is not complete. The form of each Indenture has been
filed with the SEC as an exhibit to the registration statement
of which this prospectus is a part, and you should read the
Indentures for provisions that may be important to you.
Capitalized terms used in the summary have the meanings
specified in the Indentures.
General
The Indentures provide that Debt Securities in separate series
may be issued thereunder from time to time without limitation as
to aggregate principal amount. We may specify a maximum
aggregate principal amount for the Debt Securities of any
series. We will determine the terms and conditions of the Debt
Securities, including the maturity, principal and interest, but
those terms must be consistent with the Indenture. The Debt
Securities will be our unsecured obligations.
The Subordinated Debt Securities will be subordinated in right
of payment to the prior payment in full of all of our Senior
Debt as described under Subordination of
Subordinated Debt Securities and in the prospectus
supplement applicable to any Subordinated Debt Securities. If
the prospectus supplement so indicates, the Debt Securities will
be convertible into our common stock.
If specified in the prospectus supplement respecting a
particular series of Debt Securities, certain subsidiaries of
Concho (each a Subsidiary Guarantor) will fully and
unconditionally guarantee (the Subsidiary Guarantee)
that series as described under Subsidiary
Guarantee and in the prospectus supplement. Each
Subsidiary Guarantee will be an unsecured obligation of the
Subsidiary Guarantor. A Subsidiary Guarantee of Subordinated
Debt Securities will be subordinated to the Senior Debt of the
Subsidiary Guarantor on the same basis as the Subordinated Debt
Securities are subordinated to our Senior Debt.
The applicable prospectus supplement will set forth the price or
prices at which the Debt Securities to be issued will be offered
for sale and will describe the following terms of such Debt
Securities:
(1) the title of the Debt Securities;
(2) whether the Debt Securities are Senior Debt Securities
or Subordinated Debt Securities and, if Subordinated Debt
Securities, the related subordination terms;
(3) whether any Subsidiary Guarantor will provide a
Subsidiary Guarantee of the Debt Securities;
(4) any limit on the aggregate principal amount of the Debt
Securities;
(5) each date on which the principal of the Debt Securities
will be payable;
(6) the interest rate that the Debt Securities will bear
and the interest payment dates for the Debt Securities;
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(7) each place where payments on the Debt Securities will
be payable;
(8) any terms upon which the Debt Securities may be
redeemed, in whole or in part, at our option;
(9) any sinking fund or other provisions that would
obligate us to redeem or otherwise repurchase the Debt
Securities;
(10) the portion of the principal amount, if less than all,
of the Debt Securities that will be payable upon declaration of
acceleration of the Maturity of the Debt Securities;
(11) whether the Debt Securities are defeasible;
(12) any addition to or change in the Events of Default;
(13) whether the Debt Securities are convertible into our
common stock and, if so, the terms and conditions upon which
conversion will be effected, including the initial conversion
price or conversion rate and any adjustments thereto and the
conversion period;
(14) any addition to or change in the covenants in the
Indenture applicable to the Debt Securities; and
(15) any other terms of the Debt Securities not
inconsistent with the provisions of the Indenture.
Debt Securities, including any Debt Securities that provide for
an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity
thereof (Original Issue Discount Securities), may be
sold at a substantial discount below their principal amount.
Special United States federal income tax considerations
applicable to Debt Securities sold at an original issue discount
may be described in the applicable prospectus supplement. In
addition, special United States federal income tax or other
considerations applicable to any Debt Securities that are
denominated in a currency or currency unit other than United
States dollars may be described in the applicable prospectus
supplement.
Subordination
of Subordinated Debt Securities
The indebtedness evidenced by the Subordinated Debt Securities
will, to the extent set forth in the Subordinated Indenture with
respect to each series of Subordinated Debt Securities, be
subordinated in right of payment to the prior payment in full of
all of our Senior Debt, including the Senior Debt Securities,
and it may also be senior in right of payment to all of our
Subordinated Debt. The prospectus supplement relating to any
Subordinated Debt Securities will summarize the subordination
provisions of the Subordinated Indenture applicable to that
series including:
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the applicability and effect of such provisions upon any payment
or distribution respecting that series following any
liquidation, dissolution or other
winding-up,
or any assignment for the benefit of creditors or other
marshalling of assets or any bankruptcy, insolvency or similar
proceedings;
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the applicability and effect of such provisions in the event of
specified defaults with respect to any Senior Debt, including
the circumstances under which and the periods during which we
will be prohibited from making payments on the Subordinated Debt
Securities; and
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the definition of Senior Debt applicable to the Subordinated
Debt Securities of that series and, if the series is issued on a
senior subordinated basis, the definition of Subordinated Debt
applicable to that series.
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The prospectus supplement will also describe as of a recent date
the approximate amount of Senior Debt to which the Subordinated
Debt Securities of that series will be subordinated.
The failure to make any payment on any of the Subordinated Debt
Securities by reason of the subordination provisions of the
Subordinated Indenture described in the prospectus supplement
will not be construed as preventing the occurrence of an Event
of Default with respect to the Subordinated Debt Securities
arising from any such failure to make payment.
The subordination provisions described above will not be
applicable to payments in respect of the Subordinated Debt
Securities from a defeasance trust established in connection
with any legal defeasance or
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covenant defeasance of the Subordinated Debt Securities as
described under Legal Defeasance and Covenant
Defeasance.
Subsidiary
Guarantee
If specified in the prospectus supplement, one or more of the
Subsidiary Guarantors will guarantee the Debt Securities of a
series. Unless otherwise indicated in the prospectus supplement,
the following provisions will apply to the Subsidiary Guarantee
of the Subsidiary Guarantor.
Subject to the limitations described below and in the prospectus
supplement, one or more of the Subsidiary Guarantors will
jointly and severally, fully and unconditionally guarantee the
punctual payment when due, whether at Stated Maturity, by
acceleration or otherwise, of all our payment obligations under
the Indentures and the Debt Securities of a series, whether for
principal of, premium, if any, or interest on the Debt
Securities or otherwise (all such obligations guaranteed by a
Subsidiary Guarantor being herein called the Guaranteed
Obligations). The Subsidiary Guarantors will also pay all
expenses (including reasonable counsel fees and expenses)
incurred by the applicable Trustee in enforcing any rights under
a Subsidiary Guarantee with respect to a Subsidiary Guarantor.
In the case of Subordinated Debt Securities, a Subsidiary
Guarantors Subsidiary Guarantee will be subordinated in
right of payment to the Senior Debt of such Subsidiary Guarantor
on the same basis as the Subordinated Debt Securities are
subordinated to our Senior Debt. No payment will be made by any
Subsidiary Guarantor under its Subsidiary Guarantee during any
period in which payments by us on the Subordinated Debt
Securities are suspended by the subordination provisions of the
Subordinated Indenture.
Each Subsidiary Guarantee will be limited in amount to an amount
not to exceed the maximum amount that can be guaranteed by the
relevant Subsidiary Guarantor without rendering such Subsidiary
Guarantee voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
Each Subsidiary Guarantee will be a continuing guarantee and
will:
(1) remain in full force and effect until either
(a) payment in full of all the applicable Debt Securities
(or such Debt Securities are otherwise satisfied and discharged
in accordance with the provisions of the applicable Indenture)
or (b) released as described in the following paragraph;
(2) be binding upon each Subsidiary Guarantor; and
(3) inure to the benefit of and be enforceable by the
applicable Trustee, the Holders and their successors,
transferees and assigns.
In the event that (a) a Subsidiary Guarantor ceases to be a
Subsidiary, (b) either legal defeasance or covenant
defeasance occurs with respect to the series or (c) all or
substantially all of the assets or all of the Capital Stock of
such Subsidiary Guarantor is sold, including by way of sale,
merger, consolidation or otherwise, such Subsidiary Guarantor
will be released and discharged of its obligations under its
Subsidiary Guarantee without any further action required on the
part of the Trustee or any Holder, and no other person acquiring
or owning the assets or Capital Stock of such Subsidiary
Guarantor will be required to enter into a Subsidiary Guarantee.
In addition, the prospectus supplement may specify additional
circumstances under which a Subsidiary Guarantor can be released
from its Subsidiary Guarantee.
Form,
Exchange and Transfer
The Debt Securities of each series will be issuable only in
fully registered form, without coupons, and, unless otherwise
specified in the applicable prospectus supplement, only in
denominations of $1,000 and integral multiples thereof.
At the option of the Holder, subject to the terms of the
applicable Indenture and the limitations applicable to Global
Securities, Debt Securities of each series will be exchangeable
for other Debt Securities of the same series of any authorized
denomination and of a like tenor and aggregate principal amount.
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Subject to the terms of the applicable Indenture and the
limitations applicable to Global Securities, Debt Securities may
be presented for exchange as provided above or for registration
of transfer (duly endorsed or with the form of transfer endorsed
thereon duly executed) at the office of the Security Registrar
or at the office of any transfer agent designated by us for such
purpose. No service charge will be made for any registration of
transfer or exchange of Debt Securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in that connection. Such transfer or
exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the
request. The Security Registrar and any other transfer agent
initially designated by us for any Debt Securities will be named
in the applicable prospectus supplement. We may at any time
designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through
which any transfer agent acts, except that we will be required
to maintain a transfer agent in each Place of Payment for the
Debt Securities of each series.
If the Debt Securities of any series (or of any series and
specified tenor) are to be redeemed in part, we will not be
required to (1) issue, register the transfer of or exchange
any Debt Security of that series (or of that series and
specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of
mailing of a notice of redemption of any such Debt Security that
may be selected for redemption and ending at the close of
business on the day of such mailing or (2) register the
transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion
of any such Debt Security being redeemed in part.
Global
Securities
Some or all of the Debt Securities of any series may be
represented, in whole or in part, by one or more Global
Securities that will have an aggregate principal amount equal to
that of the Debt Securities they represent. Each Global Security
will be registered in the name of a Depositary or its nominee
identified in the applicable prospectus supplement, will be
deposited with such Depositary or nominee or its custodian and
will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such
other matters as may be provided for pursuant to the applicable
Indenture.
Notwithstanding any provision of the Indentures or any Debt
Security described in this prospectus, no Global Security may be
exchanged in whole or in part for Debt Securities registered,
and no transfer of a Global Security in whole or in part may be
registered, in the name of any Person other than the Depositary
for such Global Security or any nominee of such Depositary
unless:
(1) the Depositary has notified us that it is unwilling or
unable to continue as Depositary for such Global Security or has
ceased to be qualified to act as such as required by the
applicable Indenture, and in either case we fail to appoint a
successor Depositary within 90 days;
(2) an Event of Default with respect to the Debt Securities
represented by such Global Security has occurred and is
continuing and the Trustee has received a written request from
the Depositary to issue certificated Debt Securities;
(3) subject to the rules of the Depositary, we shall have
elected to terminate the book-entry system through the
Depositary; or
(4) other circumstances exist, in addition to or in lieu of
those described above, as may be described in the applicable
prospectus supplement.
All certificated Debt Securities issued in exchange for a Global
Security or any portion thereof will be registered in such names
as the Depositary may direct.
As long as the Depositary, or its nominee, is the registered
holder of a Global Security, the Depositary or such nominee, as
the case may be, will be considered the sole owner and Holder of
such Global Security and the Debt Securities that it represents
for all purposes under the Debt Securities and the applicable
Indenture. Except in the limited circumstances referred to
above, owners of beneficial interests in a Global Security will
not be entitled to have such Global Security or any Debt
Securities that it represents registered in their names,
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will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange for those interests and
will not be considered to be the owners or Holders of such
Global Security or any Debt Securities that it represents for
any purpose under the Debt Securities or the applicable
Indenture. All payments on a Global Security will be made to the
Depositary or its nominee, as the case may be, as the Holder of
the security. The laws of some jurisdictions may require that
some purchasers of Debt Securities take physical delivery of
such Debt Securities in certificated form. These laws may impair
the ability to transfer beneficial interests in a Global
Security.
Ownership of beneficial interests in a Global Security will be
limited to institutions that have accounts with the Depositary
or its nominee (participants) and to persons that
may hold beneficial interests through participants. In
connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of Debt
Securities represented by the Global Security to the accounts of
its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records
maintained by the Depositary (with respect to participants
interests) or any such participant (with respect to interests of
Persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial
interests in a Global Security may be subject to various
policies and procedures adopted by the Depositary from time to
time. None of us, the Subsidiary Guarantors, the Trustees or the
agents of us, the Subsidiary Guarantors or the Trustees will
have any responsibility or liability for any aspect of the
Depositarys or any participants records relating to,
or for payments made on account of, beneficial interests in a
Global Security, or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
Payment
and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement, payment of interest on a Debt Security on any
Interest Payment Date will be made to the Person in whose name
such Debt Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
for such interest.
Unless otherwise indicated in the applicable prospectus
supplement, principal of and any premium and interest on the
Debt Securities of a particular series will be payable at the
office of such Paying Agent or Paying Agents as we may designate
for such purpose from time to time, except that at our option
payment of any interest on Debt Securities in certificated form
may be made by check mailed to the address of the Person
entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable
prospectus supplement, the corporate trust office of the Trustee
under the Senior Indenture in The City of New York will be
designated as sole Paying Agent for payments with respect to
Senior Debt Securities of each series, and the corporate trust
office of the Trustee under the Subordinated Indenture in The
City of New York will be designated as the sole Paying Agent for
payment with respect to Subordinated Debt Securities of each
series. Any other Paying Agents initially designated by us for
the Debt Securities of a particular series will be named in the
applicable prospectus supplement. We may at any time designate
additional Paying Agents or rescind the designation of any
Paying Agent or approve a change in the office through which any
Paying Agent acts, except that we will be required to maintain a
Paying Agent in each Place of Payment for the Debt Securities of
a particular series.
All money paid by us to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security
which remains unclaimed at the end of two years after such
principal, premium or interest has become due and payable will
be repaid to us, and the Holder of such Debt Security thereafter
may look only to us for payment.
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Consolidation,
Merger and Sale of Assets
Unless otherwise specified in the prospectus supplement, we may
not consolidate with or merge into, or transfer, lease or
otherwise dispose of all or substantially all of our assets to,
any Person (a successor Person), and may not permit
any Person to consolidate with or merge into us, unless:
(1) the successor Person (if not us) is a corporation,
partnership, trust or other entity organized and validly
existing under the laws of any domestic jurisdiction and assumes
our obligations on the Debt Securities and under the Indentures;
(2) immediately before and after giving pro forma effect to
the transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of
Default, has occurred and is continuing; and
(3) several other conditions, including any additional
conditions with respect to any particular Debt Securities
specified in the applicable prospectus supplement, are met.
The successor Person (if not us) will be substituted for us
under the applicable Indenture with the same effect as if it had
been an original party to such Indenture, and, except in the
case of a lease, we will be relieved from any further
obligations under such Indenture and the Debt Securities.
Events of
Default
Unless otherwise specified in the prospectus supplement, each of
the following will constitute an Event of Default under the
applicable Indenture with respect to Debt Securities of any
series:
(1) failure to pay principal of or any premium on any Debt
Security of that series when due, whether or not, in the case of
Subordinated Debt Securities, such payment is prohibited by the
subordination provisions of the Subordinated Indenture;
(2) failure to pay any interest on any Debt Securities of
that series when due, continued for 30 days, whether or
not, in the case of Subordinated Debt Securities, such payment
is prohibited by the subordination provisions of the
Subordinated Indenture;
(3) failure to deposit any sinking fund payment, when due,
in respect of any Debt Security of that series, whether or not,
in the case of Subordinated Debt Securities, such deposit is
prohibited by the subordination provisions of the Subordinated
Indenture;
(4) failure to perform or comply with the provisions
described under Consolidation, Merger and Sale
of Assets;
(5) failure to perform any of our other covenants in such
Indenture (other than a covenant included in such Indenture
solely for the benefit of a series other than that series),
continued for 60 days after written notice has been given
by the applicable Trustee, or the Holders of at least 25% in
principal amount of the Outstanding Debt Securities of that
series, as provided in such Indenture;
(6) any Debt of ourself, any Significant Subsidiary or, if
a Subsidiary Guarantor has guaranteed the series, such
Subsidiary Guarantor, is not paid within any applicable grace
period after final maturity or is accelerated by its holders
because of a default and the total amount of such Debt unpaid or
accelerated exceeds $20.0 million;
(7) any judgment or decree for the payment of money in
excess of $20.0 million is entered against us, any
Significant Subsidiary or, if a Subsidiary Guarantor has
guaranteed the series, such Subsidiary Guarantor, remains
outstanding for a period of 60 consecutive days following entry
of such judgment and is not discharged, waived or stayed;
(8) certain events of bankruptcy, insolvency or
reorganization affecting us, any Significant Subsidiary or, if a
Subsidiary Guarantor has guaranteed the series, such Subsidiary
Guarantor; and
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(9) if any Subsidiary Guarantor has guaranteed such series,
the Subsidiary Guarantee of any such Subsidiary Guarantor is
held by a final non-appealable order or judgment of a court of
competent jurisdiction to be unenforceable or invalid or ceases
for any reason to be in full force and effect (other than in
accordance with the terms of the applicable Indenture) or any
Subsidiary Guarantor or any Person acting on behalf of any
Subsidiary Guarantor denies or disaffirms such Subsidiary
Guarantors obligations under its Subsidiary Guarantee
(other than by reason of a release of such Subsidiary Guarantor
from its Subsidiary Guarantee in accordance with the terms of
the applicable Indenture).
If an Event of Default (other than an Event of Default with
respect to Concho Resources Inc. described in clause (8)
above) with respect to the Debt Securities of any series at the
time Outstanding occurs and is continuing, either the applicable
Trustee or the Holders of at least 25% in principal amount of
the Outstanding Debt Securities of that series by notice as
provided in the Indenture may declare the principal amount of
the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Debt Security, such
portion of the principal amount of such Debt Security as may be
specified in the terms of such Debt Security) to be due and
payable immediately, together with any accrued and unpaid
interest thereon. If an Event of Default with respect to Concho
Resources Inc. described in clause (8) above with respect
to the Debt Securities of any series at the time Outstanding
occurs, the principal amount of all the Debt Securities of that
series (or, in the case of any such Original Issue Discount
Security, such specified amount) will automatically, and without
any action by the applicable Trustee or any Holder, become
immediately due and payable, together with any accrued and
unpaid interest thereon. After any such acceleration and its
consequences, but before a judgment or decree based on
acceleration, the Holders of a majority in principal amount of
the Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration if
all Events of Default with respect to that series, other than
the non-payment of accelerated principal (or other specified
amount), have been cured or waived as provided in the applicable
Indenture. For information as to waiver of defaults, see
Modification and Waiver below.
Subject to the provisions of the Indentures relating to the
duties of the Trustees in case an Event of Default has occurred
and is continuing, no Trustee will be under any obligation to
exercise any of its rights or powers under the applicable
Indenture at the request or direction of any of the Holders,
unless such Holders have offered to such Trustee reasonable
security or indemnity. Subject to such provisions for the
indemnification of the Trustees, the Holders of a majority in
principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of that series.
No Holder of a Debt Security of any series will have any right
to institute any proceeding with respect to the applicable
Indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless:
(1) such Holder has previously given to the Trustee under
the applicable Indenture written notice of a continuing Event of
Default with respect to the Debt Securities of that series;
(2) the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series have made written
request, and such Holder or Holders have offered reasonable
security or indemnity, to the Trustee to institute such
proceeding as trustee; and
(3) the Trustee has failed to institute such proceeding,
and has not received from the Holders of a majority in principal
amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request, within 60 days
after such notice, request and offer.
However, such limitations do not apply to a suit instituted by a
Holder of a Debt Security for the enforcement of payment of the
principal of or any premium or interest on such Debt Security on
or after the applicable due date specified in such Debt Security
or, if applicable, to convert such Debt Security.
We will be required to furnish to each Trustee annually a
statement by certain of our officers as to whether or not we, to
their knowledge, are in default in the performance or observance
of any of the terms, provisions and conditions of the applicable
Indenture and, if so, specifying all such known defaults.
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Modification
and Waiver
We may modify or amend an Indenture without the consent of any
holders of the Debt Securities in certain circumstances,
including:
(1) to evidence the succession under the Indenture of
another Person to us or any Subsidiary Guarantor and to provide
for its assumption of our or such Subsidiary Guarantors
obligations to holders of Debt Securities;
(2) to make any changes that would add any additional
covenants of us or the Subsidiary Guarantors for the benefit of
the holders of Debt Securities or that do not adversely affect
the rights under the Indenture of the Holders of Debt Securities
in any material respect;
(3) to add any additional Events of Default;
(4) to provide for uncertificated notes in addition to or
in place of certificated notes;
(5) to secure the Debt Securities;
(6) to establish the form or terms of any series of Debt
Securities;
(7) to evidence and provide for the acceptance of
appointment under the Indenture of a successor Trustee;
(8) to cure any ambiguity, defect or inconsistency;
(9) to add Subsidiary Guarantors; or
(10) in the case of any Subordinated Debt Security, to make
any change in the subordination provisions that limits or
terminates the benefits applicable to any Holder of Senior Debt.
Other modifications and amendments of an Indenture may be made
by us, the Subsidiary Guarantors, if applicable, and the
applicable Trustee with the consent of the Holders of not less
than a majority in principal amount of the Outstanding Debt
Securities of each series affected by such modification or
amendment; provided, however, that no such modification or
amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security;
(2) reduce the principal amount of, or any premium or
interest on, any Debt Security;
(3) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon
acceleration of the Maturity thereof;
(4) change the place or currency of payment of principal
of, or any premium or interest on, any Debt Security;
(5) impair the right to institute suit for the enforcement
of any payment due on or any conversion right with respect to
any Debt Security;
(6) modify the subordination provisions in the case of
Subordinated Debt Securities, or modify any conversion
provisions, in either case in a manner adverse to the Holders of
the Subordinated Debt Securities;
(7) except as provided in the applicable Indenture, release
the Subsidiary Guarantee of a Subsidiary Guarantor;
(8) reduce the percentage in principal amount of
Outstanding Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the
Indenture;
(9) reduce the percentage in principal amount of
Outstanding Debt Securities of any series necessary for waiver
of compliance with certain provisions of the Indenture or for
waiver of certain defaults;
(10) modify such provisions with respect to modification,
amendment or waiver; or
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(11) following the making of an offer to purchase Debt
Securities from any Holder that has been made pursuant to a
covenant in such Indenture, modify such covenant in a manner
adverse to such Holder.
The Holders of not less than a majority in principal amount of
the Outstanding Debt Securities of any series may waive
compliance by us with certain restrictive provisions of the
applicable Indenture. The Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any
series may waive any past default under the applicable
Indenture, except a default in the payment of principal, premium
or interest and certain covenants and provisions of the
Indenture which cannot be amended without the consent of the
Holder of each Outstanding Debt Security of such series.
Each of the Indentures provides that in determining whether the
Holders of the requisite principal amount of the Outstanding
Debt Securities have given or taken any direction, notice,
consent, waiver or other action under such Indenture as of any
date:
(1) the principal amount of an Original Issue Discount
Security that will be deemed to be Outstanding will be the
amount of the principal that would be due and payable as of such
date upon acceleration of maturity to such date;
(2) if, as of such date, the principal amount payable at
the Stated Maturity of a Debt Security is not determinable (for
example, because it is based on an index), the principal amount
of such Debt Security deemed to be Outstanding as of such date
will be an amount determined in the manner prescribed for such
Debt Security;
(3) the principal amount of a Debt Security denominated in
one or more foreign currencies or currency units that will be
deemed to be Outstanding will be the United States-dollar
equivalent, determined as of such date in the manner prescribed
for such Debt Security, of the principal amount of such Debt
Security (or, in the case of a Debt Security described in
clause (1) or (2) above, of the amount described in
such clause); and
(4) certain Debt Securities, including those owned by us,
any Subsidiary Guarantor or any of our other Affiliates, will
not be deemed to be Outstanding.
Except in certain limited circumstances, we will be entitled to
set any day as a record date for the purpose of determining the
Holders of Outstanding Debt Securities of any series entitled to
give or take any direction, notice, consent, waiver or other
action under the applicable Indenture, in the manner and subject
to the limitations provided in the Indenture. In certain limited
circumstances, the Trustee will be entitled to set a record date
for action by Holders. If a record date is set for any action to
be taken by Holders of a particular series, only persons who are
Holders of Outstanding Debt Securities of that series on the
record date may take such action. To be effective, such action
must be taken by Holders of the requisite principal amount of
such Debt Securities within a specified period following the
record date. For any particular record date, this period will be
180 days or such other period as may be specified by us (or
the Trustee, if it set the record date), and may be shortened or
lengthened (but not beyond 180 days) from time to time.
Satisfaction
and Discharge
Each Indenture will be discharged and will cease to be of
further effect as to all outstanding Debt Securities of any
series issued thereunder, when:
(1) either:
(a) all outstanding Debt Securities of that series that
have been authenticated (except lost, stolen or destroyed Debt
Securities that have been replaced or paid and Debt Securities
for whose payment money has theretofore been deposited in trust
and thereafter repaid to us) have been delivered to the Trustee
for cancellation; or
(b) all outstanding Debt Securities of that series that
have been not delivered to the Trustee for cancellation have
become due and payable or will become due and payable at their
Stated Maturity within one year or are to be called for
redemption within one year under arrangements satisfactory to
the Trustee and in any case we have irrevocably deposited with
the Trustee as trust funds money in an
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amount sufficient, without consideration of any reinvestment of
interest, to pay the entire indebtedness of such Debt Securities
not delivered to the Trustee for cancellation, for principal,
premium, if any, and accrued interest to the Stated Maturity or
redemption date;
(2) we have paid or caused to be paid all other sums
payable by us under the Indenture with respect to the Debt
Securities of that series; and
(3) we have delivered an Officers Certificate and an
Opinion of Counsel to the Trustee stating that all conditions
precedent to satisfaction and discharge of the Indenture with
respect to the Debt Securities of that series have been
satisfied.
Legal
Defeasance and Covenant Defeasance
To the extent indicated in the applicable prospectus supplement,
we may elect, at our option at any time, to have our obligations
discharged under provisions relating to defeasance and discharge
of indebtedness, which we call legal defeasance, or
relating to defeasance of certain restrictive covenants applied
to the Debt Securities of any series, or to any specified part
of a series, which we call covenant defeasance.
Legal Defeasance. The Indentures provide that,
upon our exercise of our option (if any) to have the legal
defeasance provisions applied to any series of Debt Securities,
we and, if applicable, each Subsidiary Guarantor will be
discharged from all our obligations, and, if such Debt
Securities are Subordinated Debt Securities, the provisions of
the Subordinated Indenture relating to subordination will cease
to be effective, with respect to such Debt Securities (except
for certain obligations to convert, exchange or register the
transfer of Debt Securities, to replace stolen, lost or
mutilated Debt Securities, to maintain paying agencies and to
hold moneys for payment in trust) upon the deposit in trust for
the benefit of the Holders of such Debt Securities of money or
U.S. Government Obligations, or both, which, through the
payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount
sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of and any
premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the applicable
Indenture and such Debt Securities. Such defeasance or discharge
may occur only if, among other things:
(1) we have delivered to the applicable Trustee an Opinion
of Counsel to the effect that we have received from, or there
has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in
either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes
as a result of such deposit and legal defeasance and will be
subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
deposit and legal defeasance were not to occur;
(2) no Event of Default or event that with the passing of
time or the giving of notice, or both, shall constitute an Event
of Default shall have occurred and be continuing at the time of
such deposit or, with respect to any Event of Default described
in clause (8) under Events of
Default, at any time until 121 days after such
deposit;
(3) such deposit and legal defeasance will not result in a
breach or violation of, or constitute a default under, any
agreement or instrument (other than the applicable Indenture) to
which we are a party or by which we are bound;
(4) in the case of Subordinated Debt Securities, at the
time of such deposit, no default in the payment of all or a
portion of principal of (or premium, if any) or interest on any
Senior Debt shall have occurred and be continuing, no event of
default shall have resulted in the acceleration of any Senior
Debt and no other event of default with respect to any Senior
Debt shall have occurred and be continuing permitting after
notice or the lapse of time, or both, the acceleration
thereof; and
(5) we have delivered to the Trustee an Opinion of Counsel
to the effect that such deposit shall not cause the Trustee or
the trust so created to be subject to the Investment Company Act
of 1940.
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Covenant Defeasance. The Indentures provide
that, upon our exercise of our option (if any) to have the
covenant defeasance provisions applied to any Debt Securities,
we may fail to comply with certain restrictive covenants (but
not with respect to conversion, if applicable), including those
that may be described in the applicable prospectus supplement,
and the occurrence of certain Events of Default, which are
described above in clause (5) (with respect to such restrictive
covenants) and clauses (6), (7) and (9) under
Events of Default and any that may be described in
the applicable prospectus supplement, will not be deemed to
either be or result in an Event of Default and, if such Debt
Securities are Subordinated Debt Securities, the provisions of
the Subordinated Indenture relating to subordination will cease
to be effective, in each case with respect to such Debt
Securities. In order to exercise such option, we must deposit,
in trust for the benefit of the Holders of such Debt Securities,
money or U.S. Government Obligations, or both, which,
through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount
sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of and any
premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the applicable
Indenture and such Debt Securities. Such covenant defeasance may
occur only if we have delivered to the applicable Trustee an
Opinion of Counsel to the effect that Holders of such Debt
Securities will not recognize gain or loss for federal income
tax purposes as a result of such deposit and covenant defeasance
and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the
case if such deposit and covenant defeasance were not to occur,
and the requirements set forth in clauses (2), (3), (4) and
(5) above are satisfied. If we exercise this option with
respect to any series of Debt Securities and such Debt
Securities were declared due and payable because of the
occurrence of any Event of Default, the amount of money and
U.S. Government Obligations so deposited in trust would be
sufficient to pay amounts due on such Debt Securities at the
time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any
acceleration resulting from such Event of Default. In such case,
we would remain liable for such payments.
If we exercise either our legal defeasance or covenant
defeasance option, any Subsidiary Guarantee will terminate.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator, stockholder,
member, partner or trustee of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations
of the Company or any Subsidiary Guarantor under the Debt
Securities, the Indentures or any Subsidiary Guarantees or for
any claim based on, in respect of, or by reason of, such
obligations or their creation. By accepting a Debt Security,
each Holder shall be deemed to have waived and released all such
liability. The waiver and release shall be a part of the
consideration for the issue of the Debt Securities. The waiver
may not be effective to waive liabilities under the federal
securities laws, and it is the view of the SEC that such a
waiver is against public policy.
Notices
Notices to Holders of Debt Securities will be given by mail to
the addresses of such Holders as they may appear in the Security
Register.
Title
We, the Subsidiary Guarantors, the Trustees and any agent of us,
the Subsidiary Guarantors or a Trustee may treat the Person in
whose name a Debt Security is registered as the absolute owner
of the Debt Security (whether or not such Debt Security may be
overdue) for the purpose of making payment and for all other
purposes.
Governing
Law
The Indentures and the Debt Securities will be governed by, and
construed in accordance with, the law of the State of New York.
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The
Trustee
We will enter into the Indentures with a Trustee that is
qualified to act under the Trust Indenture Act of 1939, as
amended, and with any other Trustees chosen by us and appointed
in a supplemental indenture for a particular series of Debt
Securities. We may maintain a banking relationship in the
ordinary course of business with our Trustee and one or more of
its affiliates.
Resignation or Removal of Trustee. If the
Trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee must either
eliminate its conflicting interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and the applicable Indenture. Any
resignation will require the appointment of a successor Trustee
under the applicable Indenture in accordance with the terms and
conditions of such Indenture.
The Trustee may resign or be removed by us with respect to one
or more series of Debt Securities and a successor Trustee may be
appointed to act with respect to any such series. The holders of
a majority in aggregate principal amount of the Debt Securities
of any series may remove the Trustee with respect to the Debt
Securities of such series.
Limitations on Trustee if It Is Our
Creditor. Each Indenture will contain certain
limitations on the right of the Trustee, in the event that it
becomes our creditor, to obtain payment of claims in certain
cases, or to realize on certain property received in respect of
any such claim as security or otherwise.
Certificates and Opinions to Be Furnished to
Trustee. Each Indenture will provide that, in
addition to other certificates or opinions that may be
specifically required by other provisions of an Indenture, every
application by us for action by the Trustee must be accompanied
by an Officers Certificate and an Opinion of Counsel
stating that, in the opinion of the signers, all conditions
precedent to such action have been complied with by us.
17
DESCRIPTION
OF CAPITAL STOCK
The following summary of our capital stock, Restated Certificate
of Incorporation (the Certificate of Incorporation)
and Amended and Restated Bylaws (the Bylaws) does
not purport to be complete and is qualified in its entirety by
reference to the provisions of applicable law and to our
Certificate of Incorporation and Bylaws.
Our authorized capital stock consists of 300,000,000 shares
of common stock, $0.001 par value per share, and
10,000,000 shares of preferred stock, $0.001 par value
per share.
Common
Stock
As of September 1, 2009, we had 85,562,638 shares of
voting common stock outstanding, including 467,692 shares
of restricted stock. The shares of restricted stock have voting
rights, rights to receive dividends and are subject to certain
forfeiture restrictions.
Our common stock commenced trading on the NYSE under the symbol
CXO on August 3, 2007 in connection with our
initial public offering. As of September 1, 2009, there
were 41,941 holders of record of our common stock.
Holders of our common stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders
and do not have cumulative voting rights. Accordingly, holders
of a majority of the shares of our common stock entitled to vote
in any election of directors may elect all of the directors
standing for election.
Holders of our common stock are entitled to receive
proportionately any dividends if and when such dividends are
declared by our board of directors, subject to any preferential
dividend rights of preferred stock that may be outstanding at
the time such dividends are declared. Upon the liquidation,
dissolution or winding up of our company, the holders of our
common stock are entitled to receive ratably our net assets
available after the payment of all debts and other liabilities
and subject to the prior rights of any outstanding preferred
stock. Holders of our common stock have no preemptive,
subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of our common stock are
subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock that we may
designate and issue in the future.
We have not paid, and do not intend to pay in the foreseeable
future, cash dividends on our common stock.
There are no redemption or sinking fund provisions applicable to
our common stock. All outstanding shares of our common stock are
fully paid and non-assessable.
Preferred
Stock
Under the terms of our Certificate of Incorporation, our board
of directors is authorized to designate and issue shares of
preferred stock in one or more series without further vote or
action by our stockholders. Our board of directors has the
discretion to determine the rights, preferences, privileges and
restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation
preferences, of each series of preferred stock. It is not
possible to state the actual effect of the issuance of any
shares of preferred stock upon the rights of holders of the
common stock until the board of directors determines the
specific rights of the holders of the preferred stock. However,
these effects might include:
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restricting dividends on the common stock;
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diluting the voting power of the common stock;
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impairing the liquidation rights of the common stock; and
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delaying or preventing a change in control of our company.
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We currently have no shares of preferred stock outstanding, and
we have no present plans to issue any shares of preferred stock.
Anti-Takeover
Provisions of Our Certificate of Incorporation and
Bylaws
Our Certificate of Incorporation and Bylaws contain several
provisions that could delay or make more difficult the
acquisition of us through a hostile tender offer, open market
purchases, proxy contest, merger or other takeover attempt that
a stockholder might consider in his or her best interest,
including those attempts that might result in a premium over the
market price of our common stock.
Written
Consent of Stockholders
Our Certificate of Incorporation and Bylaws provide that any
action required or permitted to be taken by our stockholders
must be taken at a duly called meeting of stockholders and not
by written consent.
Special
Meetings of Stockholders
Subject to the rights of the holders of any series of preferred
stock, our Bylaws provide that special meetings of the
stockholders may only be called by the chairman of the board of
directors or by the resolution of our board of directors
approved by a majority of the total number of authorized
directors. No business other than that stated in a notice may be
transacted at any special meeting.
Advance
Notice Procedure for Director Nominations and Stockholder
Proposals
Our Bylaws provide that adequate notice must be given to
nominate candidates for election as directors or to make
proposals for consideration at annual meetings of our
stockholders. For nominations or other business to be properly
brought before an annual meeting by a stockholder, the
stockholder must have delivered a written notice to the
Secretary of our company at our principal executive offices not
less than 45 calendar days nor more than 75 calendar days prior
to the first anniversary of the date on which we first mailed
our proxy materials for the preceding years annual
meeting; provided, however, that in the event that the date of
the annual meeting is more than 30 calendar days before or more
than 30 calendar days after the first anniversary of the date of
the preceding years annual meeting notice by the
stockholder to be timely must be so delivered not later than the
close of business on the later of the 90th calendar day
prior to such annual meeting or the 10th calendar day
following the calendar day on which public announcement, if any,
of the date of such meeting is first made by us.
Nominations of persons for election to our board of directors
may be made at a special meeting of stockholders at which
directors are to be elected pursuant to our notice of meeting
(i) by or at the direction of our board of directors, or
(ii) by any stockholder of our company who is a stockholder
of record at the time of the giving of notice of the meeting,
who is entitled to vote at the meeting and who complies with the
notice procedures set forth in our Bylaws. In the event we call
a special meeting of stockholders for the purpose of electing
one or more directors to our board of directors, any stockholder
may nominate a person or persons (as the case may be) for
election to such position(s) if the stockholder provides written
notice to the Secretary of our company at our principal
executive offices not earlier than the close of business on the
90th calendar day prior to such special meeting, nor later
than the close of business on the later of the
70th calendar day prior to such special meeting or the
10th calendar day following the day on which public
announcement, if any, is first made of the date of the special
meeting and of the nominees proposed by our board of directors
to be elected at such meeting.
These procedures may operate to limit the ability of
stockholders to bring business before a stockholders meeting,
including the nomination of directors and the consideration of
any transaction that could result in a change in control and
that may result in a premium to our stockholders
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Classified
Board
Our Certificate of Incorporation divides our directors into
three classes serving staggered three-year terms. As a result,
stockholders will elect approximately one-third of the board of
directors each year. This provision, when coupled with
provisions of our Certificate of Incorporation authorizing only
the board of directors to fill vacant or newly created
directorships or increase the size of the board of directors and
provisions providing that directors may only be removed for
cause and then only by the holders of not less than
662/3%
of the voting power of all outstanding voting stock, may deter a
stockholder from gaining control of our board of directors by
removing incumbent directors or increasing the number of
directorships and simultaneously filling the vacancies or newly
created directorships with its own nominees.
Authorized
Capital Stock
Our Certificate of Incorporation contains provisions that the
authorized but unissued shares of common stock and preferred
stock are available for future issuance, subject to various
limitations imposed by the New York Stock Exchange. These
additional shares may be utilized for a variety of corporate
purposes, including public offerings to raise capital, corporate
acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred
stock could make it more difficult or discourage an attempt to
obtain control of our company by means of a proxy contest,
tender offer, merger or otherwise.
Amendment
of Bylaws
Under Delaware law, the power to adopt, amend or repeal bylaws
is conferred upon the stockholders. A corporation may, however,
in its certificate of incorporation also confer upon the board
of directors the power to adopt, amend or repeal its bylaws. Our
Certificate of Incorporation and Bylaws grant our board of
directors the power to adopt, amend and repeal our Bylaws on the
affirmative vote of a majority of the directors then in office.
Our stockholders may adopt, amend or repeal our Bylaws but only
at any regular or special meeting of stockholders by the holders
of not less than
662/3%
of the voting power of all outstanding voting stock.
Certain
Oil and Natural Gas Opportunities
Certain of our stockholders who received shares of common stock
in the combination transaction and our non-employee
directors may from time to time have investments in other
exploration and production companies that may compete with us.
Our certificate of incorporation and our Business Opportunities
Agreement provide a safe harbor under which these entities and
directors may participate in the oil and gas exploration,
exploitation, development and production business without
breaching their fiduciary duties as controlling stockholders or
directors. No participation is allowed with respect to:
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any business opportunity that is brought to the attention of a
covered individual or entity solely in such persons
capacity as a director or officer of our company and with
respect to which, at the time of such presentment, no other
covered individual or entity has independently received notice
or otherwise identified such opportunity; or
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any business opportunity that is identified by a covered
individual or entity solely through the disclosure of
information by or on behalf of us.
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The covered individuals and entities have no obligation to offer
such opportunities to us, but interested directors are required
to disclose conflicts of interest. We are not prohibited from
pursuing any business opportunity with respect to which we have
renounced any interest.
Limitation
of Liability of Directors
Our Certificate of Incorporation provides that no director shall
be personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director, except for
liability as follows:
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for any breach of the directors duty of loyalty to us or
our stockholders;
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for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of laws;
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for unlawful payment of a dividend or unlawful stock purchase or
stock redemption; and
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for any transaction from which the director derived an improper
personal benefit.
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The effect of these provisions is to eliminate our rights and
our stockholders rights, through stockholders
derivative suits on our behalf, to recover monetary damages
against a director for a breach of fiduciary duty as a director,
including breaches resulting from grossly negligent behavior,
except in the situations described above.
Delaware
Takeover Statute
We are subject to Section 203 of the Delaware General
Corporation Law, which prohibits a Delaware corporation from
engaging in any business combination with any interested
stockholder for a period of three years after the date that such
stockholder became an interested stockholder, with the following
exceptions:
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before such date, the board of directors of the corporation
approved either the business combination or the transaction that
resulted in the stockholder becoming an interested stockholder
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upon completion of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction began,
excluding for purposes of determining the voting stock
outstanding (but not the outstanding voting stock owned by the
interested stockholder) those shares owned (1) by persons
who are directors and also officers and (2) employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
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on or after such date, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the
affirmative vote of at least
662/3%
of the outstanding voting stock that is not owned by the
interested stockholder.
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In general, Section 203 defines a business combination to
include the following:
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any merger or consolidation involving the corporation and the
interested stockholder;
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any sale, transfer, pledge or other disposition (in one
transaction or a series of transactions) of 10% or more of the
assets of the corporation involving the interested stockholder;
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subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock or any class or
series of the corporation beneficially owned by the interested
stockholder; or
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the receipt by the interested stockholder of the benefit of any
loss, advances, guarantees, pledges or other financial benefits
by or through the corporation.
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In general, Section 203 defines an interested
stockholder as an entity or person who, together with the
persons affiliates and associates, beneficially owns, or
within three years prior to the time of determination of
interested stockholder status did own, 15% or more of the
outstanding voting stock of the corporation.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.
21
DESCRIPTION
OF WARRANTS
We may issue warrants for the purchase of our common stock.
Warrants may be issued independently or together with Debt
Securities, preferred stock or common stock offered by any
prospectus supplement and may be attached to or separate from
any such offered securities. Each series of warrants will be
issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent, all as
set forth in the prospectus supplement relating to the
particular issue of warrants. The warrant agent will act solely
as our agent in connection with the warrants and will not assume
any obligation or relationship of agency or trust for or with
any holders of warrants or beneficial owners of warrants. The
following summary of certain provisions of the warrants does not
purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the warrant
agreements.
You should refer to the prospectus supplement relating to a
particular issue of warrants for the terms of and information
relating to the warrants, including, where applicable:
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(1)
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the number of shares of common stock purchasable upon exercise
of the warrants and the price at which such number of shares of
common stock may be purchased upon exercise of the warrants;
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(2)
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the date on which the right to exercise the warrants commences
and the date on which such right expires (the Expiration
Date);
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(3)
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United States federal income tax consequences applicable to the
warrants;
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(4)
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the amount of the warrants outstanding as of the most recent
practicable date; and
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(5)
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any other terms of the warrants.
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Warrants will be offered and exercisable for United States
dollars only. Warrants will be issued in registered form only.
Each warrant will entitle its holder to purchase such number of
shares of common stock at such exercise price as is in each case
set forth in, or calculable from, the prospectus supplement
relating to the warrants. The exercise price may be subject to
adjustment upon the occurrence of events described in such
prospectus supplement. After the close of business on the
Expiration Date (or such later date to which we may extend such
Expiration Date), unexercised warrants will become void. The
place or places where, and the manner in which, warrants may be
exercised will be specified in the prospectus supplement
relating to such warrants.
Prior to the exercise of any warrants, holders of the warrants
will not have any of the rights of holders of common stock,
including the right to receive payments of any dividends on the
common stock purchasable upon exercise of the warrants, or to
exercise any applicable right to vote.
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PLAN OF
DISTRIBUTION
We may sell the offered securities in and outside the United
States (1) through underwriters or dealers,
(2) directly to purchasers, including our affiliates and
stockholders, (3) through agents or (4) through a
combination of any of these methods. The prospectus supplement
will include the following information:
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the terms of the offering;
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the names of any underwriters or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price of the securities;
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the estimated net proceeds to us from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items
constituting underwriters compensation;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any commissions paid to agents.
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Sale
Through Underwriters or Dealers
If underwriters are used in the sale, the underwriters will
acquire the securities for their own account for resale to the
public, either on a firm commitment basis or a best efforts
basis. The underwriters may resell the securities from time to
time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. Underwriters may offer
securities to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by
one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to
certain conditions. The underwriters may change from time to
time any offering price and any discounts or concessions allowed
or reallowed or paid to dealers.
During and after an offering through underwriters, the
underwriters may purchase and sell the securities in the open
market. These transactions may include overallotment and
stabilizing transactions and purchases to cover syndicate short
positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that
selling concessions allowed to syndicate members or other
broker-dealers for the offered securities sold for their account
may be reclaimed by the syndicate if the offered securities are
repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or
otherwise affect the market price of the offered securities,
which may be higher than the price that might otherwise prevail
in the open market. If commenced, the underwriters may
discontinue these activities at any time.
If dealers are used, we will sell the securities to them as
principals. The dealers may then resell those securities to the
public at varying prices determined by the dealers at the time
of resale. We will include in the prospectus supplement the
names of the dealers and the terms of the transaction.
Direct
Sales and Sales Through Agents
We may sell the securities directly. In this case, no
underwriters or agents would be involved. We may also sell the
securities through agents designated from time to time. In the
prospectus supplement, we will name any agent involved in the
offer or sale of the offered securities, and we will describe
any commissions payable to the agent. Unless we inform you
otherwise in the prospectus supplement, any agent will agree to
use its reasonable best efforts to solicit purchases for the
period of its appointment.
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We may sell the securities directly to institutional investors
or others who may be deemed to be underwriters within the
meaning of the Securities Act with respect to any sale of
securities. We will describe the terms of any such sales in the
prospectus supplement.
Remarketing
Arrangements
Offered securities may also be offered and sold, if so indicated
in the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more remarketing firms, acting as principals for their own
accounts or as agents for us. Any remarketing firm will be
identified and the terms of its agreements, if any, with us and
its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters,
as that term is defined in the Securities Act, in connection
with the securities remarketed.
Delayed
Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize
agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities from us at the
public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The
prospectus supplement will describe the commission payable for
solicitation of those contracts.
General
Information
We may have agreements with the agents, dealers, underwriters
and remarketing firms to indemnify them against certain civil
liabilities, including liabilities under the Securities Act, or
to contribute with respect to payments that the agents, dealers,
underwriters or remarketing firms may be required to make.
Agents, dealers, underwriters and remarketing firms may be
customers of, engage in transactions with, or perform services
for us in the ordinary course of their businesses.
LEGAL
MATTERS
Certain legal matters in connection with the securities will be
passed upon by Vinson & Elkins L.L.P., Houston, Texas,
as our counsel. Any underwriter or agent will be advised about
other issues relating to any offering by its own legal counsel.
EXPERTS
The (i) consolidated financial statements of Concho
Resources Inc. and subsidiaries incorporated in this prospectus
by reference to our Annual Report on
Form 10-K
for the year ended December 31, 2008, retrospectively
adjusted by our Current Report on
Form 8-K
filed on September 9, 2009 and (ii) managements
assessment of the effectiveness of internal control over
financial reporting incorporated in this prospectus by reference
to our Annual Report on
Form 10-K
for the year ended December 31, 2008 have been so
incorporated by reference in reliance upon the reports of Grant
Thornton LLP, independent registered public accountants, upon
the authority of said firm as experts in auditing and accounting
in giving said reports.
The special-purpose combined financial statements of the Henry
Group Properties as of December 31, 2007 and 2006, and for
each of the years in the three-year period ended
December 31, 2007 incorporated in this prospectus by
reference to the Current Reports on
Form 8-K
filed on August 6, 2008 and October 7, 2008 have been
so incorporated by reference in reliance upon the report of
Davis, Kinard & Co., P.C., independent registered
public accounting firm, upon the authority of said firm as
experts in accounting and auditing.
Certain estimates of our net crude oil and natural gas reserves
and related information included or incorporated by reference in
this prospectus have been derived from reports prepared by
Cawley, Gillespie & Associates, Inc. and Netherland,
Sewell & Associates, Inc. All such information has
been so included or incorporated by reference on the authority
of such firms as experts regarding the matters contained in
their reports.
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