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To: Dennis Roth who wrote (178362)	5/6/2013 9:07:42 AM
From: Dennis Roth	1 Recommendation Respond to of 206176

Concho Resources Inc (CXO) 2 May 2013 ¦ 16 pages ir.citi.com Q1'13 Wrap-up: Delaware Basin Drives Strong Growth Outlook Q1’13 Bottom Line – As outlined in our ' Quick Read' note yesterday, Concho reported bottom line results below expectations primarily due to lower-than-projected production, much lower-than-expected natural gas price realizations and higher G&A costs. Guidance Reaffirmed – Despite the Q1’13 disappointment, Concho maintained its 2013 production guidance of 92-95 MBOE/d (21% “organic” growth at high-end). We continue to model ~95 BOE/d. Production growth will be "almost exclusively" from the Delaware Basin, as legacy Yeso and Wolfberry assets should post minimal growth. The full-year capital budget remains $1.6bn ($1.4bn for drilling & completions) versus our revised ~$1.4bn after-tax operating cash flow projection. Expanding Horizontal Program Across The Permian – In the N. Delaware Basin, Concho reported 18 new hz wells with an avg 30-day IP rate of >760 BOE/d (70% oil). Several wells are now testing 10k ft laterals and one well has spud to test a ~13k ft lateral. In addition, the company successfully drilled and completed its first dual lateral. Management believes over 2/3s of the ~4,212 horizontal drilling locations in Northern Delaware Basin are prospective for multi-zone development targeting Bone Springs, Avalon and Wolfcamp objectives. Ten wells have been completed in the S. Delaware Basin to date, where Concho is moving in a third rig. No additional production details were given, however, since the last quarter's update since this play is still being evaluated. In the Midland Basin, the company is still drilling mostly vertical wells, but will continue to shift towards more hzs and may provide a hz well inventory count next quarter. In Upton County, Concho drilled its third hz Wolfcamp well, and plans to drill 10 by the end of the year. Recall that Pioneer completed a JV nearby in the southern Wolfcamp at ~$20.5k/acre earlier this year. Concho also plans to move more rigs out of the NM Shelf and Midland Wolfberry areas to the Delaware Basin, and it plans to transition more of its drilling activity from vertical to horizontal wells. Adjusting Estimates; Lowering Price Target – Based on Q1 results, recent cost trends and other fine tuning, we are reducing our 2013 EPS/CFPS estimates to $3.78/$13.55 (from $4.32/$14.20) and have also lowered estimates for 2014 forward. We are also reducing our 12-month price target to $100 from $107/sh. Maintain Buy.

To: Dennis Roth who wrote (178362)	5/13/2013 10:42:37 AM
From: Dennis Roth	1 Recommendation Read Replies (1) \| Respond to of 206176

E&P Stock Perspectives Per Underlying Commodity Price Drivers 9 May 2013 ¦ 13 pages ir.citi.com A Warmer-Than-Normal Summer, Which Is Widely Forecast, Could Further Benefit The More Natural Gas Levered E&P Stocks Summer Weather Outlook – Citi’s Meteorological team is forecasting another hotter-than-normal summer, and the 6th hottest on record, with nearly every region of the country expected to experience above-normal temperatures. Most third-party prognosticators are also calling for a hotter-than-normal summer this year. However, Citi’s forecast would still result in weighted temperatures averaging ~6% cooler than last summer. Importantly, although successively cooler, the past three summers have been the three hottest since records have been kept beginning in 1950. But in the mean time, a much colder-than-normal March and April this year have pushed U.S. natural gas storage levels to below the five-year average, which has clearly lent momentum to natural gas prices. And while deviations from normal have a much greater impact on demand during the winter months, we estimate that every 1% deviation from normal temperatures during the summer (June-August) impacts natural gas cooling-load demand by ~10 Bcf for this three-month period. Thus a 6% cooler summer than last year, per Citi’s forecast, would result in ~60 Bcf less natural gas demand year over year, all else being equal. But any potential further uplift to natural gas prices from a hotter-than-normal summer would benefit the more natural gas leveraged E&P stocks, i.e. *UPL, CHK, ECA, COG* and *SWN,* and vice versa.

To: Dennis Roth who wrote (178362)	6/4/2013 10:15:10 AM
From: Dennis Roth	2 Recommendations Read Replies (1) \| Respond to of 206176

E&P Stock Perspectives Per The March EIA- 914 Production and Demand Data Haynesville Production Decline Underscores Sequential Drop 2 June 2013 ¦ 12 pages ir.citi.com March EIA-914 Data Slight Positive For Gas-Leveraged E&P Stocks – The EIA-914 production data for March 2013 was reported on Friday with U.S. onshore natural gas production for the month at ~68.9 Bcf/d, or a ~0.3 Bcf/d decline versus February and versus our projection for roughly flat production sequentially. This followed a 0.9 Bcf/d sequential increase in February. Also, U.S. onshore natural gas production in March this year was ~1.7 Bcf/d higher than in March of 2012, despite nearly every company in our E&P coverage group having reduced or minimized ‘dry’ gas-directed activity over the prior year. Thus, the slight drop in domestic onshore natural gas production in March could be viewed as positive for the more gas-leveraged E&P names including COG, ECA, UPL, CHK, SWN, and RRC. Haynesville Shale Underscored Sequential Decline... – The biggest sequential production decline in March was in Louisiana where natural gas output fell ~0.3 Bcf/d sequentially. This marked the ninth consecutive month of sequential declines with most operators in the Haynesville, including Encana and Chesapeake, having reduced activity to a minimum last year, while some operators reported shut-ins for maintenance. However, Encana recently announced that it plans to ramp-up activity in the Haynesville this year, although a production response won’t occur until later in the year due to activity being pad drilling. ...While Marcellus Production Growth Slowed... – In the “Other States” category, which includes Pennsylvania (Marcellus), Colorado (DJ Basin) and North Dakota (Bakken), natural gas production declined ~0.1 Bcf/d in March after surging 0.5 Bcf/d sequentially in February. This was only the second sequential decline in the Other States region over the prior three years (output also declined 0.1 Bcf/d this past December) and could be largely explained by a surge in production in February with new and previously uncompleted wells coming on line due to infrastructure expansions. Then the subsequent initial decline in output from these new wells in March more than offset production from fewer new wells being tied in with no additional infrastructure build-outs. Nonetheless, Other States production was up ~3.0 Bcf/d over March of last year. ...And ‘Associated’ Gas Volumes In TX & OK Continued To Rise – Natural gas production in Texas rose 0.1 Bcf/d in March, after increasing 0.3 Bcf/d in February, due to an increase in associated natural gas production in the Eagle Ford shale and Permian Basin. This resulted from producers, including APA, CXO, CHK, DVN, EOG, MRO and PXD, continuing to ratchet up oil/liquids drilling in these plays while adding natural gas pipeline takeaway and gas processing capacity. In Oklahoma, natural gas production also increased ~0.1 Bcf/d in March due to an uptick in associated production from the Cana Woodford, Granite Wash and Mississippian plays where *APA, CHK, DVN, NFX and SD* have leading positions. New Mexico gas production increased by less than ~0.1 Bcf/d sequentially which was also driven by growth in associated gas volumes from the Permian Basin. Output In Rest of Lower-48 Declined Modestly – Elsewhere, production in Wyoming was relatively flat, while offshore Gulf of Mexico output fell ~0.1 Bcf/d sequentially due to natural field declines as well as maintenance and pipeline issues. As a result, total U.S. Lower-48 natural gas production in March declined ~0.4 Bcf/d versus February to ~72.7 Bcf/