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 March 7, 2012. 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.
| Issuer: | Concho Resources Inc. | |||
| Security Description: | 5.5% Senior Notes due 2022 | |||
| Distribution: | SEC Registered | |||
| Size: | $600,000,000 | |||
| Maturity: | October 1, 2022 | |||
| Coupon: | 5.500% | |||
| Price: | 100.000% of face amount | |||
| Yield to maturity: | 5.500% | |||
| Spread to Benchmark Treasury: | +354 basis points | |||
| Benchmark Treasury: | UST 2% due February 15, 2022 | |||
| Interest Payment Dates: | October 1 and April 1, commencing October 1, 2012 | |||
| Gross Proceeds: | $600,000,000 | |||
| Net Proceeds to the Issuer (before expenses): | $591,000,000 | |||
| Redemption Provisions: | ||||
| First call date: | October 1, 2017 | |||
| Make-whole call: | Before the first call date at a discount rate of Treasury plus 50 basis points | |||
| Redemption prices: | ||||
| Commencing October 1, 2017: | 102.750% | |||
| Commencing October 1, 2018: | 101.833% | |||
| Commencing October 1, 2019: Commencing October 1, 2020 |
100.917% | |||
| and thereafter: | 100.000% | |||
| Redemption with proceeds of equity offering | Prior to April 1, 2015, up to 35% may be redeemed at 105.500% | |||
| Change of control: | Put at 101% of principal plus accrued interest | |||
| Trade date: | March 7, 2012 | |||
| Settlement: | (T+3); March 12, 2012 | |||
| Denominations: | $2,000 and integral multiples of $1,000 | |||
| CUSIP/ISIN: | 20605PAD3 / US20605PAD33 | |||
| Form of Offering: | SEC Registered (Registration No. 333-161809) | |||
| Joint book-running managers: | J.P. Morgan Securities LLC Merrill Lynch, Pierce, Fenner & Smith Incorporated Wells Fargo Securities, LLC | |||
| Senior Co-managers: | Barclays Capital Inc. BMO Capital Markets Corp. Credit Agricole Securities (USA) Inc. ING Financial Markets LLC Mitsubishi UFJ Securities (USA), Inc. U.S. Bancorp Investments, Inc. | |||
| Junior Co-managers: | Capital One Southcoast, Inc. CIBC World Markets Corp. Deutsche Bank Securities Inc. Lloyds Securities Inc. RBC Capital Markets LLC RBS Securities Inc. Scotia Capital (USA) Inc. SMBC Nikko Capital Markets Limited Tudor, Pickering, Holt & Co. Securities, Inc. | |||
2
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; 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 $500.0 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.
Pro Forma 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-18:
For the year ended December 31, 2011, our consolidated ratio of earnings to fixed charges, on an as adjusted basis to give effect to this offering, would have been 6.26.
Use of Proceeds
The following disclosure under “Use of Proceeds” on page S-19 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 to be approximately $590.1 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 Adjusted column under “Capitalization” on page S-20 and each other location where they appear in the preliminary prospectus supplement are amended to read as follows:
|
December 31, 2011 As Adjusted (in thousands) |
||||||
| Cash and cash equivalents |
$ | 6,942 | ||||
| Long-term debt: |
||||||
| Credit facility |
$ | — | ||||
| Senior notes offered hereby |
$ | 600,000 | ||||
| Total long-term debt |
$ | 2,096,641 | ||||
| Total capitalization |
$ | 5,077,380 | ||||