Issuer Free Writing Prospectus
Filed by: Concho Resources Inc.
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement on
Form S-3:
No. 333-161809
Concho
Resources Inc.
Pricing
Term Sheet
This Pricing Term Sheet is qualified in its entirety by
reference to the Preliminary Prospectus Supplement, dated
December 9, 2010. The information in this Pricing Term
Sheet supplements the Preliminary Prospectus Supplement and
supersedes the information in the Preliminary Prospectus
Supplement to the extent it is inconsistent with the information
in the Preliminary Prospectus Supplement. Capitalized terms used
in this Pricing Term Sheet but not defined have the meanings
given them in the Preliminary Prospectus Supplement.
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Issuer:
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Concho Resources Inc.
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Size:
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$600,000,000
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Maturity:
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January 15, 2021
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Coupon:
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7.000%
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Price:
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100.000% of face amount
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Yield to maturity:
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7.000%
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Spread to Benchmark Treasury:
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+378 basis points
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Benchmark Treasury:
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UST 2.625% due November 15, 2020
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Interest Payment Dates:
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January 15 and July 15, commencing July 15, 2011
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Gross Proceeds:
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$600,000,000
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Net Proceeds to the Issuer (before expenses):
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$588,000,000
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Redemption Provisions:
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First call date:
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January 15, 2016
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Make-whole call:
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Before the first call date at a discount rate of Treasury plus
50 basis points
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Redemption prices:
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Commencing January 15, 2016: 103.500%
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Commencing January 15, 2017: 102.333%
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Commencing January 15, 2018: 101.167%
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Commencing January 15, 2019
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and
thereafter: 100.000%
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Redemption with proceeds of equity offering
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Prior to 2014, up to 35% may be redeemed at 107%
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Change of control:
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Put at 101% of principal plus accrued interest
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Trade date:
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December 9, 2010
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Settlement:
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T+3; December 14, 2010
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Denominations:
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$2,000 and integral multiples of $1,000
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CUSIP/ISIN:
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20605PAB7/US20605PAB76
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Form of Offering:
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SEC Registered (Registration No. 333-161809)
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Joint book-running managers:
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J.P. Morgan Securities LLC
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
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Credit Agricole Securities (USA) Inc.
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Wells Fargo Securities, LLC
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Co-managers:
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BNP Paribas Securities Corp.
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Deutsche Bank Securities Inc.
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ING Financial Markets LLC
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Mitsubishi UFJ Securities (USA), Inc.
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SunTrust Robinson Humphrey, Inc.
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U.S. Bancorp Investments, Inc.
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BBVA Securities Inc.
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Capital One Southcoast, Inc.
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Lloyds TSB Bank plc
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Natixis Securities North America Inc.
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RBS Securities Inc.
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Scotia Capital (USA) Inc.
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Tudor, Pickering, Holt & Co. Securities, Inc.
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The issuer has filed a registration statement (including a
prospectus and prospectus supplement) with the SEC for the
offering to which this communication relates. Before you invest,
you should read the prospectus in that registration statement
and other documents the issuer has filed with the SEC for more
complete information about the issuer and this offering. You may
get these documents for free by visiting EDGAR on the SEC Web
site at www.sec.gov. Alternatively, the issuer, any underwriter
or any dealer participating in the offering will arrange to send
you the prospectus if you request it by contacting
J.P. Morgan Securities LLC at 383 Madison Avenue, New York,
NY 10179, Attention: Syndicate Desk; Merrill Lynch, Pierce,
Fenner & Smith Incorporated at 4 World Financial
Center, New York, NY, 10080, Attention: Syndicate
Operations, by calling
(800) 294-1322
or by sending an email to dg.prospectus_requests@baml.com;
Credit Agricole Securities (USA) Inc. at 1301 Avenue of the
Americas, New York, NY 10019 or by calling
(866) 807-6030;
or Wells Fargo Securities, LLC at 550 South Tryon Street,
7th Floor, MAC D1086-070, Charlotte, NC 28202, by calling
(800) 326-5897
or by sending an email to cmclientsupport@wellsfargo.com.
Additional
Information
Offering
size
The Company has increased the offering of the Notes from
$350.0 million aggregate principal amount to
$600.0 million aggregate principal amount. Corresponding
changes will be made wherever applicable to the Preliminary
Prospectus Supplement, including as discussed below.
Conflicts
of Interest
The following disclosure under Summary The
Offering Conflicts of Interest on
page S-7
and each other location where it appears in the preliminary
prospectus supplement is amended to read as follows:
Tudor, Pickering, Holt & Co. Securities, Inc. is
assuming the responsibilities of acting as the qualified
independent underwriter in connection with this offering.
Adjusted
Ratio of Earnings to Fixed Charges
The following disclosure is hereby added as the last paragraph
of Ratios of Earnings to Fixed Charges and Earnings to
Fixed Charges and Preferred Stock Dividends on
page S-
21, and each other location where it appears in the preliminary
prospectus supplement is amended to read as follows:
For the nine months ended September 30, 2010 and the year
ended December 31, 2009, our consolidated ratio of earnings
to fixed charges, on an adjusted basis giving effect to this
offering, would have been 6.81 and less than 1:1, respectively.
To achieve ratio coverage of 1:1 for the year ended
December 31, 2009, we would have needed additional earnings
of approximately $58.6 million.
Use of
Proceeds
The following disclosure under Use of Proceeds on
page S-22
and each other location where it appears in the preliminary
prospectus supplement is amended to read as follows:
We expect the net proceeds from this offering will be
approximately $587.4 million, after deducting estimated
fees and expenses (including underwriting discounts and
commissions). We intend to use the net proceeds from this
offering to repay a portion of the outstanding borrowings under
our credit facility.
Capitalization
The following numbers in the As Finally Adjusted column under
Capitalization on
page S-23
and each other location where they appear in the preliminary
prospectus supplement are amended to read as follows:
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September 30, 2010
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As Finally Adjusted
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(In thousands)
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Long-term debt:
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Credit facility
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$
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754,344
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(2)
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Senior notes offered hereby
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600,000
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Total long-term debt
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$
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1,809,464
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Total capitalization
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$
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4,154,426
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(2) |
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At September 30, 2010, after giving effect to (i) the
Acquisitions and (ii) the issuance and sale of the notes
offered hereby and our registered common stock offering and the
application of the estimated net proceeds therefrom, we would
have been able to incur an additional $1.2 billion of
indebtedness under our credit facility. We expect our registered
common stock offering to close at the same time as the closing
of this notes offering. If we do not consummate the registered
common stock offering, approximately $1.0 billion in
borrowings under our credit facility will remain outstanding. |