2010-07-20-2010-07-20-2010-10-07

Acquired Marbob oil and gas assets in NM Permian Basin, doubling Yeso drilling inventory and gaining total proved reserves of 63 million BOE (58% oil, 63% proved developed).

Concho Resources Inc., Midland, (NYSE: CXO) has closed its acquisition of all the New Mexico Permian Basin oil and gas assets of privately held Marbob Energy Corp., Artesia, N.M., for US$1.3 billion in cash, stock and debt.

The deal includes $1.1 billion in cash, 1.1 million shares valued at $50 million and a $150-million 8% senior unsecured note issued to Marbob due in 2018. The deal was originally valued at $1.65 billion, but the cash portion was reduced by approximately $400 million following the exercise of preferential purchase rights by third parties.

The acquisition includes a large acreage position contiguous to Concho's core Yeso play and a significant acreage position in the emerging Bone Spring play. Net production as of Oct. 1 was approximately 12,000 barrels of oil equivalent per day.

Total proved reserves as of Oct. 1 were 63 million barrels equivalent (58% oil, 63% proved developed). Estimated unproved reserves are 166 million barrels equivalent.

Upside includes approximately 2,300 identified drilling locations (350 proved undeveloped), including approximately 1,300 in the Yeso play and approximately 1,000 in the Bone Spring play. Concho will retain Marbob's technical and operational staff.

Concho chairman, president and chief executive Timothy Leach, "The properties we acquired from Marbob expand our Yeso drilling inventory and significantly enhance our position in the emerging Bone Spring play, where our company now has approximately 150,000 net acres."

In a separate deal, Concho acquired additional non-operated rights and interests in certain Marbob properties owned by persons affiliated with Marbob for approximately $32 million. As of June 30, estimated proved reserves associated with these additional interests totaled approximately 1.3 million barrels oil equivalent.

Bank of America Merrill Lynch was financial advisor to Concho. Vinson & Elkins LLP was legal advisor.