Concho Resources (CXO) Activity in Terry County

Below are portions of a transcript that I cut and pasted from a discussion by Concho Resources CEO where they discuss their acreage acquisitions in Terry County and Hockley County. This is another large oil company entering into Terry County. There is a lot of talk about the Wolfcamp and Cline shale formations. Here is a link to the articles: Enjoy!

Concho Resources' CEO Discusses Acquisition of Three Rivers Operating Company Conference (Transcript)

And then up to the north, we’re picking up a strategic piece of acreage in Terry County in and around that new development we have for Cline and Wolfcamp up in the northern part of Midland Basin. And then in the south, we get a very attractive block of acreage down in the Southern Midland Basin. This will greatly complement our effort to increase horizontal drilling in the Midland Basin.

Q & A

David R. Tameron – Wells Fargo Advisors LLC

Hi, good morning, again. I’d add my congrats as well again on the acquisition. Can you spend a little more and may be I missed this if you did, but you talked about the play, for the Permian kind of heated up, northern Midland for the Cline and Wolfcamp. Can you give a little us a little more detail or any more color there?

Timothy A. Leach

On the Midland Basin the Cline and Wolfcamp play (inaudible)?

David R. Tameron – Wells Fargo Advisors LLC

Yeah, yeah, you made a comment early during Q&A, I think about north of a little bit, it’s heating up?

Timothy A. Leach

Yeah. Matt is the best one for answering that question, he is out there in trenches. So…

Matthew G. Hyde

Hi, David, this is Matt. I think we gave some insight into the northern Midland Basin potential with our announcement of our acreage position up there in Terry and Hockley. Genuinely, as you know, there has been a very little information out about that specific portion of the Midland Basin. Although, I can tell you, there are lots of people that are active up there including some fairly large operators at this point in time. Most of the public information out there is specific genuinely to the southern Midland Basin at this point in time, and then just recently, more over into the Eastern Shelf. But I can assure you, there is quite a bit of activity behind the scenes going on – on the northern portion of the Midland Basis, both with respect to the Wolfcamp and the Cline.

Sven Del Pozzo – IHS Herold

Good morning. Looking at the last couple of deals we’ve just talked about, you’ve mentioned one in Terry County and in Lynn and then down in – the bottom right hand corner Reeves and Pecos County. It seems like you’re buying stuff for cheaper that’s away from activity whether it might there might be greater uncertainty associated with the quality of the acreage that’s being acquired. So – and you mentioned also at least for this stuff at Terry County and Lynn County, the Wolfcamp and the Cline Shale, in the same Senate’s. I’m wondering if it’s generally true what I said that there is not as much drilling in those areas. Can we think about these plays being much more expensive than the way that we know them today based on current drilling and would you agree with that and does that mean there is more acreage out there to grab?

Timothy A. Leach

Yes, I would agree with that, so would just about every one of my competitors. And the acreage grab, I mean, you rightly point out that a lot of things we’re doing, we’ve had a great amount of success in the northern part of the Delaware Basin and there has been some success over in the southern part of the Midland Basin. And the real question is, where can you find rocks that look like that in other parts of the Permian, and that’s what’s driving all this activity.

And so it is, you step out, the acreage is a less expensive than if I was buying a block of acreage right next to one of my really highly productive horizontal program, but it’s riskier. But at the Permian Basin with it stacked plays, it’s a level of risk, I think you can get comfortable with and that’s what is going on in our industry today. And we think that we’ve got some pretty good signs here in Concho and we’re pretty excited about the opportunities there in front of us.

Additionally below is a link to a really good article on the Wolfcamp and Cline Shale. I got this article from another gentleman (Ralpr) on the Cline Shale group so Kudos to him! Thought you might like it!