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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the year ended December 31,
    2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 1-33615
  Concho Resources Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

76-0818600(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)550 West Texas Avenue, Suite 100
    Midland, Texas

79701(Address of principal executive
    offices)

(Zip code)   (432) 683-7443
 (Registrants telephone number, including area code)
  Securities Registered Pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange On Which RegisteredCommon Stock, $0.001 par value

New York Stock Exchange   Securities Registered Pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o (Do not
    check if a smaller reporting company)  Rule 12b-2 o þ
       Documents Incorporated by Reference:




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Table of
    Contents
  CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
    STATEMENTS

1GLOSSARY OF TERMS

2PART I

6Item 1. Business

6General

6Henry Entities Acquisition

6Chase Oil Transaction

6Business and Properties

6Drilling Activities

7Our Production, Prices and Expenses

8Summary of Core Operating Areas and Emerging
    Plays

8Marketing Arrangements

10Our Principal Customers

11Competition

11Applicable Laws and Regulations

12Our Employees

16Available Information

16Item 1A.  Risk Factors

17Risks Related to Our Business

17Risks Relating to Our Common Stock

30Item 1B.  Unresolved Staff Comments

31Item 2.  Properties

31Our Oil and Natural Gas Reserves

31Developed and Undeveloped Acreage

33Title to Our Properties

34Item 3.  Legal Proceedings

34Item 4.  Submission of Matters to a Vote of
    Shareholders

34PART II

35Item 5.  Market for Registrants Common
    Equity, Related Stockholder Matters and Issuer Purchases of
    Equity Securities

35Market Information

35Dividends

35Repurchase of Equity Securities

35Item 6.  Selected Financial Data

35Selected Historical Financial Information

35Selected Historical Financial and Operating
    Information for Lowe Properties

38Item 7.  Managements Discussion and
    Analysis of Financial Condition and Results of Operations

38Overview

39Commodity prices

39Recent events

39Items Impacting Comparability of our Financial
    Results

42Results of Operations

42 i




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Year ended December 31, 2008, compared to year
    ended December 31, 2007

43Year ended December 31, 2007, compared to year
    ended December 31, 2006

48Capital Commitments, Capital Resources and
    Liquidity

53Critical Accounting Policies and Practices

57Recent Accounting Pronouncements

58Item 7A.  Quantitative and Qualitative
    Disclosure About Market Risk

61Credit risk

61Commodity price risk

61Interest rate risk

62Item 8.  Financial Statements and
    Supplementary Data

63Item 9.  Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure

64Item 9A.  Controls and Procedures

64Evaluation of disclosure controls and
    procedures

64Changes in internal control over financial
    reporting

64Henry Properties acquisition

64Item 9B.  Other Information

68PART III

68Item 10.  Directors, Executive Officers and
    Corporate Governance

68Item 11.  Executive Compensation

68Item 12.  Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholder
    Matters

68Equity Compensation Plans

68Item 13.  Certain Relationships and Related
    Transactions, and Director Independence

68Item 14.  Principal Accounting Fees and
    Services

69PART IV

69Item 15.  Exhibits, Financial Statement
    Schedules, and Reports on Form 8-K

69SIGNATURES

73INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1EX-21.1EX-23.1EX-23.2EX-23.3EX-31.1EX-31.2EX-32.1EX-32.2   ii




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CAUTIONARY
    STATEMENT REGARDING FORWARD-LOOKING STATEMENTS      
    our business and financial strategy;
    the estimated quantities of crude oil and natural gas reserves;
    our use of industry technology;
    our realized crude oil and natural gas prices;
    the timing and amount of the future production of our crude oil
    and natural gas;
    the amount, nature and timing of our capital expenditures;
    the drilling of our wells;
    our competition and government regulations;
    the marketing of our crude oil and natural gas;
    our exploitation activities or property acquisitions;
    the costs of exploiting and developing our properties and
    conducting other operations;
    general economic and business conditions;
    our cash flow and anticipated liquidity;
    uncertainty regarding our future operating results;
    our plans, objectives, expectations and intentions contained in
    this report that are not historical; and
    our ability to integrate acquisitions.     1




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GLOSSARY
    OF TERMS    Bbl
    
    One stock tank barrel, of 42 U.S. gallons liquid volume, used
    herein in reference to crude oil, condensate or natural gas
    liquids.Boe
    
    One barrel of crude oil equivalent, a standard convention used
    to express oil and natural gas volumes on a comparable oil
    equivalent basis. Natural gas equivalents are determined under
    the relative energy content method by using the ratio of
    6.0 Mcf of gas to 1.0 Bbl of oil or condensate.Bcfe
    
    One billion cubic feet of natural gas equivalent using the ratio
    of one barrel of crude oil, condensate or natural gas liquids to
    six Mcf of natural gas.Basin
    
    A large natural depression on the earths surface in which
    sediments accumulate.Development wells
    
    Wells drilled within the proved area of an oil or gas reservoir
    to the depth of a stratigraphic horizon known to be productive.Dry hole
    
    A well found to be incapable of producing hydrocarbons in
    sufficient quantities such that proceeds from the sale of such
    production would exceed production expenses, taxes and the
    royalty burden.Exploitation
    
    A drilling or other project which may target proven or unproven
    reserves (such as probable or possible reserves), but which
    generally is reasonably expected to have lower risk.Exploratory wells
    
    Wells drilled to find and produce oil or gas in an unproved
    area, to find a new reservoir in a field previously found to be
    productive of oil or gas in another reservoir, or to extend a
    known reservoir.Field
    
    An area consisting of a single reservoir or multiple reservoirs
    all grouped on, or related to, the same individual geological
    structural feature or stratigraphic condition. The field name
    refers to the surface area, although it may refer to both the
    surface and the underground productive formations.Gross wells
    
    The number of wells in which a working interest is owned.Horizontal drilling
    
    A drilling technique used in certain formations where a well is
    drilled vertically to a certain depth and then drilled at a high
    angle to vertical (which can be greater than 90 degrees) in
    order to stay within a specified interval.Infill wells
    
    Wells drilled into the same pool as known producing wells so
    that oil or natural gas does not have to travel as far through
    the formation.LIBOR
    
    London Interbank Offered Rate, which is a market rate of
    interest.MBbl
    
    One thousand barrels of crude oil, condensate or natural gas
    liquids.MBoe
    
    One thousand Boe.Mcf
    
    One thousand cubic feet of natural gas.MMBbl
    
    One million barrels of crude oil, condensate or natural gas
    liquids.MMBoe
    
    One million Boe. 2




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MMBtu
    
    One million British thermal units.MMcf
    
    One million cubic feet of natural gas.NYMEX
    
    The New York Mercantile Exchange.NYSE
    
    The New York Stock Exchange.Net acres
    
    The percentage of total acres an owner owns out of a particular
    number of acres within a specified tract. For example, an owner
    who has a 50 percent interest in 100 acres owns
    50 net acres.Net revenue interest
    
    A working interest owners gross working interest in
    production, less the related royalty, overriding royalty,
    production payment, and net profits interests.Net wells
    
    The total of fractional working interests owned in gross wells.PV-10
    
    When used with respect to oil and natural gas reserves,
    PV-10 means
    the estimated future gross revenue to be generated from the
    production of proved reserves, net of estimated production and
    future development and abandonment costs, using prices and costs
    in effect at the determination date, before income taxes, and
    without giving effect to non-property-related expenses except
    for specific general and administrative expenses incurred to
    operate the properties, discounted to a present value using an
    annual discount rate of 10 percent.Primary recovery
    
    The period of production in which oil and natural gas is
    produced from its reservoir through the wellbore without
    enhanced recovery technologies, such as water flooding or gas
    injection.Productive wells
    
    Wells that produce commercial quantities of hydrocarbons,
    exclusive of their capacity to produce at a reasonable rate of
    return.Proved developed reserves
    
    Has the meaning given to such term in
    Rule 4-10(a)(3)
    of
    Regulation S-X,
    which defines proved developed reserves as:Proved developed oil and gas reserves are reserves that can be
    expected to be recovered through existing wells with existing
    equipment and operating methods. Additional oil and gas expected
    to be obtained through the application of fluid injection or
    other improved recovery techniques for supplementing the natural
    forces and mechanisms of primary recovery should be included as
    proved developed reserves only after testing by a pilot project
    or after the operation of an installed program has confirmed
    through production response that increased recovery will be
    achieved.Proved reserves
    
    Has the meaning given to such term in
    Rule 4-10(a)(2)
    of
    Regulation S-X,
    which defines proved reserves as:Proved oil and gas reserves are the estimated quantities of
    crude oil, natural gas, and natural gas liquids which geological
    and engineering data demonstrate with reasonable certainty to be
    recoverable in future years from known reservoirs under existing
    economic and operating conditions, i.e., prices and costs as of
    the date the estimate is made. Prices include consideration of
    changes in existing prices provided only by contractual
    arrangements, but not on escalations based upon future
    conditions. 3




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(i) Reservoirs are considered proved if economic
    producibility is supported by either actual production or
    conclusive formation test. The area of a reservoir considered
    proved includes (a) that portion delineated by drilling and
    defined by gas-oil and/or oil-water contacts, if any, and
    (b) the immediately adjoining portions not yet drilled, but
    which can be reasonably judged as economically productive on the
    basis of available geological and engineering data. In the
    absence of information on fluid contacts, the lowest known
    structural occurrence of hydrocarbons controls the lower proved
    limit of the reservoir.(ii) Reserves which can be produced economically through
    application of improved recovery techniques (such as fluid
    injection) are included in the proved classification when
    successful testing by a pilot project, or the operation of an
    installed program in the reservoir, provides support for the
    engineering analysis on which the project or program was based.(iii) Estimates of proved reserves do not include the
    following: (a) oil that may become available from known
    reservoirs but is classified separately as indicated additional
    reserves; (b) crude oil, natural gas, and natural gas
    liquids, the recovery of which is subject to reasonable doubt
    because of uncertainty as to geology, reservoir characteristics,
    or economic factors; (c) crude oil, natural gas, and
    natural gas liquids, that may occur in undrilled prospects; and
    (d) crude oil, natural gas, and natural gas liquids, that
    may be recovered from oil shales, coal, gilsonite and other such
    sources.Proved undeveloped reserves
    
    Has the meaning given to such term in
    Rule 4-10(a)(4)
    of
    Regulation S-X,
    which defines proved undeveloped reserves as:Proved undeveloped oil and gas reserves are reserves that are
    expected to be recovered from new wells on undrilled acreage, or
    from existing wells where a relatively major expenditure is
    required for recompletion. Reserves on undrilled acreage shall
    be limited to those drilling units offsetting productive units
    that are reasonably certain of production when drilled. Proved
    reserves for other undrilled units can be claimed only where it
    can be demonstrated with certainty that there is continuity of
    production from the existing productive formation. Under no
    circumstances should estimates for proved undeveloped reserves
    be attributable to any acreage for which an application of fluid
    injection or other improved recovery technique is contemplated,
    unless such techniques have been proved effective by actual
    tests in the area and in the same reservoir.Recompletion
    
    The addition of production from another interval or formation in
    an existing wellbore.Reservoir
    
    A formation beneath the surface of the earth from which
    hydrocarbons may be present. Its
    make-up is
    sufficiently homogenous to differentiate it from other
    formations.SEC
    
    The United States Securities and Exchange Commission.Secondary recovery
    
    The recovery of oil and gas through the injection of liquids or
    gases into the reservoir, supplementing its natural energy.
    Secondary 4




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recovery methods are often applied when production slows due to
    depletion of the natural pressure.Seismic survey
    
    Also known as a seismograph survey, is a survey of an area by
    means of an instrument which records the travel time of the
    vibrations of the earth. By recording the time interval between
    the source of the shock wave and the reflected or refracted
    shock waves from various formations, geophysicists are better
    able to define the underground configurations.Spacing
    
    The distance between wells producing from the same reservoir.
    Spacing is expressed in terms of acres, e.g.,
    40-acre
    spacing, and is established by regulatory agencies.Standardized measure
    
    The present value (discounted at an annual rate of 10%) of
    estimated future net revenues to be generated from the
    production of proved reserves net of estimated income taxes
    associated with such net revenues, as determined in accordance
    with Statement of Financial Accounting Standards No. 69
    (using prices and costs in effect as of the period end date)
    without giving effect to non-property related expenses such as
    indirect general and administrative expenses, and debt service
    or to depreciation, depletion and amortization. Standardized
    measure does not give effect to derivative transactions.Step-out drilling
    
    The drilling of a well adjacent to existing production in an
    effort to expand the aerial extent of a known producing field.Undeveloped acreage
    
    Acreage owned or leased on which wells can be drilled or
    completed to a point that would permit the production of
    commercial quantities of oil and natural gas regardless of
    whether such acreage contains proved reserves.Unit
    
    The joining of all or substantially all interests in a reservoir
    or field, rather than single tracts, to provide for development
    and operation without regard to separate property interests.
    Also, the area covered by a unitization agreement.Wellbore
    
    The hole drilled by the bit that is equipped for oil or gas
    production on a completed well. Also called a well or borehole.Working interest
    
    The right granted to the lessee of a property to explore for and
    to produce and own oil, gas, or other minerals. The working
    interest owners bear the exploration, development, and operating
    costs on either a cash, penalty, or carried basis.Workover
    
    Operations on a producing well to restore or increase production. 5




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PART I  Item 1.
    Business General     Henry
    Entities Acquisition   Chase Oil
    Transaction   Business
    and Properties   6




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and/or
   Drilling
    Activities    Years Ended December 31,2008

2007

2006Gross

Net

Gross

Net

Gross

NetDevelopment wellsProductive


118.0



76.8



60.0



38.5



93.0



57.8Dry


















7.0



2.4Exploratory wellsProductive


93.0



63.2



55.0



48.0



37.0



25.4Dry


1.0



1.0



2.0



1.2



3.0



0.8Total wellsProductive


211.0



140.0



115.0



86.5



130.0



83.2Dry


1.0



1.0



2.0



1.2



10.0



3.2Total


212.0



141.0



117.0



87.7



140.0



86.4     Drilling In-progress

Pending CompletionGross

Net

Gross

NetDevelopment wells


7.0



5.4



17.0



10.2Exploratory wells


4.0



1.7



14.0



6.0Total


11.0



7.1



31.0



16.2  7




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Our
    Production, Prices and Expenses    Years Ended December 31,2008

2007

2006Net production volumes:Oil (MBbl)


4,586



3,014



2,295Natural gas (MMcf)


14,968



12,064



9,507Total (MBoe)


7,081



5,025



3,880Average daily production volumes:Oil (Bbl)


12,530



8,258



6,288Natural gas (Mcf)


40,896



33,052



26,047Total (Boe)


19,347



13,767



10,630Average prices:Oil, without hedges (Bbl)

$
91.92


$
68.58


$
60.47Oil, with hedges (Bbl)

$
85.25


$
64.90


$
57.42Natural gas, without hedges (Mcf)

$
9.59


$
8.08


$
6.87Natural gas, with hedges (Mcf)

$
9.54


$
8.18


$
7.00Total, without hedges (Boe)

$
79.80


$
60.54


$
52.62Total, with hedges (Boe)

$
75.38


$
58.56


$
51.12Operating costs and expenses per Boe:Oil and gas production

$
6.70


$
5.96


$
5.69Oil and gas production taxes

$
6.18


$
4.84


$
4.06General and administrative

$
5.76


$
5.01


$
5.60Depreciation, depletion and amortization

$
17.50


$
15.28


$
15.65  Summary
    of Core Operating Areas and Emerging Plays    December 31, 20082008 Average


Number ofProved Reserves


Daily Sales


Net


Percent ofat December 31, 2008


Volumes


Producing


PV-10MBoe


PV-10


(Boe)


Wells


Operated by Us(In millions)Core Operating Areas:New Mexico Permian


95,055


$
1,242.8



14,664



1,020.5



94.6
%Texas Permian


39,392



378.0



4,008



395.5



93.4
%Emerging plays and other


2,828



42.4



675



13.7



47.1
%Total


137,275


$
1,663.2



19,347



1,429.7   Core
    Operating Areas
   8




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PV-10.
  New Mexico Permian. PV-10.
        Texas Permian. PV-10.
       9




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Emerging
    Plays
    Lower Abo horizontal play.
    Bakken/Three Forks play.
    Other emerging plays.
  
    Central Basin Platform of West Texas, where we drilled one
    unsuccessful Woodford shale exploratory well in 2008;
    Western Delaware Basin of West Texas, where we drilled four
    exploratory wells prior to 2008, targeting the Bone Springs,
    Atoka, Barnett and Woodford shales, of which three were
    unsuccessful and one was successful; and
    Arkoma Basin in Arkansas, where, in 2008, we participated in the
    drilling of three exploratory wells targeting both the Hale and
    the Fayetteville shale, all of which were in various stages of
    completion and evaluation at December 31, 2008.   Marketing
    Arrangements  General.
  Crude Oil.
 10




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Natural Gas.
     Our
    Principal Customers     Competition       11




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Applicable
    Laws and Regulations  Regulation
    of the Oil and Natural Gas Industry
  Regulation of transportation of
    oil.
      Regulation of transportation and sale of natural
    gas.
     12




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13




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Regulation of production.
  Environmental,
    Health and Safety Matters
  General.
  
    require the acquisition of various permits before drilling
    commences;
    restrict the types, quantities and concentration of various
    substances that can be released into the environment in
    connection with oil and natural gas drilling and production, and
    saltwater disposal activities;
    limit or prohibit drilling activities on certain lands lying
    within wilderness, wetlands and other protected areas; and
    require remedial measures to mitigate pollution from former and
    ongoing operations, such as requirements to close pits and plug
    abandoned wells.      Waste handling.
  Comprehensive Environmental Response, Compensation and
    Liability Act.
 14




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Water discharges.
  Air emissions.
    Massachusetts, et
    al. v. EPA Massachusetts Massachusetts
 15




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National Environmental Policy Act.
  OSHA and other laws and regulation. and/or
   Our
    Employees   Available
    Information  1-800-SEC-0330. http://www.sec.gov.
  Form 10-Q, Form 8-K
 16




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Item 1A.
    Risk
    Factors  You should consider carefully the following risk factors
    together with all of the other information included in this
    report and other reports filed with the SEC, before investing in
    our shares. If any of the following risks were actually to
    occur, our business, financial condition or results of
    operations could be materially adversely affected. In that case,
    the trading price of our shares could decline and you could lose
    all or part of your investment.
 Risks
    Related to Our Business  Crude
    oil and natural gas prices are volatile. A decline in crude oil
    and natural gas prices could adversely affect our financial
    position, financial results, cash flow, access to capital and
    ability to grow.
    
    the level of consumer demand for crude oil and natural gas;
    the domestic and foreign supply of crude oil and natural gas;
    commodity processing, gathering and transportation availability,
    and the availability of refining capacity;
    the price and level of imports of foreign crude oil and natural
    gas;
    the ability of the members of the Organization of Petroleum
    Exporting Countries to agree to and maintain crude oil price and
    production controls;
    domestic and foreign governmental regulations and taxes;
    the price and availability of alternative fuel sources;
    weather conditions;
    political conditions or hostilities in oil and gas producing
    regions, including the Middle East, Africa and South America;
    technological advances affecting energy consumption; and
    worldwide economic conditions.     17




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Drilling
    for and producing crude oil and natural gas are high-risk
    activities with many uncertainties that could cause our expenses
    to increase or our cash flows and production volumes to
    decrease.
    
    delays imposed by or resulting from compliance with regulatory
    and contractual requirements;
    pressure or irregularities in geological formations;
    shortages of or delays in obtaining equipment and qualified
    personnel;
    equipment failures or accidents;
    adverse weather conditions;
    reductions in crude oil and natural gas prices;
    surface access restrictions;
    loss of title or other title related issues;
    crude oil, natural gas liquids or natural gas gathering,
    transportation and processing availability restrictions or
    limitations; and
    limitations in the market for crude oil and natural gas.  Estimates
    of proved reserves and future net cash flows are not precise.
    The actual quantities of our proved reserves and our future net
    cash flows may prove to be lower than estimated.
    and/or
  
    historical production from the area compared with production
    from other producing areas;
    the quality, quantity and interpretation of available relevant
    data;
    the assumed effects of regulations by governmental agencies;
    the quality, quantity and interpretation of available relevant
    data;
    the assumed effects of regulations by governmental agencies;
    assumptions concerning future commodity prices; and
    assumptions concerning future operating costs; severance, ad
    valorem and excise taxes; development costs; and workover and
    remedial costs. 18




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
    the quantities of crude oil and natural gas that are ultimately
    recovered;
    the production and operating costs incurred;
    the amount and timing of future development
    expenditures; and
    future commodity prices.      
    the amount and timing of actual production;
    levels of future capital spending;
    increases or decreases in the supply of or demand for oil and
    gas; and
    changes in governmental regulations or taxation.  PV-10 PV-10
  Our
    business requires substantial capital expenditures. We may be
    unable to obtain needed capital or financing on satisfactory
    terms or at all, which could lead to a decline in our crude oil
    and natural gas reserves.
   19




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
    our proved reserves;
    the level of crude oil and natural gas we are able to produce
    from existing wells;
    the prices at which our crude oil and natural gas are
    sold; and
    our ability to acquire, locate and produce new reserves.    We may
    not be able to obtain funding at all, or obtain funding on
    acceptable terms, to meet our future capital needs because of
    the deterioration of the credit and capital
    markets.
        
    our lending counterparties may be unwilling or unable to meet
    their funding obligations;
    the borrowing base under our credit facility is redetermined at
    least twice a year and may decrease due to a decrease in crude
    oil or natural gas prices, operating difficulties, declines in
    reserves, lending requirements or regulations, or for other
    reasons; or 20




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
    if any lender is unable or unwilling to fund their respective
    portion of any advance under our credit facility, then the other
    lenders thereunder are not required to provide additional
    funding to make up the portion of the advance that the
    defaulting lender refused to fund.    Our
    lenders can limit our borrowing capabilities, which may
    materially impact our operations.
    Our
    producing properties are located in the Permian Basin of
    Southeastern New Mexico and West Texas, making us vulnerable to
    risks associated with operating in one major geographic area. In
    addition, we have a large amount of proved reserves attributable
    to a small number of producing horizons within this
    area.
  PV-10
    Future
    price declines could result in a reduction in the carrying value
    of our proved oil and gas properties, which could adversely
    affect our results of operations.
   21




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Part
    of our strategy involves exploratory drilling, including
    drilling in new or emerging plays. As a result, our drilling
    results in these areas are uncertain, and the value of our
    undeveloped acreage will decline if drilling results are
    unsuccessful.
    Our
    commodity price risk management program may cause us to forego
    additional future profits or result in our making cash payments
    to our counterparties.
    
    the counterparty to a commodity price risk management contract
    may default on its contractual obligations to us;
    there may be a change in the expected differential between the
    underlying price in a commodity price risk management agreement
    and actual prices received; or
    market prices may exceed the prices which we are contracted to
    receive, resulting in our need to make significant cash payments
    to our counterparties.    We
    have entered into interest rate derivative instruments that may
    subject us to loss of income.
      
    the counterparty may default on its contractual obligations to
    us;
    there may be issues with regard to the legal enforceability of
    such instruments; 22




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
    the early repayment of one of our interest rate derivative
    instruments could lead to prepayment penalties; or
    unanticipated and significant changes in interest rates may
    cause a significant loss of basis in the instrument and a change
    in current period expense.  If we
    enter into derivative instruments that require us to post cash
    collateral, our cash otherwise available for use in our
    operations would be reduced, which could limit our ability to
    make future capital expenditures.
    Nonperformance
    by the counterparties to our derivative instruments and
    commodity purchase agreements could adversely affect our
    financial condition and results of operations.
      Our
    identified inventory of drilling locations and recompletion
    opportunities are scheduled out over several years, making them
    susceptible to uncertainties that could materially alter the
    occurrence or timing of their drilling.
    Approximately
    44.3 percent of our total estimated net proved reserves at
    December 31, 2008, were undeveloped, and those reserves may
    not ultimately be developed.
   23




---



##### Table of Contents



Because
    we do not control the development of the properties in which we
    own interests, but do not operate, we may not be able to achieve
    any production from these properties in a timely
    manner.
  PV-10
  
    the nature and timing of drilling and operational activities;
    the timing and amount of capital expenditures;
    the operators expertise and financial resources;
    the approval of other participants in such properties; and
    the selection of suitable technology.    Unless
    we replace our crude oil and natural gas reserves, our reserves
    and production will decline, which would adversely affect our
    cash flow, our ability to raise capital and the value of our
    common stock.
    We may
    be unable to make attractive acquisitions or successfully
    integrate acquired companies, and any inability to do so may
    disrupt our business and hinder our ability to
    grow.
       24




---



##### Table of Contents



The
    acquisition of the Henry Entities could expose us to potentially
    significant liabilities.
    Properties
    acquired may prove to be worth less than we paid because of
    uncertainties in evaluating recoverable reserves and potential
    liabilities.
    Competition
    in the oil and gas industry is intense, making it more difficult
    for us to acquire properties, market crude oil and natural gas
    and secure trained personnel.
   25




---



##### Table of Contents



Shortages
    of oilfield equipment, services and qualified personnel could
    delay our drilling program and increase the prices we pay to
    obtain such equipment, services and personnel.
    Our
    exploration and development drilling may not result in
    commercially productive reserves.
    
    unexpected drilling conditions;
    title problems;
    pressure or lost circulation in formations;
    equipment failures or accidents;
    adverse weather conditions;
    compliance with environmental and other governmental or
    contractual requirements; and
    increases in the cost of, or shortages or delays in the
    availability of, electricity, supplies, materials, drilling or
    workover rigs, equipment and services.  We
    periodically evaluate our unproved oil and gas properties for
    impairment, and could be required to recognize noncash charges
    to earnings of future periods.
  project-by-project
  We may
    incur substantial losses and be subject to substantial liability
    claims as a result of our crude oil and natural gas operations.
    In addition, we may not be insured for, or our insurance may be
    inadequate to protect us against, these risks.
   26




---



##### Table of Contents




    environmental hazards, such as uncontrollable flows of crude
    oil, natural gas, brine, well fluids, toxic gas or other
    pollution into the environment, including groundwater
    contamination;
    abnormally pressured or structured formations;
    mechanical difficulties, such as stuck oilfield drilling and
    service tools and casing collapse;
    fires, explosions and ruptures of pipelines;
    personal injuries and death; and
    natural disasters.    
    injury or loss of life;
    damage to and destruction of property, natural resources and
    equipment;
    pollution and other environmental damage;
    regulatory investigations and penalties;
    suspension of our operations; and
    repair and remediation costs.    Market
    conditions or operational impediments may hinder our access to
    crude oil and natural gas markets or delay our
    production.
    We are
    subject to complex federal, state, local and other laws and
    regulations that could adversely affect the cost, timing, manner
    or feasibility of conducting our operations.
   27




---



##### Table of Contents



We may
    incur substantial costs to comply with, and demand for our
    products may be reduced by, climate change legislation and
    regulatory initiatives.
    Our
    operations expose us to significant costs and liabilities with
    respect to environmental and operational safety
    matters.
      The
    loss of our chief executive officer or other key personnel could
    negatively impact our ability to execute our business
    strategy.
    Uncertainties
    associated with enhanced recovery methods may result in us not
    realizing an acceptable return on our investments in such
    projects.
   28




---



##### Table of Contents



Our
    indebtedness could restrict our operations and make us more
    vulnerable to adverse economic conditions.
      
    impair our ability to make investments and obtain additional
    financing for working capital, capital expenditures,
    acquisitions or other general corporate purposes;
    limit our ability to use operating cash flow in other areas of
    our business because we must dedicate a substantial portion of
    these funds to make principal and interest payments on our
    indebtedness;
    limit our ability to borrow funds that may be necessary to
    operate or expand our business;
    put us at a competitive disadvantage to competitors that have
    less debt;
    increase our vulnerability to interest rate increases; and
    hinder our ability to adjust to rapidly changing economic and
    industry conditions.    Our
    credit facility imposes restrictions on us that may affect our
    ability to successfully operate our business.
    
    incurring additional indebtedness;
    paying dividends;
    creating certain additional liens on our assets;
    entering into sale and leaseback transactions;
    making investments;
    entering into transactions with affiliates;
    making material changes to the type of business we conduct or
    our business structure;
    making guarantees;
    disposing of assets in excess of certain permitted amounts;
    merging or consolidating with other entities; and
    selling all or substantially all of our assets.   29




---



##### Table of Contents



A
    terrorist attack or armed conflict could harm our business by
    decreasing our revenues and increasing our costs.
   Risks
    Relating to Our Common Stock  Our
    restated certificate of incorporation, amended and restated
    bylaws and Delaware law contain provisions that could discourage
    acquisition bids or merger proposals, which may adversely affect
    the market price of our common stock.
    
    the organization of our board of directors as a classified
    board, which allows no more than approximately one-third of our
    directors to be elected each year;
    stockholders cannot remove directors from our board of directors
    except for cause and then only by the holders of not less than
    662/3 percent
    of the voting power of all outstanding voting stock;
    the prohibition of stockholder action by written
    consent; and
    limitations on the ability of our stockholders to call special
    meetings and establish advance notice provisions for stockholder
    proposals and nominations for elections to the board of
    directors to be acted upon at meetings of stockholders.  Because
    we have no plans to pay dividends on our common stock,
    stockholders must look solely to stock appreciation for a return
    on their investment in us.
   30




---



##### Table of Contents



The
    availability of shares for sale in the future could reduce the
    market price of our common stock.
      Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties Our Oil
    and Natural Gas Reserves  PV-10 PV-10
  Oil (MBbl)


Gas (MMcf)


Total (MBoe)


PV-10(a)(In millions)Core Operating Areas:New Mexico Permian


56,322



232,399



95,055


$
1,242.8Texas Permian


28,319



66,439



39,392



378.0Emerging plays and other


1,644



7,110



2,828



42.4Total


86,285



305,948



137,275


$
1,663.2Present value of future income tax discounted at 10%














(464.2
)Standardized Measure













$
1,199.0     (a)
    
    Non-GAAP Financial Measure and Reconciliation
    (unaudited) 
    PV-10 is
    derived from the Standardized Measure which is the most directly
    comparable GAAP financial measure.
    PV-10 is a
    computation of the Standardized Measure on a pre-tax basis.
    PV-10 is
    equal to the Standardized Measure at the applicable date, before
    deducting future income taxes, discounted at 10%. We believe
    that the presentation of the
    PV-10 is
    relevant and useful to investors because it presents the
    discounted future net cash flows attributable to our estimated
    net proved reserves prior to taking into account future
    corporate income taxes, and it is a useful measure for
    evaluating the relative monetary significance of our oil and
    natural gas properties. Further, investors may utilize the
    measure as a basis for comparison of the relative size and value
    of our reserves to other companies. We use this measure when
    assessing the potential return on investment related to our oil
    and natural gas properties.
    PV-10,
    however, is not a substitute for the Standardized Measure. Our
    PV-10
    measure and the Standardized Measure do not purport to present
    the fair value of our oil and natural gas reserves. 31




---



##### Table of Contents



Oil (MBbl)


Gas (MMcf)


Total (MBoe)


Percent of Total


PV-10(In millions)Proved developed producing


41,317



162,419



68,387



49.8
%

$
1,072.1Proved developed non-producing


5,344



16,705



8,128



5.9
%


99.3Proved undeveloped


39,624



126,824



60,760



44.3
%


491.8Total proved


86,285



305,948



137,275



100.0
%

$
1,663.2     Future


Future


Future


FutureProduction


Cash


Production


Development


Future NetYear Ended December 31,(a)

(MBoe)


Inflows


Costs


Costs


Cash Flows2009


1,957


$
82,647


$
9,552


$
192,656


$
(119,561
)2010


3,767



158,303



19,204



143,366



(4,267
)2011


4,711



199,055



25,310



121,547



52,1982012


4,882



205,521



27,841



86,991



90,6892013


4,445



187,524



27,365



21,739



138,420Thereafter


40,998



1,724,511



412,737



82,599



1,229,175Total


60,760


$
2,557,561


$
522,009


$
648,898


$
1,386,654     (a)
    
    Beginning in 2010 and thereafter, the production and cash flows
    represent the drilling results from the respective year plus the
    incremental effects of proved undeveloped drilling from the
    preceding years beginning in 2009.    Purchases of

Sales of

Revisions ofExtensions and

Minerals-in-

Minerals-in-

PreviousProduction

Discoveries

Place

Place

EstimatesCore Operating Areas:tNew Mexico Permian


(5,352
)


29,657



36







(6,470
)Texas Permian


(1,463
)


5,037



30,138







(6,884
)Emerging Plays and Other


(266
)


1,730











112Total


(7,081
)


36,424



30,174







(13,242
)   Production.
  Extensions and discoveries.
  Purchases of
    minerals-in-place. minerals-in-place
  Sales of
    minerals-in-place. minerals-in-place
  Revisions of previous
    estimates.
 32




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##### Table of Contents



Developed
    and Undeveloped Acreage    Developed Acres

Undeveloped Acres

Total AcresGross

Net

Gross

Net

Gross

NetCore Operating Areas:New Mexico Permian


108,728



53,994



44,697



17,429



153,425



71,423Texas Permian


192,264



50,060



49,244



19,667



241,508



69,727Emerging plays and other(a)


20,218



8,230



196,931



94,345



217,149



102,575Total


321,210



112,284



290,872



131,441



612,082



243,725     (a)
    
    The following table sets forth gross and net acreage at
    December 31, 2008 for each of our five emerging plays and
    our acreage categorized as Other included in
    Emerging plays and other:  Total AcresGross

NetSoutheastern New Mexico


60,915



30,581Williston Basin of North Dakota


42,802



11,223Central Basin Platform


22,925



22,156Western Delaware Basin


68,814



23,593Arkoma Basin of Arkansas


16,744



14,225Total emerging plays


212,200



101,778Other


4,949



797Total emerging plays and other


217,149



102,575   and/or
  2009(a)

2010

2011

ThereafterGross

Net

Gross

Net

Gross

Net

Gross

NetCore Operating Areas:New Mexico Permian


5,241



1,912



7,453



2,922



2,846



1,145



36,751



11,584Texas Permian


6,498



2,467



6,233



549



5,990



1,088







Emerging plays and other


88,413



28,387



41,612



16,951



11,839



9,538



8,420



4,896Total


100,152



32,766



55,298



20,422



20,675



11,771



45,171



16,480     (a)
    
    Due to market conditions and prioritization of capital, we have
    deemphasized exploration efforts in certain emerging plays
    having significant lease expirations over the next two years,
    which includes the Delaware Basin, Central Basin Platform and
    Arkoma Basin in Arkansas. We have impaired a significant portion
    of the costs associated with these plays. 33




---



##### Table of Contents



Productive
    wells
    Gross Productive Wells

Net Productive WellsOil

Gas

Total

Oil

Gas

TotalCore Operating Areas:New Mexico Permian


1,515



192



1,707



967.3



55.8



1,023.1Texas Permian


1,625



71



1,696



381.0



13.7



394.7Emerging plays and other


61



89



150



8.5



5.3



13.8Total


3,201



352



3,553



1,356.8



74.8



1,431.6  Title to
    Our Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Shareholders   34




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities Market
    Information    Price Per ShareHigh

Low2007:Third Quarter (August 3, 2007 through September 30,
    2007)

$
16.44


$
11.60Fourth Quarter

$
22.30


$
14.302008:First Quarter

$
26.44


$
17.33Second Quarter

$
40.97


$
25.12Third Quarter

$
39.07


$
22.31Fourth Quarter

$
27.79


$
14.71      Dividends   Repurchase
    of Equity Securities    Item 6.
    Selected
    Financial Data   Selected
    Historical Financial Information      
    Prior to December 7, 2004, Concho Equity Holdings Corp. did
    not own any material assets and did not conduct substantial
    operations other than organizational activities; 35




---



##### Table of Contents




    On December 7, 2004, Concho Equity Holdings Corp. acquired
    oil and gas assets for approximately $117 million and
    commenced oil and gas operations;
    On February 27, 2006, the initial closing of the Chase Oil
    transaction occurred, and we acquired the Chase Group Properties
    for approximately 35 million shares of common stock and
    approximately $409 million in cash;
    On March 27, 2007, we entered into a $200 million
    second lien term loan facility from which we received proceeds
    of $199 million that we used to repay the
    $39.8 million outstanding under our prior term loan
    facility and to reduce the outstanding balance under our credit
    facility by $154 million, with the remaining
    $5.2 million used to pay loan fees, accrued interest and
    for general corporate purposes;
    In August 2007, we completed our initial public offering of
    common stock from which we received proceeds of
    $173 million that we used to retire outstanding borrowings
    under our second lien term loan facility totaling
    $86.5 million, and to retire outstanding borrowings under
    our credit facility totaling $86.5 million; and
    On July 31, 2008, we closed our acquisition of the Henry
    Entities and additional non-operated interests in oil and gas
    properties from persons affiliated with the Henry Entities. In
    August 2008 and September 2008, we acquired additional
    non-operated interests in oil and gas properties from persons
    affiliated with the Henry Entities. We paid approximately
    $584.1 million in net cash for the acquisition of the Henry
    Entities and the related acquisition of the along-side
    interests, which was funded with borrowings under our credit
    facility, which was amended and restated on July 31, 2008,
    and net proceeds of approximately $242.4 million from our
    private placement of 8,302,894 shares of our common stock.    Chase GroupConcho Resources Inc.


PropertiesInception(April 21,2004) through


Years EndedYears Ended December 31,


December 31,


December 31,2008(a)


2007


2006(b)


2005


2004(c)


2005


2004(In thousands, except per share amounts)Statement of operations data:Operating revenues:Oil sales

$
390,945


$
195,596


$
131,773


$
31,621


$
1,851


$
73,132


$
66,529Natural gas sales


142,844



98,737



66,517



23,315



1,771



46,546



41,247Total operating revenues


533,789



294,333



198,290



54,936



3,622



119,678



107,776Operating costs and expenses:Oil and gas production


91,234



54,267



37,822



14,635



746



23,277



20,964Exploration and abandonments


38,468



29,098



5,612



2,666



1,850







179Depreciation, depletion and amortization


123,912



76,779



60,722



11,485



956



18,646



20,196Accretion of discount on asset retirement obligations


889



444



287



89



7



446



263Impairments of long-lived assets


18,417



7,267



9,891



2,295







194



3,233General and administrative


35,553



21,336



12,577



8,055



3,086



1,702



1,387Stock-based compensation


5,223



3,841



9,144



3,252



1,128







Bad debt expense


2,905























Contract drilling fees  stacked rigs






4,269



















 36




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##### Table of Contents



Chase GroupConcho Resources Inc.


PropertiesInception(April 21,2004) through


Years EndedYears Ended December 31,


December 31,


December 31,2008(a)


2007


2006(b)


2005


2004(c)


2005


2004(In thousands, except per share amounts)Ineffective portion of cash flow hedges


(1,336
)


821



(1,193
)


1,148











(Gain) loss on derivatives not designated as hedges


(249,870
)


20,274







5,001



(684
)


1,062



7,936Total operating costs and expenses


65,395



218,396



134,862



48,626



7,089



45,327



54,158Income (loss) from operations


468,394



75,937



63,428



6,310



(3,467
)


74,351



53,618Other income (expense):Interest expense


(29,039
)


(36,042
)


(30,567
)


(3,096
)


(272
)






Other, net


1,432



1,484



1,186



779



168







Total other expense


(27,607
)


(34,558
)


(29,381
)


(2,317
)


(104
)






Income (loss) before income taxes


440,787



41,379



34,047



3,993



(3,571
)


74,351



53,618Income tax (expense) benefit


(162,085
)


(16,019
)


(14,379
)


(2,039
)


915







Net income (loss)


278,702



25,360



19,668



1,954



(2,656
)

$
74,351


$
53,618Preferred stock dividends






(45
)


(1,244
)


(4,766
)


(804
)Effect of induced conversion of preferred stock










11,601







Net income (loss) applicable to common shareholders

$
278,702


$
25,315


$
30,025


$
(2,812
)

$
(3,460
)Basic earnings (loss) per share:Net income (loss) per share

$
3.52


$
0.39


$
0.63


$
(0.70
)

$
(3.48
)Shares used in basic earnings (loss) per share


79,206



64,316



47,287



4,059



994Diluted earnings (loss) per share:Net income (loss) per share

$
3.46


$
0.38


$
0.59


$
(0.70
)

$
(3.48
)Shares used in diluted earnings (loss) per share


80,587



66,309



50,729



4,059



994   Concho Resources Inc.

Chase Group PropertiesInception(April 21,2004) throughYears Ended December 31,

December 31,

Years Ended December 31,2008(a)

2007

2006(b)

2005

2004(c)

2005

2004(In thousands)Other financial data:Net cash provided by (used in) operations

$
391,397


$
169,769


$
112,181


$
25,070


$
(2,193
)

$
93,162


$
84,202Net cash provided by (used in) investing


(946,050
)


(160,353
)


(596,852
)


(61,902
)


(122,473
)


(35,611
)


(30,045
)Net cash provided by (used in) financing


541,981



19,886



476,611



45,358



125,322



(57,551
)


(54,157
)Capital expenditures


1,185,831



190,634



1,226,180



72,758



116,880



32,352



25,451   37




---



##### Table of Contents



December 31,

December 31,2008(a)

2007

2006(b)

2005

2004(c)

2005

2004Balance sheet data:Cash and cash equivalents

$
17,752


$
30,424


$
1,122


$
9,182


$
656


$



$
Property and equipment, net


2,401,404



1,394,994



1,320,655



170,583



115,455



149,042



135,568Total assets


2,815,203



1,508,229



1,390,072



232,385



130,717



161,792



145,100Long-term debt, including current maturities


630,000



327,404



495,500



72,000



53,000







Equity


1,325,154



775,398



575,156



109,670



71,710



150,814



134,014     (a)
    
    The acquisition of the Henry Entities occurred on July 31,
    2008. See Note D of the Notes to Consolidated Financial
    Statements included in Item 8. Financial Statements and
    Supplementary Data.(b)
    
    The acquisition of the Chase Group Properties was substantially
    consummated on February 27, 2006. See Note D of the
    Notes to Consolidated Financial Statements included in
    Item 8. Financial Statements and Supplementary
    Data.(c)
    
    The acquisition of the Lowe Properties was completed on
    December 7, 2004. See Selected Historical Financial
    and Operating Information for Lowe Properties below: Selected
    Historical Financial and Operating Information for Lowe
    Properties    Period fromJanuary 1,throughNovember 30,2004(In thousands)Revenues

$
34,663Direct operating expenses:Lease operating expense


6,983Production tax expense


2,159Other expenses


461Total operating costs and expenses


9,603Revenues in excess of direct operating expenses

$
25,060   Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations     38




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##### Table of Contents



Overview  PV-10
 Commodity
    prices     Recent
    events  Henry Entities acquisition.
  Amended and restated credit
    facility. 2 3
 39




---



##### Table of Contents



Common stock private placement.
  2009 capital budget.
  2009Budget(In millions)Drilling and recompletion opportunities in our core operating
    area

$
398Projects operated by third parties


8Emerging plays, acquisition of leasehold acreage and other
    property interests, and geological and geophysical


72Maintenance capital in our core operating areas


22Total 2009 capital budget

$
500     
    reduced our operated drilling rig count in the Wolfberry play
    from eight to five;
    deferred our deepening program on our Southeastern New Mexico
    shelf properties; and
    deferred certain drilling activity in the Lower Abo horizontal
    play.    Short-term interruptions in
    production.
  
    None of our properties and facilities were directly impacted by
    Hurricane Ike; however, facilities which ultimately received our
    production, primarily natural gas liquids, sustained power
    interruptions and physical damage. As a result, our production
    was either curtailed or shut-in for significant periods of time.
    As a result, we estimate that our September 2008 production was
    reduced by approximately 117 MBoe and our October 2008
    production was reduced by approximately 33 MBoe;
    On May 16, 2008, a refinery located in New Mexico shut down
    for ten days due to repairs. As a result, we shut-in
    approximately 37 MBoe of production during the ten day
    period;
    On April 7, 2008, a natural gas processing plant through
    which we process and sell a portion of the production from our
    New Mexico shelf properties was curtailed for its annual routine
    maintenance. The plant resumed full operation on April 19,
    2008, and we thereafter began restoring production from all of
    our properties that had been affected. Approximately
    75 MBoe of our production was shut-in as a result of this
    plant shut-down; and
    During the first quarter of 2008, we experienced short-term
    interruptions in our production on the New Mexico shelf
    properties due to operational problems with a natural gas
    processing plant. There were a total of 10 days of
    curtailment during the first quarter, and approximately
    17 MBoe of our production was curtailed during this period.  Derivative financial instrument
    exposure.
 40




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##### Table of Contents



New commodity derivative
    contracts.
  Aggregate








RemainingRemaining


Daily


Index


ContractVolume


Volume


Price


PeriodCrude oil (volumes in Bbls):Price collar


768,000



2,104


$
120.00 - $134.60
(a)


1/1/09 - 12/31/09Price swap


292,000



800


$
98.35
(a)


1/1/09 - 12/31/09Price swap


348,000



953


$
125.10
(a)


1/1/09 - 12/31/09Price swap


240,000



658


$
128.80
(a)


1/1/10 - 12/31/10Price swap


336,000



921


$
128.66
(a)


1/1/11 - 12/31/11Price swap


504,000



1,377


$
127.80
(a)


1/1/12 - 12/31/12Natural gas (volumes in MMBtus):Price swap


1,825,000



5,000


$
8.44
(b)


1/1/09 - 12/31/09Index basis swap


6,022,500



16,500


$
1.08
(c)


1/1/09 - 12/31/09     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price.(b)
    
    The index price for the natural gas price collar is based on the
    Inside FERC-El Paso Permian Basin first-of-the-month spot
    price.(c)
    
    The basis differential between the El Paso Permian delivery
    point and NYMEX Henry Hub delivery point.  Commodity derivative contracts assumed in the Henry
    Entities acquisition.
  Aggregate








RemainingRemaining


Daily


Index


ContractVolume


Volume


Price


PeriodCrude oil (volumes in Bbls):Price swap


443,491



1,215


$
73.59
(a)


1/1/09 - 12/31/09Price swap


401,746



1,101


$
72.03
(a)


1/1/10 - 12/31/10Price swap


221,746



608


$
68.92
(a)


1/1/11 - 12/31/11     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price and
    the prices represent weighted average prices.  New interest rate derivative
    contracts.
 41




---



##### Table of Contents



Items Impacting
    Comparability of our Financial Results    
    On February 24, 2006, we entered into a combination
    agreement in which we agreed to purchase the Chase Group
    Properties and combine them with substantially all of the
    outstanding equity interests of Concho Equity Holdings Corp. to
    form Concho. We have accounted for the combination
    transaction that occurred on February 27, 2006, as an
    acquisition by Concho Equity Holdings Corp. of the Chase Group
    Properties and a simultaneous reorganization of Concho such that
    Concho Equity Holdings Corp. became our wholly owned subsidiary.
    Concho Equity Holdings Corp. is our predecessor for accounting
    purposes. As a result, our historical financial statements prior
    to February 27, 2006, are the financial statements of
    Concho Equity Holdings Corp;
    On February 27, 2006, the initial closing of the Chase Oil
    transaction occurred, and we acquired the Chase Group Properties
    for approximately 35 million shares of common stock and
    approximately $409 million in cash;
    On March 27, 2007, we entered into a $200 million
    second lien term loan facility from which we received proceeds
    of $199 million that we used to repay the
    $39.8 million outstanding under our prior term loan
    facility and to reduce the outstanding balance under our credit
    facility by $154 million, with the remaining
    $5.2 million used to pay loan fees, accrued interest and
    for general corporate purposes;
    In August 2007, we completed our initial public offering of
    common stock from which we received proceeds of
    $173 million that we used to retire outstanding borrowings
    under our second lien term loan facility totaling
    $86.5 million, and to retire outstanding borrowings under
    our credit facility totaling $86.5 million; and
    On July 31, 2008, we closed our acquisition of the Henry
    Entities and additional non-operated interests in oil and gas
    properties from persons affiliated with the Henry Entities. In
    August 2008 and September 2008, we acquired additional
    non-operated interests in oil and gas properties from persons
    affiliated with the Henry Entities. We paid approximately
    $584.1 million in net cash for the acquisition of the Henry
    Entities and the related acquisition of the along-side
    interests, which was funded with borrowings under our credit
    facility, which was amended and restated on July 31, 2008,
    and net proceeds of approximately $242.4 million from our
    private placement of 8,302,894 shares of our common stock. Results
    of Operations    Years Ended December 31,2008


2007


2006(In thousands, except price anddaily volume data)Statement of operations data:Oil sales

$
390,945


$
195,596


$
131,773Natural gas sales


142,844



98,737



66,517Total operating revenues


533,789



294,333



198,290Operating costs and expenses (excluding gains (losses) on
    derivatives not designated as hedges)


(315,265
)


(198,122
)


(134,862
)Gains (losses) on derivatives not designated as hedges


249,870



(20,274
)


Interest, net and other revenue


(27,607
)


(34,558
)


(29,381
)Income before income taxes


440,787



41,379



34,047 42




---



##### Table of Contents



Years Ended December 31,2008


2007


2006(In thousands, except price anddaily volume data)Income tax expense


(162,085
)


(16,019
)


(14,379
)Net income

$
278,702


$
25,360


$
19,668Net production volumes:Oil (MBbl)


4,586



3,014



2,295Natural gas (MMcf)


14,968



12,064



9,507Total (MBoe)


7,081



5,025



3,880Average daily production volumes:Oil (Bbl)


12,530



8,258



6,288Natural gas (Mcf)


40,896



33,052



26,047Total (Boe)


19,347



13,767



10,630Average prices:Oil, without hedges (Bbl)

$
91.92


$
68.58


$
60.47Oil, with hedges (Bbl)

$
85.25


$
64.90


$
57.42Natural gas, without hedges (Mcf)

$
9.59


$
8.08


$
6.87Natural gas, with hedges (Mcf)

$
9.54


$
8.18


$
7.00Total, without hedges (Boe)

$
79.80


$
60.54


$
52.62Total, with hedges (Boe)

$
75.38


$
58.56


$
51.12  Year
    ended December 31, 2008, compared to year ended
    December 31, 2007  Oil and gas revenues.
  
    average realized oil prices (after giving effect to hedging
    activities) were $85.25 per Bbl during the year ended
    December 31, 2008, an increase of 31 percent from
    $64.90 per Bbl during the year ended December 31, 2007;
    total oil production was 4,586 MBbl for the year ended
    December 31, 2008, an increase of 1,572 MBbl
    (52 percent) from 3,014 MBbl for the year ended
    December 31, 2007;
    average realized natural gas prices (after giving effect to
    hedging activities) were $9.54 per Mcf during the year ended
    December 31, 2008, an increase of 17 percent from
    $8.18 per Mcf during the year ended December 31, 2007;
    total natural gas production was 14,968 MMcf for the year
    ended December 31, 2008, an increase of 2,904 MMcf
    (24 percent) from 12,064 MMcf for the year ended
    December 31, 2007;
    average realized barrel of oil equivalent prices (after giving
    effect to hedging activities) were $75.38 per Boe during the
    year ended December 31, 2008, an increase of
    29 percent from $58.56 per Boe during the year ended
    December 31, 2007; and
    total production was 7,081 MBoe for the year ended
    December 31, 2008, an increase of 2,056 MBoe
    (41 percent) from 5,025 MBoe for the year ended
    December 31, 2007.   43




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##### Table of Contents



Hedging activities.
  Crude Oil Hedges

Natural Gas HedgesYears Ended

Years EndedDecember 31,

December 31,2008

2007

2008

2007Hedging revenue increase (decrease) (in thousands)

$
(30,591
)

$
(11,091
)

$
(696
)

$
1,291Hedged volumes (Bbls and MMBtus, respectively)


951,000



1,076,750



4,941,000



6,482,600Hedged revenue increase (decrease) per hedged volume

$
(32.17
)

$
(10.30
)

$
(0.14
)

$
0.20          44




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##### Table of Contents



Oil and gas production costs.
  Years Ended December 31,2008


2007Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)Lease operating expenses

$
43,725


$
6.17


$
26,480


$
5.27Taxes:Ad valorem


2,738



0.39



2,012



0.40Production


43,775



6.18



24,301



4.84Workover costs


996



0.14



1,474



0.29Total oil and gas production expenses

$
91,234


$
12.88


$
54,267


$
10.80             Exploration and abandonments
    expense.
  Years Ended December 31,2008


2007(In thousands)Geological and geophysical

$
3,139


$
4,089Exploratory dry holes


3,723



21,923Leasehold abandonments and other


31,606



3,086Total exploration and abandonments

$
38,468


$
29,098    45




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##### Table of Contents



Depreciation, depletion and amortization
    expense.
  Years Ended December 31,2008


2007Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)Depletion of proved oil and gas properties

$
121,464


$
17.15


$
75,744


$
15.07Depreciation of other property and equipment


1,808



0.26



1,035



0.21Amortization of intangible asset  operating rights


640



0.09







Total depletion, depreciation and amortization

$
123,912


$
17.50


$
76,779


$
15.28Crude oil price used to estimate proved oil reserves at period
    end

$
41.00






$
92.50Natural gas price used to estimate proved gas reserves at period
    end

$
5.71






$
6.80       Impairment of long-lived assets.
 46




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##### Table of Contents



General and administrative
    expenses.
  Years Ended December 31,2008


2007Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)General and administrative expenses  recurring

$
36,170


$
5.11


$
22,419


$
4.46Non-recurring bonus paid to Henry Entitiesemployees, see Note K


4,328



0.61







Non-cash stock-based compensation  stock options


3,101



0.44



2,463



0.49Non-cash stock-based compensation  restricted stock


2,122



0.30



1,378



0.27Less: Third-party operating fee reimbursements


(4,945
)


(0.70
)


(1,083
)


(0.21
)Total general and administrative expenses

$
40,776


$
5.76


$
25,177


$
5.01         Bad debt expense.
  Contract drilling fees  stacked
    rigs.
  Gains (losses) on derivatives not designated as
    hedges.
 47




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##### Table of Contents



Interest expense.
    Income tax provision.
 Year
    ended December 31, 2007, compared to year ended
    December 31, 2006  Oil and gas revenues.
  
    average realized oil prices (after giving effect to hedging
    activities) were $64.90 per Bbl during the year ended
    December 31, 2007, an increase of 13 percent from
    $57.42 per Bbl during the year ended December 31, 2006;
    total oil production was 3,014 MBbl for the year ended
    December 31, 2007, an increase of 719 MBbl
    (31 percent) from 2,295 MBbl for the year ended
    December 31, 2006;
    average realized natural gas prices (after giving effect to
    hedging activities) were $8.18 per Mcf during the year ended
    December 31, 2007, an increase of 17 percent from
    $7.00 per Mcf during the year ended December 31, 2006; 48




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##### Table of Contents




    total natural gas production was 12,064 MMcf for the year
    ended December 31, 2007, an increase of 2,557 MMcf
    (27 percent) from 9,507 MMcf for the year ended
    December 31, 2006;
    average realized barrel of crude oil equivalent prices (after
    giving effect to hedging activities) were $58.56 per Boe during
    the year ended December 31, 2007, an increase of
    15 percent from $51.12 per Boe during the year ended
    December 31, 2006;
    total production was 5,025 MBoe for the year ended
    December 31, 2007, an increase of 1,145 MBoe
    (30 percent) from 3,880 MBoe for the year ended
    December 31, 2006; and
    total production during the year ended December 31, 2007
    was reduced by approximately 110 MBoe as a result of the
    temporary shut-downs of a natural gas processing plant through
    which we process and sell a portion of our production.  Hedging activities.
  Crude Oil Hedges


Natural Gas HedgesYears Ended


Years EndedDecember 31,


December 31,2007


2006


2007


2006Hedging revenue increase (decrease) (in thousands)

$
(11,091
)

$
(7,000
)

$
1,291


$
1,232Hedged volumes (Bbls and MMBtus, respectively)


1,076,750



1,080,500



6,482,600



5,447,500Hedged revenue increase (decrease) per hedged volume

$
(10.30
)

$
(6.48
)

$
0.20


$
0.23        49




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##### Table of Contents



Oil and gas production costs.
  Years Ended December 31,2007


2006Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)Lease operating expenses

$
26,480


$
5.27


$
20,424


$
5.26Taxes:Ad valorem


2,012



0.40



1,120



0.29Production


24,301



4.84



15,762



4.06Workover costs


1,474



0.29



516



0.14Total oil and gas production expenses

$
54,267


$
10.80


$
37,822


$
9.75             Exploration and abandonments
    expense.
  Years Ended December 31,2007


2006(In thousands)Geological and geophysical

$
4,089


$
2,185Exploratory dry holes


21,923



3,192Leasehold abandonments and other


3,086



235Total exploration and abandonments

$
29,098


$
5,612    50




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##### Table of Contents



Depreciation, depletion and amortization
    expense.
  Years Ended December 31,2007


2006Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)Depletion of proved oil and gas properties

$
75,744


$
15.07


$
59,872


$
15.43Depreciation of other property and equipment


1,035



0.21



850



0.22Total depletion, depreciation and amortization

$
76,779


$
15.28


$
60,722


$
15.65Crude oil price used to estimate proved oil reserves at period
    end

$
92.50






$
57.75Natural gas price used to estimate proved gas reserves at period
    end

$
6.80






$
5.64     Impairment of long-lived assets.
 51




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##### Table of Contents



Contract drilling fees  stacked
    rigs.
  General and administrative
    expenses.
  Years Ended December 31,2007


2006Amount


Per Boe


Amount


Per Boe(In thousands, except per unit amounts)General and administrative expenses  recurring

$
22,419


$
4.46


$
13,376


$
3.45Non-cash stock-based compensation  Capital Options










975



0.25Non-cash stock-based compensation  stock options


2,463



0.49



7,125



1.84Non-cash stock-based compensation  restricted stock


1,378



0.27



1,044



0.27Less: Third-party operating fee reimbursements


(1,083
)


(0.21
)


(799
)


(0.21
)Total general and administrative expenses

$
25,177


$
5.01


$
21,721


$
5.60       Gains (losses) on derivatives not designated as
    hedges.
    Interest expense.
   52




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##### Table of Contents



Income tax provision.
 Capital
    Commitments, Capital Resources and Liquidity  Capital commitments.
  Oil and gas properties.
    
    reduced our operated drilling rig count in the Wolfberry play
    from eight to five;
    deferred our deepening program on our Southeastern New Mexico
    shelf properties; and
    deferred certain drilling activity in the Lower Abo horizontal
    play.       53




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##### Table of Contents



Acquisitions.
  Contractual obligations.
    Payments Due by PeriodLess Than


1 - 3


3 - 5


More ThanTotal


1 Year


Years


Years


5 Years(In thousands)Long-term debt(a)

$
630,000


$



$



$
630,000


$
Operating lease obligations(b)


4,743



970



2,955



818



Drilling commitments(c)


28,730



25,858



2,872







Employment agreements with executive officers(d)


5,970



2,190



3,780







Henry Entities bonus obligation(e)


16,446



10,387



6,059







Derivative assets(f)


(172,440
)


(111,283
)


(61,157
)






Asset retirement obligations(g)


16,809



2,611



604



598



12,996Total contractual cash obligations

$
530,258


$
(69,267
)

$
(44,887
)

$
631,416


$
12,996     (a)
    
    See Note J of the Notes to Consolidated Financial
    Statements included in Item 8. Financial Statements
    and Supplementary Data. The amounts included in the table
    above represent principal maturities only.(b)
    
    See Note K of the Notes to Consolidated Financial
    Statements included in Item 8. Financial Statements
    and Supplementary Data.(c)
    
    Consists of daywork drilling contracts related to drilling rigs
    contracted for 2009 and 2010. See Note K of the Notes to
    Consolidated Financial Statements included in Item 8.
    Financial Statements and Supplementary Data.(d)
    
    Represents amounts of cash compensation we are obligated to pay
    to our executive officers under employment agreements assuming
    such employees continue to serve the entire term of their
    employment agreement and their cash compensation is not
    adjusted. An executive officer resigned as of March 31,
    2008, and we will be obligated to pay him 1/12th of his base
    salary for each month from April 2008 through March 2009 as
    consideration for such persons covenant not to compete
    with us in accordance with his employment agreement.
    Additionally, Steven L. Beal, our President and Chief Operating
    Officer, has given notice of his intent to retire from the
    Company effective June 30, 2009. As a result, only six
    months of Mr. Beals salary is included.(e)
    
    Represents bonuses we agreed to pay certain employees of the
    Henry Entities at each of the first and second anniversaries of
    the closing of the Henry Properties acquisition. See Note D
    of the Notes to Consolidated Financial Statements included in
    Item 8. Financial Statements and Supplementary
    Data.(f)
    
    Derivative obligations represent net asset for commodity and
    interest rate derivatives that were valued at December 31,
    2008. The ultimate settlement amounts of our derivative
    obligations are unknown because they are subject to continuing
    market risk. See Item 7A. Quantitative and
    Qualitative Disclosures About Market Risk and Note I
    of the Notes to Consolidated Financial Statements included in
    Item 8. Financial Statements and Supplementary
    Data for additional information regarding our derivative
    obligations.(g)
    
    Amounts represent costs related to expected oil and gas property
    abandonments related to proved reserves by period, net of any
    future accretion.  Off-balance sheet
    arrangements.
 54




---



##### Table of Contents



Capital resources.
  Cash flow from operating activities.
  Cash flow used in investing activities.
  Cash flow from financing activities.
  2 3
       55




---



##### Table of Contents



Financial markets.
          Liquidity.
    Book capitalization and current
    ratio.
  Inflation and changes in prices.
 56




---



##### Table of Contents



Critical
    Accounting Policies and Practices      Successful
    Efforts Method of Accounting
         57




---



##### Table of Contents



Oil
    and Natural Gas Reserves and Standardized Measure of Discounted
    Future Cash Flows
    Asset
    Retirement Obligations
    Impairment
    of Long-Lived Assets
    Valuation
    of Stock-Based Compensation
   Recent
    Accounting Pronouncements  The Fair Value Option for Financial Assets and
    Financial Liabilities, Including an Amendment of FASB Statement
    No. 115 instrument-by-instrument
 58




---



##### Table of Contents



FIN 39-1, Amendment of FASB Interpretation No. 39 (FIN No. 39-1). FIN No. 39-1 FIN No. 39-1 FIN No. 39-1
  06-11, Accounting for Income Tax Benefits of Dividends on
    Share-Based Payment Awards 06-11 06-11 06-11 06-11 06-11
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB
    No. 51
  Share-Based
    Payment Share-Based Payment Share-Based Payment (revised 2004)
 59




---



##### Table of Contents



Disclosures about Derivative Instruments and Hedging
    Activities Accounting for Derivative
    Instruments and Hedging Activities
  No. SFAS No. 142-3, Determination of the Useful Life of Intangible Assets SFAS No. 142-3). SFAS No. 142-3 Goodwill and Other Intangible Assets SFAS No. 142-3 SFAS No. 142-3 SFAS No. 142-3
  The Hierarchy of Generally Accepted Accounting
    Principles The Meaning of Present Fairly in Conformity with
    Generally Accepted Accounting Principles
  No. EITF 03-6-1 Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1) EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  No. SFAS 157-3, Determining the Fair Value of a Financial Asset When
    the Market for That Asset is Not Active No. SFAS 157-3 No. SFAS 157-3.
  Recent
    Developments in Reserve Reporting
    
    permit the use of new technologies to determine proved reserves
    if those technologies have been demonstrated empirically to lead
    to reliable conclusions about reserves volumes; 60




---



##### Table of Contents




    allow companies to disclose in SEC filed documents their
    probable and possible reserves to investors (currently, the SEC
    rules limit disclosure to only proved reserves);
    require companies to report the independence and qualifications
    of a reserves preparer or auditor;
    file reports when a third party is relied upon to prepare
    reserves estimates or conducts a reserves audit; and
    report oil and gas reserves using an average price based upon
    the prior
    12-month
    period rather than year-end prices.  Form 10-K.
  Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk      Credit risk
  Commodity price
    risk
   61




---



##### Table of Contents



Interest rate
    risk
        Derivative Instruments Net Assets (Liabilities)(a)Commodities


Interest Rate


Total(In thousands)Fair value of contracts outstanding at December 31, 2007

$
(45,065
)

$



$
(45,065
)Fair value of contracts from acquisitions


(62,662
)






(62,662
)Changes in fair values(b)


244,305



(1,083
)


243,222Contract maturities


36,945







36,945Fair value of contracts outstanding at December 31, 2008

$
173,523


$
(1,083
)

$
172,440     (a)
    
    Represents the fair values of open derivative contracts subject
    to market risk.(b)
    
    At inception, new derivative contracts entered into by us have
    no intrinsic value. 62




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  page F-1.
 63




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Evaluation of disclosure controls and
    procedures. Rule 13a-15(b) Rule 13a-15(e))
  Changes in internal control over financial
    reporting. Rule 13a-15(f)
  Henry Properties
    acquisition.
 64




---



##### Table of Contents



MANAGEMENTS
    REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
        Form 10-K,
 65




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  
  Internal Control-Integrated Framework
        Internal Control  Integrated
    Framework
       66




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters Equity
    Compensation Plans    Number of SecuritiesRemaining Available forWeighted-Average


Future Issuance UnderExercise


Equity CompensationNumber of Securities to be


Price of


Plans (ExcludingIssued Upon Exercise of


Outstanding


Securities Reflected inPlan Category

Outstanding Options


Options


Column(a))Equity compensation plan approved by security holders(a)


2,731,324


$
12.46



1,993,507Equity compensation plan not approved by security holders(b)





$




Total


2,731,324







1,993,507     (a)
    
    2006 Stock Incentive Plan. See Note G of the Notes to
    Consolidated Financial Statements included in Item 8.
    Financial Statements and Supplementary Data.(b)
    
    None.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence   67




---



##### Table of Contents



Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules, and Reports on
    Form 8-K  (a)
    Listing
    of Financial Statements  Financial
    Statements
                  (b)
    Exhibits    (c)
    Financial
    Statement Schedules    Exhibits
  ExhibitNumber

Exhibit2.1


Purchase Agreement, dated June 5, 2008, by and among Concho
    Resources Inc., James C. Henry and Paula Henry, Henry Securities
    Ltd., Henchild LLC, Henry Family Investment Group, Henry Holding
    LP, Henry Energy LP, Aguasal Holding, HELP Investment LLC, Henry
    Capital LLC, Henry Operating LLC, Henry Petroleum LP, Quail
    Ranch LLC, Aguasal Management LLC, and Aguasal LP (filed as
    Exhibit 2.1 to the Companys Current Report on
    Form 8-K
    on June 9, 2008, and incorporated herein by reference).3.1


Restated Certificate of Incorporation (filed as Exhibit 3.1
    to the Companys Current Report on
    Form 8-K
    on August 6, 2007, and incorporated herein by reference).3.2


Amended and Restated Bylaws of Concho Resources Inc., as amended
    March 25, 2008 (filed as Exhibit 3.1 to the
    Companys Current Report on
    Form 8-K
    on March 26, 2008, and incorporated herein by reference).4.1


Specimen Common Stock Certificate (filed as Exhibit 4.1 to
    the Companys Current Report on
    Form S-1/A
    on July 5, 2007, and incorporated herein by reference). 68




---



##### Table of Contents



ExhibitNumber

Exhibit10.1


Credit Agreement, dated as of February 24, 2006, by and
    among Concho Resources Inc., JPMorgan Chase Bank, N.A., as
    administrative agent, Bank of America, N.A., as syndication
    agent, Wachovia Bank, National Association, and BNP Paribas, as
    documentation agents, and other lenders party thereto(filed as
    Exhibit 10.1 to the Companys Current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.2


Second Lien Credit Agreement, dated as of March 23, 2007,
    among Concho Resources Inc., Bank of America, N.A., as
    administrative agent, and Banc of America LLC, as sole lead
    arranger and sole booking manager (filed as Exhibit 10.2 to
    the Companys Current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.3


Form of Drilling Agreement with Silver Oak Drilling, LLC (filed
    as Exhibit 10.4 to the Companys Current Report on
    Form S-1/A
    on July 5, 2007, and incorporated herein by reference).10.4


Salt Water Disposal System Ownership and Operating Agreement
    dated February 24, 2006, among COG Operating LLC, Chase Oil
    Corporation, Caza Energy LLC and Mack Energy Corporation (filed
    as Exhibit 10.5 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.5


Transition Services Agreement dated April 23, 2007, between
    COG Operating LLC and Mack Energy Corporation (filed as
    Exhibit 10.3 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.6


Combination Agreement dated February 24, 2006, among Concho
    Resources Inc., Concho Equity Holdings Corp., Chase Oil
    Corporation, Caza Energy LLC and the other signatories thereto
    (filed as Exhibit 2.1 to the Companys Current Report
    on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).
    The Combination Agreement filed as Exhibit 2.1 omits
    certain of the schedules and exhibits to the Combination
    Agreement in accordance with Item 601(b)(2) of
    Regulation S-K.
    A list briefly identifying the contents of all omitted schedules
    and exhibits is included with the Combination Agreement filed as
    Exhibit 2.1. Concho Resources agrees to furnish
    supplementally a copy of any omitted schedule or exhibit to the
    Securities and Exchange Commission upon request.10.7


Software License Agreement dated March 2, 2006, between
    Enertia Software Systems and Concho Resources Inc. (filed as
    Exhibit 10.6 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.8


Leasehold Acquisition Agreement dated April 1, 2005, by and
    between Trey Resources, Inc. and COG Oil and Gas LP (filed as
    Exhibit 10.7 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.9


Transfer of Operating Rights (Sublease) in a Lease for Oil and
    Gas for Valhalla properties (filed as Exhibit 10.8 to the
    Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.10


Assignment of Oil and Gas Leases from Caza Energy LLC (filed as
    Exhibit 10.9 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.11
**

Escrow Agreement dated February 27, 2006, among Concho
    Resources Inc., Timothy A. Leach, Steven L. Beal, David W.
    Copeland, Curt F. Kamradt and E. Joseph Wright and the other
    signatories thereto (filed as Exhibit 10.10 to the
    Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.12


Business Opportunities Agreement dated February 27, 2006,
    among Concho Resources Inc. and the other signatories thereto
    (filed as Exhibit 10.11 to the Companys Current
    Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.13


Registration Rights Agreement dated February 27, 2006,
    among Concho Resources Inc. and the other signatories thereto
    (filed as Exhibit 10.12 to the Companys Current
    Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.14
**

Concho Resources Inc. 2006 Stock Incentive Plan (filed as
    Exhibit 10.13 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference). 69




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##### Table of Contents



ExhibitNumber

Exhibit10.15
**

Concho Resources Inc. Summary of Executive Officer Compensation
    Program (filed as Exhibit 10.15 to the Companys
    Current Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10.16
**

Form of Nonstatutory Stock Option Agreement (filed as
    Exhibit 10.16 to the Companys Current Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10.17
**

Form of Restricted Stock Agreement (for employees) (filed as
    Exhibit 10.16 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.18
**

Form of Restricted Stock Agreement (for non-employee directors)
    (filed as Exhibit 10.18 to the Companys Current
    Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10.19
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Timothy A. Leach (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.20
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Steven L. Beal (filed as
    Exhibit 10.2 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.21
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and E. Joseph Wright (filed as
    Exhibit 10.3 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.22
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Darin G. Holderness (filed as
    Exhibit 10.4 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.23
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and David W. Copeland (filed as
    Exhibit 10.5 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.24
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Matthew G. Hyde (filed as
    Exhibit 10.6 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.25
**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Jack F. Harper (filed as
    Exhibit 10.7 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10.26
**

Form of Indemnification Agreement between Concho Resources Inc.
    and each of the officers and directors thereof (filed as
    Exhibit 10.23 to the Companys current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10.27
**

Indemnification Agreement, dated May 21, 2008, by and
    between Concho Resources, Inc. and Matthew G. Hyde (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on May 28, 2008, and incorporated herein by reference).10.28
**

Indemnification Agreement, dated August 25, 2008, by and
    between Concho Resources, Inc. and Darin G. Holderness (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on August 29, 2008, and incorporated herein by reference).10.29
**

Indemnification Agreement, dated February 27, 2008, by and
    between Concho Resources, Inc. and William H. Easter III
    (filed as Exhibit 10.1 to the Companys current Report
    on
    Form 8-K
    on March 4, 2008, and incorporated herein by reference).10.30


Gas Purchase Contract between COG Oil & Gas LP and
    Duke Energy Field Services, LP dated November 1, 2006
    (filed as Exhibit 10.25 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).
    Confidential treatment of certain provisions of this exhibit has
    previously been granted by the Securities and Exchange
    Commission. Omitted material for which confidential treatment
    has been granted has been filed separately with the Securities
    and Exchange Commission.10.31


Letter Agreement between COG Operating LLC and Navajo Refining
    Company, L.P. dated January 15, 2007 (filed as
    Exhibit 10.26 to the Companys current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference). 70




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##### Table of Contents



ExhibitNumber

Exhibit10.32


First Amendment to Credit Agreement, dated as of July 6,
    2006, among Concho Resources Inc., certain of its subsidiaries,
    JPMorgan Chase Bank, N.A. and the other leaders party thereto
    (filed as Exhibit 10.27 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.33


Second Amendment to Credit Agreement, dated as of March 7,
    2007, among Concho Resources Inc., certain of its subsidiaries,
    JPMorgan Chase Bank, N.A. and the other leaders party thereto
    (filed as Exhibit 10.28 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.34


Third Amendment to Credit Agreement, dated as of May 19,
    2008, by and among Concho Resources Inc., certain of its
    subsidiaries, JPMorgan Chase Bank, N.A. and the other leaders
    party thereto (filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    on May 23, 2008, and incorporated herein by reference).10.35
**

Form of option letter agreement among Concho Resources Inc.,
    Concho Equity Holdings Corp. and each of Messrs. Leach and
    Beal (filed as Exhibit 10.29 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.36
**

Form of option letter agreement among Concho Resources Inc.,
    Concho Equity Holdings Corp. and each of Messrs. Copeland,
    Kamradt, Thomas and Wright (filed as Exhibit 10.30 to the
    Companys current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10.37
**

Form of Amendment to Stock Option Award Agreement with executive
    officers related to the Pre-Combination Options (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10.38
**

Form of Amendment to Nonstatutory Stock Option Agreement with
    executive officers related to the June 2006 Options (filed as
    Exhibit 10.2 to the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10.39
**

Form of Restricted Stock Agreement with executive officers
    related to the June 2006 Options (filed as Exhibit 10.3 to
    the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10.40
**

Summary of Director Compensation Program (filed as
    Exhibit 10.41 to the Companys Current Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10.41


Common Stock Purchase Agreement, dated June 5, 2008, by and
    among Concho Resources Inc. and the purchasers named therein
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    on June 9, 2008, and incorporated herein by reference).10.42


Registration Rights Agreement, dated July 31, 2008, by and
    between Concho Resources Inc. and the purchasers named therein
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    on August 6, 2008, and incorporated herein by reference).10.43


Amended and Restated Credit Agreement, dated July 31, 2008,
    by and among Concho Resources Inc., JP Morgan Chase Bank, N.A.,
    Bank of America, N.A., Calyon New York Branch, ING Capital LLC
    and BNP Paribas and certain other lenders party thereto (filed
    as Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    on August 6, 2008, and incorporated herein by reference).21.1
(a)

Subsidiaries of Concho Resources Inc.23.1
(a)

Consent of Grant Thornton LLP23.2
(a)

Consent of Netherland, Sewell & Associates, Inc.23.3
(a)

Consent of Cawley, Gillespie & Associates, Inc.31.1
(a)

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31.2
(a)

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32.1
(b)

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32.2
(b)

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (a)
    
    Filed herewith.(b)
    
    Furnished herewith.**
    
    Management contract or compensatory plan or arrangement. 71




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##### Table of Contents



SIGNATURES    CONCHO RESOURCES INC.
  /s/  Timothy
    A. Leach          Signature

Title

Date/s/  TIMOTHY
    A. LEACHTimothy
    A. Leach

Director, Chairman of the Board of Directors and Chief Executive
    Officer (Principal Executive Officer)

February 27, 2009/s/  STEVEN
    L. BEALSteven
    L. Beal

Director, President and Chief Operating Officer

February 27, 2009/s/  DARIN
    G. HOLDERNESSDarin
    G. Holderness

Vice President, Chief Financial Officer and Treasurer (Principal
    Financial and Accounting Officer)

February 27, 2009/s/  TUCKER
    S. BRIDWELLTucker
    S. Bridwell

Director

February 27, 2009/s/  WILLIAM
    H. EASTER IIIWilliam
    H. Easter III

Director

February 27, 2009/s/  W.
    HOWARD KEENAN, JR.W.
    Howard Keenan, JR.

Director

February 27, 2009/s/  RAY
    M. POAGERay
    M. Poage

Director

February 27, 2009/s/  A.
    WELLFORD TABORA.
    Wellford Tabor

Director

February 27, 2009  72




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS  PageConsolidated Financial Statements of Concho Resources
    Inc.:Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of December 31,
    2008 and 2007


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2008, 2007 and 2006


F-4Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2008, 2007 and 2006


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008, 2007 and 2006


F-6Notes to Consolidated Financial Statements


F-7Unaudited Supplementary Information


F-42  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  
        Internal Control  Integrated
    Framework
  
  
 F-2




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##### Table of Contents



CONCHO
    RESOURCES INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007(In thousands, except share and per share data)ASSETSCurrent assets:Cash and cash equivalents


$17,752



$30,424Accounts receivable, net of allowance for doubtful accounts:Oil and gas


48,793



36,735Joint operations and other


92,833



21,183Related parties


314



Derivative instruments


113,149



1,866Deferred income taxes






13,502Prepaid costs and other


5,942



4,273Total current assets


278,783



107,983Property and equipment, at cost:Oil and gas properties, successful efforts method


2,693,574



1,555,018Accumulated depletion and depreciation


(306,990
)


(167,109
)Total oil and gas properties, net


2,386,584



1,387,909Other property and equipment, net


14,820



7,085Total property and equipment, net


2,401,404



1,394,994Deferred loan costs, net


15,701



3,426Inventory


19,956



1,459Intangible asset, net  operating rights


37,768



Noncurrent derivative instruments


61,157



Other assets


434



367Total assets


$2,815,203



$1,508,229LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable:Trade


$7,462



$14,222Related parties


312



2,119Other current liabilities:Bank overdrafts


9,434



5,651Revenue payable


22,286



14,494Accrued and prepaid drilling costs


154,196



39,276Derivative instruments


1,866



36,414Deferred income taxes


37,205



Current portion of long-term debt






2,000Other current liabilities


38,057



14,466Total current liabilities


270,818



128,642Long-term debt


630,000



325,404Noncurrent derivative instruments






10,517Deferred income taxes


573,763



259,070Asset retirement obligations and other long-term liabilities


15,468



9,198Commitments and contingencies (Note K)Stockholders equity:Preferred stock, $0.001 par value; 10,000,000 shares
    authorized; none issued and outstanding at December 31,
    2008 and 2007






Common stock, $0.001 par value; 300,000,000 authorized;
    84,828,824 and 75,832,310 shares issued at
    December 31, 2008 and 2007, respectively


85



76Additional paid-in capital


1,009,025



752,380Notes receivable from employees






(330
)Retained earnings


316,169



37,467Accumulated other comprehensive loss






(14,195
)Treasury stock, at cost; 3,142 and no shares at
    December 31, 2008 and 2007, respectively


(125
)


Total stockholders equity


1,325,154



775,398Total liabilities and stockholders equity


$2,815,203



$1,508,229    F-3




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##### Table of Contents



CONCHO
    RESOURCES INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years Ended December 31,2008


2007


2006(In thousands, except per share amounts)Operating revenues:Oil sales

$
390,945


$
195,596


$
131,773Natural gas sales


142,844



98,737



66,517Total operating revenues


533,789



294,333



198,290Operating costs and expenses:Oil and gas production


91,234



54,267



37,822Exploration and abandonments


38,468



29,098



5,612Depreciation, depletion and amortization


123,912



76,779



60,722Accretion of discount on asset retirement obligations


889



444



287Impairments of long-lived assets


18,417



7,267



9,891General and administrative (including non-cash stock-based
    compensation of $5,223, $3,841 and $9,144 for the years ended
    December 31, 2008, 2007 and 2006, respectively)


40,776



25,177



21,721Bad debt expense


2,905







Contract drilling fees  stacked rigs






4,269



Ineffective portion of cash flow hedges


(1,336
)


821



(1,193
)(Gain) loss on derivatives not designated as hedges


(249,870
)


20,274



Total operating costs and expenses


65,395



218,396



134,862Income from operations


468,394



75,937



63,428Other income (expense):Interest expense


(29,039
)


(36,042
)


(30,567
)Other, net


1,432



1,484



1,186Total other expense


(27,607
)


(34,558
)


(29,381
)Income before income taxes


440,787



41,379



34,047Income tax expense


(162,085
)


(16,019
)


(14,379
)Net income


278,702



25,360



19,668Preferred stock dividends






(45
)


(1,244
)Effect of induced conversion of preferred stock










11,601Net income applicable to common shareholders

$
278,702


$
25,315


$
30,025Basic earnings per share:Net income per share

$
3.52


$
0.39


$
0.63Weighted average shares used in basic earnings per share


79,206



64,316



47,287Diluted earnings per share:Net income per share

$
3.46


$
0.38


$
0.59Weighted average shares used in diluted earnings per share


80,587



66,309



50,729    F-4




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##### Table of Contents



CONCHO
    RESOURCES INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  Notes





AccumulatedReceivable


Retained


Other6% Series A








Additional


from


Earnings


Comprehensive








TotalPreferred Stock


Common Stock


Paid-in


Officers and


(Accumulated


Income


Treasury Stock


StockholdersShares


Amount


Shares


Amount


Capital


Employees


Deficit)


(Loss)


Shares


Amount


Equity(In thousands)BALANCE AT DECEMBER 31, 2005


12,959


$
130



8,142


$
8


$
135,876


$
(9,012
)

$
(6,272
)

$
(11,060
)





$



$
109,670Comprehensive income:Net income


























19,668















19,668Deferred hedge gains, net of tax of $4,200






























7,736











7,736Net settlement losses included in earnings, net of taxes of
    $2,030






























3,738











3,738Total comprehensive income










































31,142Issuance of subscribed units


4,518



45



2,259



2



45,329



(3,158
)


















42,218Issuance of common stock










578



1



577























578Conversion of preferred stock


(17,477
)


(175
)


13,106



13



162























Issuance of common stock for acquisition










34,795



35



384,301























384,336Stock-based compensation for restricted stock










214







1,044























1,044Cancellation of restricted stock










(1
)






























Stock-based compensation for stock options


















7,125























7,125Stock-based compensation on issuance of units


















975























975Accrued interest  officer and employee notes






















(688
)


















(688
)6% Series A preferred stock dividends


























(1,244
)














(1,244
)BALANCE AT DECEMBER 31, 2006










59,093



59



575,389



(12,858
)


12,152



414











575,156Comprehensive income:Net income


























25,360















25,360Deferred hedge losses, net of taxes of $13,204






























(20,579
)










(20,579
)Net settlement losses included in earnings, net of taxes of
    $3,830






























5,970











5,970Total comprehensive income










































10,751Stock-based compensation for restricted stock










138







1,378























1,378Cancellation of restricted stock










(2
)






























Stock-based compensation for stock options


















2,463























2,463Amendment of certain outstanding stock options due to 409A
    modification










83







(192
)






















(192
)Issuance of common stock for acquisition obligation










54







650























650Net proceeds from initial public equity offering










16,466



17



172,692























172,709Proceeds from notes receivable  officers and employees






















12,830



















12,830Accrued interest  officer and employee notes






















(302
)


















(302
)6% Series A preferred stock dividends


























(45
)














(45
)BALANCE AT DECEMBER 31, 2007










75,832



76



752,380



(330
)


37,467



(14,195
)










775,398Comprehensive income:Net income


























278,702















278,702Deferred hedge losses, net of taxes of $3,121






























(4,864
)










(4,864
)Net settlement losses included in earnings, net of taxes of
    $12,228






























19,059











19,059Total comprehensive income










































292,897Issuance of common stock










8,303



8



242,418























242,426Stock options exercised










612



1



5,390























5,391Stock-based compensation for restricted stock










128







2,122























2,122Cancellation of restricted stock










(46
)






























Stock-based compensation for stock options


















3,101























3,101Excess tax benefits related to stock-based compensation


















3,614























3,614Proceeds from notes receivable  employees






















333



















333Accrued interest  employee notes






















(3
)


















(3
)Purchase of treasury stock


































3



(125
)


(125
)BALANCE AT DECEMBER 31, 2008





$




84,829


$
85


$
1,009,025


$



$
316,169


$




3


$
(125
)

$
1,325,154    F-5




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years Ended December 31,2008


2007


2006(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
278,702


$
25,360


$
19,668Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation, depletion and amortization


123,912



76,779



60,722Impairments of long-lived assets


18,417



7,267



9,891Accretion of discount on asset retirement obligations


889



444



287Exploration expense, including dry holes


35,328



25,009



3,387Non-cash compensation expense


5,223



3,841



9,144Deferred income taxes


153,484



13,716



12,618Gain on sale of assets


(777
)


(368
)


(3
)Ineffective portion of cash flow hedges


(1,336
)


821



(1,193
)(Gain) loss on derivatives not designated as hedges


(249,870
)


20,274



Dedesignated cash flow hedges reclassified from accumulated
    other comprehensive income (loss)


696



(1,103
)


Other non-cash items


6,517



3,376



1,150Changes in operating assets and liabilities, net of acquisitions:Accounts receivable


42,514



(5,759
)


(27,683
)Prepaid costs and other


(5,542
)


(169
)


(2,162
)Inventory


(16,819
)


(150
)


(291
)Accounts payable


(25,234
)


(3,493
)


13,853Revenue payable


7,074



4,593



2,372Other current liabilities


18,219



(669
)


10,421Net cash provided by operating activities


391,397



169,769



112,181CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures on oil and gas properties


(347,702
)


(162,378
)


(182,389
)Acquisition of oil and gas properties, businesses and other
    assets


(584,220
)


(255
)


(413,229
)Additions to other property and equipment


(8,808
)


(2,813
)


(1,234
)Proceeds from the sale of oil and gas properties and other assets


1,034



3,278



Settlements received (paid) on derivatives not designated as
    hedges


(6,354
)


1,815



Net cash used in investing activities


(946,050
)


(160,353
)


(596,852
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt


767,800



300,200



664,993Payments of long-term debt


(465,700
)


(468,800
)


(241,493
)Exercise of stock options


5,391







Excess tax benefit from stock-based compensation


3,614







Net proceeds from issuance of common stock


242,426



172,709



61,178Payments of preferred stock dividends






(132
)


(2,567
)Proceeds from repayment of officer and employee notes


333



12,830



Payments for loan origination costs


(15,541
)


(2,572
)


(5,500
)Purchase of treasury stock


(125
)






Bank overdrafts


3,783



5,651



Net cash provided by financing activities


541,981



19,886



476,611Net increase (decrease) in cash and cash equivalents


(12,672
)


29,302



(8,060
)Cash and cash equivalents at beginning of period


30,424



1,122



9,182Cash and cash equivalents at end of period

$
17,752


$
30,424


$
1,122SUPPLEMENTAL CASH FLOWS:Cash paid for interest and fees, net of $1,233, $2,647 and
    $2,129 capitalized interest

$
27,747


$
41,036


$
23,882Cash paid for income taxes

$
11,304


$
2,050


$
1,725NON-CASH INVESTING AND FINANCING ACTIVITIES:Issuance of common stock in acquisition of oil and gas
    properties and other assets

$



$
650


$
384,336Deferred tax effect of acquired oil and gas properties

$
206,497


$
(444
)

$
227,735Issuance of notes receivable in connection with capital options

$



$



$
3,158    F-6




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES
    TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31,
    2008, 2007 and 2006
  Note A.
    Organization
    and nature of operations        Note B.
    Summary
    of significant accounting policies  Principles of consolidation.
  Use of estimates in the preparation of financial
    statements.
  Cash equivalents.
 F-7




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Accounts receivable.
  Assets held for sale.
  Inventory.
  Deferred loan costs.
    Total(In thousands)2009

$
3,4262010


3,4262011


3,4262012


3,4262013


1,997Total

$
15,701   Oil and gas properties.
 F-8




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        and/or
         F-9




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Other property and equipment.
  Intangible assets.
  (In Thousands)2009

$
1,5362010


1,5362011


1,5362012


1,5362013


1,536Thereafter


30,088Total

$
37,768   Environmental. and/or
  Oil and gas sales and imbalances.
 F-10




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,2008

2007(Dollars in thousands)Gas imbalance liability (included in asset retirement
    obligations and other long-term liabilities)

$
472


$
621Overtake position (Mcf)


85,698



96,215Gas imbalance receivable (included in other assets)

$
406


$
367Undertake position (Mcf)


90,321



81,569   Years Ended December 31,2008

2007Value of net undertake arising during the year (reducing oil and
    gas production expense)

$
189


$
14Net undertake position arising during the year (Mcf)


19,269



4,264   Derivative instruments and hedging.
      Asset retirement obligations.
 F-11




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Treasury stock.
  General and administrative expense.
  Stock-based compensation.
  Income taxes.
    Reclassifications.
  Recent accounting pronouncements. The Fair Value Option for Financial Assets and
    Financial Liabilities, Including an Amendment of FASB Statement
    No. 115 instrument-by-instrument
  FIN 39-1, Amendment of FASB Interpretation No. 39 (FIN No. 39-1). FIN No. 39-1
 F-12




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  FIN No. 39-1 FIN No. 39-1
  06-11, Accounting for Income Tax Benefits of Dividends on
    Share-Based Payment Awards 06-11 06-11 06-11 06-11 06-11
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB
    No. 51
  Share-Based
    Payment Share-Based Payment Share-Based Payment (revised 2004)
  Disclosures about Derivative Instruments and Hedging
    Activities
 F-13




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    No. SFAS 142-3, Determination of the Useful Life of Intangible Assets SFAS No. 142-3). SFAS No. 142-3 Goodwill and Other Intangible Assets SFAS No. 142-3 SFAS No. 142-3 SFAS No. 142-3
  The Hierarchy of Generally Accepted Accounting
    Principles The Meaning of Present Fairly in Conformity with
    Generally Accepted Accounting Principles
  No. EITF 03-6-1 Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities EITF 03-6-1) EITF 03-6-1 EITF 03-6-1 EITF 03-6-1
  No. SFAS 157-3, Determining the Fair Value of a Financial Asset When
    the Market for That Asset is Not Active No. SFAS 157-3 No. SFAS 157-3.
  Recent developments in reserve
    reporting.
  
    permit the use of new technologies to determine proved reserves
    if those technologies have been demonstrated empirically to lead
    to reliable conclusions about reserves volumes;
    allow companies to disclose in SEC filed documents their
    probable and possible reserves to investors (currently, the SEC
    rules limit disclosure to only proved reserves);
    require companies to report the independence and qualifications
    of a reserves preparer or auditor; F-14




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   
    file reports when a third party is relied upon to prepare
    reserves estimates or conducts a reserves audit; and
    report oil and gas reserves using an average price based upon
    the prior
    12-month
    period rather than year-end prices.    Note C.
    Exploratory
    well costs      Years Ended December 31,2008


2007


2006(In thousands)Beginning capitalized exploratory well costs

$
21,056


$
26,503


$
4,370Additions to exploratory well costs pending the determination of
    proved reserves


25,621



97,368



25,170Reclassifications due to determination of proved reserves


(18,327
)


(95,869
)


(2,759
)Exploratory well costs charged to expense


(2,797
)


(6,946
)


(278
)Ending capitalized exploratory well costs

$
25,553


$
21,056


$
26,503     December 31,2008


2007(In thousands)Wells in drilling progress

$
7,765


$
4,199Capitalized exploratory well costs that have been capitalized
    for a period of one year or less


17,788



16,857Capitalized exploratory well costs that have been capitalized
    for a period greater than one year






Total capitalized exploratory well costs

$
25,553


$
21,056     Note D.
    Acquisition
    and business combination  Henry Entities acquisition.
 F-15




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
          (In thousands)Fair value of Henry Properties net assets:Current assets, net of cash acquired of $19,049(a)

$
86,321Proved oil and gas properties


595,005Unproved oil and gas properties


233,199Other long-term assets


6,977Intangible assets  operating rights


38,409Total assets acquired


959,911Current liabilities


(113,729
)Asset retirement obligations and other long-term liabilities


(7,529
)Noncurrent derivative liabilities


(39,037
)Deferred tax liability


(215,475
)Total liabilities assumed


(375,770
)Net purchase price

$
584,141Consideration paid for Henry Properties net assets:Cash consideration paid, net of cash acquired of $19,049

$
578,491Acquisition costs(b)


5,650Total purchase price

$
584,141     (a)
    
    Includes a deferred tax asset of approximately $9.0 million.(b)
    
    Estimated acquisition costs include legal and accounting fees,
    advisory fees and other acquisition-related costs. F-16




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     Years Ended December 31,2008

2007(In thousands, except per share data)Operating revenues

$
629,214


$
389,758Net income (loss) applicable to common shareholders

$
257,540


$
(7,471
)Earnings (loss) per common share:Basic

$
2.94


$
(0.10
)Diluted

$
2.90


$
(0.10
)   Chase Group combination.
  Note E.
    Asset
    retirement obligations      Years Ended December 31,2008


2007


2006(In thousands)Asset retirement obligations, beginning of period

$
9,418


$
8,700


$
1,120Liabilities incurred from new wells


1,197



471



1,288Liabilities assumed in acquisitions


7,062







6,155Accretion expense


889



444



287Liabilities settled upon plugging and abandoning wells






(26
)


Revision of estimates


(1,757
)


(171
)


(150
)Asset retirement obligations, end of period

$
16,809


$
9,418


$
8,700   Note F.
    Stockholders
    equity and stock issued subject to limited recourse
    notes  Common stock private placement.
 F-17




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
      Initial public offering.
  Secondary public offering.
  Treasury stock.
  Equity commitments.
   F-18




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Capital calls.
  6% Series A preferred
    stock.
    Purchase Notes.
   F-19




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Stock issuances treated as Capital
    Options.
  Number of


WeightedBundled Capital


AverageOptions


Exercise PriceOutstanding at December 31, 2005


1,100,000


$
9.52Bundled Capital Options granted





$
Cancelled/forfeited


(161,697
)

$
9.52Outstanding at December 31, 2006


938,303


$
9.52Bundled Capital Options exercised


(938,303
)

$
9.52Outstanding at December 31, 2007





$
Vested outstanding at:December 31, 2006


938,303


$
9.52December 31, 2007





$
     Number of


WeightedCapital


AverageOptions


Exercise PriceOutstanding at December 31, 2005


482,500


$
9.74$15 Capital Options granted


16,000


$
12.13Cancelled/forfeited


(73,279
)

$
9.81Outstanding at December 31, 2006


425,221


$
9.81$10 Capital Options exercised


(270,828
)

$
8.97$15 Capital Options exercised


(116,008
)

$
12.26Outstanding at December 31, 2007


38,385


$
8.34$10 Capital Options exercised


(38,385
)

$
8.34Outstanding at December 31, 2008





$
Vested outstanding at:December 31, 2006


425,221


$
9.81December 31, 2007


38,385


$
8.34December 31, 2008





$
     Capital

WeightedOptions

Average

WeightedOutstanding,

Remaining

AverageVested and

Contractual

Exercise

IntrinsicExercisable

Life

Price

ValueVested Capital Options Outstanding and Exercisable at
    December 31, 2007:Exercise price

$
10.00



38,385



2.52 years


$
8.34


$
562,000  F-20




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Stock-based compensation expense from Capital Options

$
975,000Bundled Capital Options:Stock-based compensation expense

$
508,000Options vesting during period


242,000Weighted average grant date fair value per option

$
2.10Capital Options:Stock-based compensation expense

$
467,000Options vesting during period


119,799Weighted average grant date fair value per option

$
3.90   Conversion of CEHC 6% Series A Preferred Stock and
    CEHC common stock.
      Common stock held in escrow.
  Note G.
    Incentive
    plans  Defined contribution plan.
 F-21




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Stock incentive plan.
  Number ofCommon SharesApproved and authorized awards


5,850,000Stock option grants, net of forfeitures


(3,343,684
)Restricted stock grants, net of forfeitures


(512,809
)Awards available for future grant


1,993,507   Restricted stock awards.
  Number of


Grant DateRestricted


Fair ValueShares


Per ShareRestricted stock:Outstanding at January 1, 2006


Shares granted


213,584


$
15.40Shares cancelled/forteited


(1,368
)Lapse of restrictions


Outstanding at December 31, 2006


212,216Shares granted


220,995


$
9.22Shares cancelled/forteited


(1,662
)Lapse of restrictions


(60,000
)Outstanding at December 31, 2007


371,549Shares granted


128,001


$
32.13Shares cancelled/forteited


(46,741
)Lapse of restrictions


(45,458
)Outstanding at December 31, 2008


407,351     Years Ended December 31,2008

2007

2006(In thousands)Stock-based compensation expense related to restricted stock

$
2,122


$
1,378


$
1,044Income tax benefit related to restricted stock

$
808


$
533


$
407Deductions in current taxable income related to restricted stock

$
1,234


$



$
  F-22




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Stock option awards.
              January 1, 2006Through February 27, 2006WeightedNumber of


AverageUnits(a)


PriceOutstanding at beginning of period


1,365,075


$
10.32Options granted


514,267


$
10.68Options forfeited





$
Options exercised





$
Outstanding at end of period


1,879,342


$
10.42Exercisable at end of period


1,562,770


$
10.51     (a)
    
    Each option Unit can be exercised for on Preferred Unit which is
    comprised of one-half of a share of CEHC common stock and one
    share of CEHC preferred stock. F-23




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
     CEHC





ResourcesCEHC

Unit


Conversion


Option


ResourcesUnit Option Exercise Price

Options


Rate


Exercise Price


Options$10.00


1,721,010



1.25:1


$
8.00



2,151,129$15.00


158,332



1.25:1


$
12.00



197,9841,879,342











2,349,113     Years Ended December 31,


February 27, 20062008


2007


through December 31, 2006Weighted





Weighted





WeightedAverage





Average





AverageNumber of


Exercise


Number of


Exercise


Number of


ExerciseOptions


Price


Options


Price


Options


PriceStock options:Outstanding at beginning of period


3,011,722


$
9.71



2,797,997


$
8.93



2,349,113


$
8.34Options granted


607,555


$
23.54



215,000


$
12.85



450,000


$
12.00Options forfeited


(275,593
)

$
14.96



(1,275
)

$
8.00



(1,116
)

$
10.88Options exercised


(612,360
)

$
8.80






$







$
Outstanding at end of period


2,731,324


$
12.46



3,011,722


$
9.71



2,797,997


$
8.93Vested at end of period


1,567,389


$
9.18



2,063,499


$
8.79



1,952,274


$
8.40Exercisable at end of period


517,019


$
11.16



508,462


$
10.58



1,952,274


$
8.40  F-24




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    WeightedAverage


WeightedNumber


Remaining


AverageVested and


Contractual


Exercise


IntrinsicExercisable


Life


Price


Value(In thousands)Vested options:December 31, 2008:Exercise price

$
8.00



1,232,647



2.58 years


$
8.00


$
18,268Exercise price

$
12.00



143,492



4.99 years


$
12.00



1,553Exercise price

$
14.68



191,250



7.78 years


$
14.68



1,5561,567,389






$
9.18


$
21,377Exercisable options:December 31, 2008:Exercise price

$
8.00



236,227



5.62 years


$
8.00


$
3,501Exercise price

$
12.00



89,542



6.78 years


$
12.00



969Exercise price

$
14.68



191,250



7.78 years


$
14.68



1,556517,019






$
11.16


$
6,026Vested options:December 31, 2007:Exercise price

$
8.00



1,753,819



3.15 years


$
8.00


$
22,116Exercise price

$
12.00



197,180



5.72 years


$
12.00



1,698Exercise price

$
15.40



112,500



8.45 years


$
15.40



5862,063,499






$
10.58


$
24,400Exercisable options:December 31, 2007:Exercise price

$
8.00



275,685



6.62 years


$
8.00


$
3,476Exercise price

$
12.00



120,277



7.78 years


$
12.00



1,036Exercise price

$
15.40



112,500



8.45 years


$
15.40



586508,462






$
10.58


$
5,098Vested and exercisable options:December 31, 2006:Exercise price

$
8.00



1,755,094



8.47 years


$
8.00


$
15,099Exercise price

$
12.00



197,180



8.86 years


$
12.00


$
7691,952,274






$
8.40


$
15,868  F-25




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Years Ended December 31,2008


2007


2006(In thousands)Grant date fair value for awards during the period:Time Vesting options(a)

$
580


$
87


$
1,931Performance Vesting options:Officers(b)










531Non-officers(c)










142Stock option grants under the Plan(d)


5,675



1,921



3,555Total

$
6,255


$
2,008


$
6,159Stock-based compensation expense from stock
    options:Time Vesting options(a)

$
181


$
17


$
5,085Performance Vesting options:Officers(b)


253



602



511Non-officers(c)










505Stock option grants under the Plan(d)


2,667



1,844



1,024Total

$
3,101


$
2,463


$
7,125Income taxes and other information:Income tax benefit related to stock options

$
1,990


$
953


$
2,779Deductions in current taxable income related to stock options
    exercised

$
10,756


$



$
     (a)
    
    Options granted prior to February 27, 2006, vested
    immediately as of the date of the Combination, as a result of a
    change of control. Options granted thereafter vest using a four
    year graded vesting schedule by approval from the Board of
    Directors.(b)
    
    Options granted prior to February 27, 2006, vest using a
    three year cliff vesting schedule by approval from CEHCs
    Board of Directors.(c)
    
    Vested as of the date of the Combination by approval from
    CEHCs Board of Directors.(d)
    
    Vest using a three or four year graded vesting schedule by
    approval from the Board of Directors. The 2007 grant date fair
    value includes an adjustment of $765,000 from a change in fair
    value due to the Code Section 409A (defined later) option
    modification.    2008

2007

2006Risk-free interest rate


3.18
%


4.47
%


4.81
%Expected term (years)


6.21



6.25



2.87Expected volatility


38.88
%


37.33
%


37.12
%Expected dividend yield










  F-26




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Stock option modifications.
        Future stock-based compensation expense.
  Restricted


StockStock


Options


Total(In thousands)2009

$
2,470


$
2,701


$
5,1712010


1,393



1,242



2,6352011


475



466



9412012


40



55



95Total

$
4,378


$
4,464


$
8,842   Note H.  Disclosures
    about fair value of financial instruments
  Fair Value
    Measurements No. 157-2,
 F-27




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Level 1:
    Unadjusted quoted prices in active markets that are accessible
    at the measurement date for identical, unrestricted assets or
    liabilities. The Company considers active markets to be those in
    which transactions for the assets or liabilities occur in
    sufficient frequency and volume to provide pricing information
    on an ongoing basis.Level 2:
    Quoted prices in markets that are not active, or inputs which
    are observable, either directly or indirectly, for substantially
    the full term of the asset or liability. This category includes
    those derivative instruments that the Company values using
    observable market data. Substantially all of these inputs are
    observable in the marketplace throughout the full term of the
    derivative instrument, can be derived from observable data, or
    supported by observable levels at which transactions are
    executed in the marketplace. Level 2 instruments primarily
    include non-exchange traded derivatives such as over-the-counter
    commodity price swaps, investments and interest rate swaps. The
    Companys valuation models are primarily industry-standard
    models that consider various inputs including: (i) quoted
    forward prices for commodities, (ii) time value and
    (iii) current market and contractual prices for the
    underlying instruments, as well as other relevant economic
    measures. The Company utilizes our counterparties
    valuations to assess the reasonableness of our prices and
    valuation techniques.Level 3:
    Measured based on prices or valuation models that require inputs
    that are both significant to the fair value measurement and less
    observable from objective sources (i.e., supported by
    little or no market activity). Level 3 instruments
    primarily include derivative instruments, such as basis swaps,
    commodity price collars and floors, as well as investments. The
    Companys valuation models are primarily industry-standard
    models that consider various inputs including: (i) quoted
    forward prices for commodities, (ii) time value,
    (iii) volatility factors and (iv) current market and
    contractual prices for the underlying instruments, as well as
    other relevant economic measures. Although the Company utilizes
    our counterparties valuations to assess the reasonableness
    of our prices and valuation techniques, the Company does not
    have sufficient corroborating market evidence to support
    classifying these assets and liabilities as Level 2.    Cash and cash equivalents, accounts receivable, other current
    assets, accounts payable, interest payable and other current
    liabilities.
  Notes receivable  officers and
    employees.
  Line of credit and term note.
  Derivative instruments.
 F-28




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Fair value measurements usingQuoted


Significant





Totalprices


other


Significant


carrying valuein active


observable


unobservable


atmarkets


inputs


inputs


December 31,(Level 1)


(Level 2)


(Level 3)


2008(In thousands)Commodity derivative price swap contracts

$



$
124,641


$



$
124,641Commodity derivative basis swap contracts






(680
)






(680
)Interest rate derivative swap contracts






(1,083
)






(1,083
)Commodity derivative price collar contracts










49,562



49,562Total financial assets (liabilities)

$



$
122,878


$
49,562


$
172,440     (In Thousands)Balance at January 1, 2008

$
1,866Realized and unrealized gains


49,122Purchases, issuances, and settlements


(1,426
)Balance at December 31, 2008

$
49,562Total gains for the period included in earnings attributable to
    the change in unrealized gains relating to assets still held at
    the reporting date

$
47,696     Note I.
    Derivative
    financial instruments       F-29




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
        2008 commodity derivative contracts.
  Aggregate








RemainingRemaining


Daily


Index


ContractVolume


Volume


Price


PeriodCrude oil (volumes in Bbls):Price collar


768,000



2,104


$
120.00 - $134.60
(a)


1/1/09-12/31/09Price swap


292,000



800


$
98.35
(a)


1/1/09-12/31/09Price swap


348,000



953


$
125.10
(a)


1/1/09-12/31/09Price swap


240,000



658


$
128.80
(a)


1/1/10-12/31/10Price swap


336,000



921


$
128.66
(a)


1/1/11-12/31/11Price swap


504,000



1,377


$
127.80
(a)


1/1/12-12/31/12Natural gas (volumes in MMBtus):Price swap


1,825,000



5,000


$
8.44
(b)


1/1/09-12/31/09Index basis swap


6,022,500



16,500


$
1.08
(c)


1/1/09-12/31/09     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price.(b)
    
    The index price for the natural gas price collar is based on the
    Inside FERC-El Paso Permian Basin first-of-the-month spot
    price.(c)
    
    The basis differential between the El Paso Permian delivery
    point and NYMEX Henry Hub delivery point. F-30




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Commodity derivative contracts assumed in the Henry Entities
    acquisition.
  Aggregate








RemainingRemaining


Daily


Index


ContractVolume


Volume


Price


PeriodCrude oil (volumes in Bbls):Price swap


443,491



1,215


$
73.59
(a)


1/1/09 - 12/31/09Price swap


401,746



1,101


$
72.03
(a)


1/1/10 - 12/31/10Price swap


221,746



608


$
68.92
(a)


1/1/11 - 12/31/11     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price and
    the prices represent weighted average prices.  2008 interest rate derivative
    contracts.
    AggregateRemainingVolume /





Index

RemainingFair Value


Notional


Daily


Price /

ContractAsset (Liability)


Amount


Volume


Rate

Period(In thousands)Crude oil (volumes in Bbls):Price collar

$
49,562



768,000



2,104


$120.00 - $134.60(a)


1/1/09 - 12/31/09Price swap


58,269



1,813,491



4,968


$87.16(a)(c)


1/1/09 - 12/31/09Price swap


17,948



641,746



1,758


$93.26(a)(c)


1/1/10 - 12/31/10Price swap


18,191



557,746



1,528


$104.91(a)(c)


1/1/11 - 12/31/11Price swap


24,339



504,000



1,377


$127.80(a)


1/1/12 - 12/31/12Natural gas (volumes in MMBtus):Price swap


5,894



1,825,000



5,000


$8.44(b)


1/1/09 - 12/31/09Basis swap


(680
)


6,022,500



16,500


$1.08(d)


1/1/09 - 12/31/09Interest rate (notional amount in dollars):Rate swap


(1,083
)

$
300,000,000






1.90%(e)


5/1/09 - 4/30/12Net asset

$
172,440     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price.(b)
    
    The index price for the natural gas price collar is based on the
    Inside FERC-El Paso Permian Basin first-of-the-month spot
    price.(c)
    
    Prices represent weighted average prices. F-31




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   (d)
    
    The basis differential between the El Paso Permian delivery
    point and NYMEX Henry Hub delivery point.(e)
    
    The index rate is based on the one-month LIBOR.  :
  Years Ended December 31,2008


2007


2006(In thousands)Increase (decrease) in oil and gas revenue from derivative
    activity:Cash payments on cash flow hedges in oil sales

$
(30,591
)

$
(11,091
)

$
(7,000
)Cash receipts from cash flow hedges in gas sales






188



1,232Dedesignated cash flow hedges reclassified from AOCI in gas sales


(696
)


1,103



Total decrease in oil and gas revenue from derivative activity

$
(31,287
)

$
(9,800
)

$
(5,768
)Gain (loss) on derivatives not designated as
    hedges:Mark-to-market gain (loss):Commodity derivatives

$
257,307


$
(22,089
)

$
Interest rate derivatives


(1,083
)






Cash (payments) receipts on derivatives not designated as
    hedges:Commodity derivatives


(6,354
)


1,815



Interest rate derivatives










Total gain (loss) on derivatives not designated as hedges

$
249,870


$
(20,274
)

$
Gain (loss) from ineffective portion of cash flow
    hedges:

$
1,336


$
(821
)

$
1,193Accumulated other comprehensive income (loss):Cash flow hedges:Mark-to-market gain (loss) of cash flow hedges

$
(7,985
)

$
(33,783
)

$
11,936Reclassification adjustment of losses to earnings


30,591



10,903



5,768Net AOCI upon dedesignation at June 30, 2007






(407
)


Net change, before income taxes


22,606



(23,287
)


17,704Income tax effect


(8,835
)


9,102



(6,230
)Net change, net of income taxes

$
13,771


$
(14,185
)

$
11,474Dedesignated cash flow hedges:Net AOCI upon dedesignation at June 30, 2007

$



$
407


$
Reclassification adjustment of (gains) losses to earnings


696



(1,103
)


Income tax effect


(272
)


272



Net change, net of income taxes

$
424


$
(424
)

$
  F-32




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Post 2008 commodity derivative
    contracts.
  Aggregate







RemainingRemaining


Daily


Index

ContractVolume


Volume


Price

PeriodCrude oil (volumes in Bbls):Price swap


600,000



1,644


$57.55(a)


1/1/10 - 12/31/10Price collar


600,000



6,522


$45.00 - $49.00(a)


3/1/09 - 5/31/09     (a)
    
    The index prices for the oil price swaps are based on the
    NYMEX-West Texas Intermediate monthly average futures price.  Note J.
    Debt    December 31,2008


2007(In thousands)Senior Credit Facility

$
630,000


$
216,0002nd Lien Credit Facility






109,900Unamortized original issue discount on 2nd Lien Credit Facility






(496
)Total long-term debt


630,000



325,404Current portion of 2nd Lien Credit Facility






2,000Total debt

$
630,000


$
327,404   Senior credit facility. 2 3
    same-day
 F-33




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    2nd lien credit facility.
  Principal maturities of long-term
    debt.
  (In thousands)2009

$
2010


2011


2012


2013


630,000Total

$
630,000   Interest expense.
  Years Ended December 31,2008


2007


2006(In thousands)Cash payments for interest

$
27,747


$
41,036


$
23,882Amortization of original issue discount


58



98



Amortization of deferred loan origination costs


2,157



1,338



1,494Write-off of deferred loan origination costs and original issue
    discount


1,547



2,631



Net changes in accruals


(1,237
)


(6,414
)


7,320Interest costs incurred


30,272



38,689



32,696Less: capitalized interest


(1,233
)


(2,647
)


(2,129
)Total interest expense

$
29,039


$
36,042


$
30,567  F-34




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Note K.
    Commitments
    and contingencies  Severance agreements.
  Indemnifications.
  Legal actions. quarter-by-quarter
  Acquisition commitments.
  Daywork commitments.
  Payments Due By PeriodLess Than


1 - 3


3 - 5


More ThanTotal


1 Year


Years


Years


5 Years(In thousands)Daywork drilling contracts

$
5,584


$
5,584


$



$



$
Daywork drilling contracts with related parties(a)


12,296



12,296











Daywork drilling contracts assumed in the Henry Properties
    acquisition(b)


10,850



7,978



2,872







Total contractual drilling commitments

$
28,730


$
25,858


$
2,872


$



$
     (a)
    
    Consists of daywork drilling contracts with Silver Oak Drilling,
    LLC, an affiliate of the Chase Group.(b)
    
    A major oil and gas company which owns an interest in the wells
    being drilled and the Company are parties to these contracts.
    Only the Companys 25% share of the contract obligation has
    been reflected above. F-35




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
   Operating leases.
    (In thousands)2009

$
9702010


9852011


9892012


9812013


818Total

$
4,743   Note L.
    Income
    taxes        Accounting for Uncertainty in Income
    Taxes Accounting for Income Taxes
  FIN No. 48-1, Definition of Settlement in FASB Interpretation
    No. 48 (FIN No. 48-1) FIN No. 48-1 48-1
  Texas margins tax.
 F-36




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Income tax provision.
  Years Ended December 31,2008


2007


2006(In thousands)Income from operations

$
162,085


$
16,019


$
14,379Changes in stockholders equity:Net deferred hedge gains (losses)


(3,121
)


(13,204
)


4,200Net settlement losses included in earnings


12,228



3,830



2,030Tax benefits related to stock-based compensation


(3,614
)






$
167,578


$
6,645


$
20,609     Years Ended December 31,2008


2007


2006(In thousands)Current:U.S. federal

$
8,080


$
1,902


$
1,527U.S. state and local


521



401



2348,601



2,303



1,761Deferred:U.S. federal


141,668



10,069



10,777U.S. state and local


11,816



3,647



1,841153,484



13,716



12,618$
162,085


$
16,019


$
14,379     Years Ended December 31,2008


2007


2006(In thousands)Income at U.S. federal statutory rate

$
154,276


$
14,483


$
11,916State income taxes (net of federal tax effect)


13,372



2,631



2,083Stock-based compensation










380Statutory depletion carryover






(613
)


Change in tax rate


(5,671
)






Nondeductible expense & other


108



(482
)


Expense for income taxes

$
162,085


$
16,019


$
14,379  F-37




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    December 31,2008


2007(In thousands)Deferred tax asset:Stock-based compensation

$
5,569


$
4,440Derivative instruments






17,612Statutory depletion carryover


1,635



613Federal tax credit carryovers


8,525



1,195Other


10,625



564Total deferred tax assets


26,354



24,424Deferred tax liability:Oil and gas properties, principally due to differences in basis
    and depletion and the deduction of intangible drilling costs for
    tax purposes


(557,011
)


(269,938
)Intangible asset  operating rights


(14,387
)


Derivative instruments


(65,689
)


Other


(235
)


(54
)Total deferred tax liabilities


(637,322
)


(269,992
)Net deferred tax liability

$
(610,968
)

$
(245,568
)   Note M.
    Major
    customers and derivative counterparties  Sales to major customers.
    Years Ended December 31,2008

2007

2006Navajo Refining Company, L.P.


59%



60%



52%DCP Midstream LP


18%



23%



17%     Derivative counterparties.
 F-38




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Note N.
    Related
    parties  Contract Operator Agreement and Transition Services
    Agreement.
      Other related party transactions.
      Overriding royalty and royalty
    interests.
     F-39




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
  Prospect participation.
  Working interests owned by employees.
  Note O.
    Net
    income per share          Years Ended December 31,2008

2007

2006(In thousands)Weighted average common shares outstanding:Basic


79,206



64,316



47,287Dilutive Bundled Capital Options






847



2,516Dilutive Capital Options


6



154



192Dilutive common stock options


1,134



901



714Dilutive restricted stock


241



91



20Diluted


80,587



66,309



50,729  F-40




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS 
    (Continued)
    Note P.
    Other
    current liabilities    December 31,2008


2007(In thousands)Other current liabilities:Accrued production costs

$
15,489


$
4,135Payroll related matters


11,290



3,821Accrued interest


353



1,590Asset retirement obligations


2,611



912Other


8,314



4,008Other current liabilities

$
38,057


$
14,466  F-41




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  UNAUDITED
    SUPPLEMENTARY INFORMATION
 December 31,
    2008, 2007 and 2006
  Capitalized
    Costs
  December 31,2008


2007(In thousands)Oil and gas properties:Proved

$
2,316,330


$
1,303,665Unproved


377,244



251,353Less: accumulated depletion


(306,990
)


(167,109
)Net capitalized costs for oil and gas properties

$
2,386,584


$
1,387,909   Costs
    Incurred for Oil and Gas Producing Activities(a)
  Years Ended December 31,2008


2007


2006(In thousands)Property acquisition costs:Proved

$
597,713


$



$
830,537Unproved


240,294



7,293



220,295Exploration


160,174



116,004



49,297Development


178,842



64,524



124,817Total costs incurred for oil and gas properties

$
1,177,023


$
187,821


$
1,224,946     (a)
    
    The costs incurred for oil and gas producing activities includes
    the following amounts of asset retirement obligations:  Years Ended December 31,2008


2007


2006(In thousands)Proved property acquisition costs

$
7,062


$



$
6,155Exploration costs


563



(15
)


43Development costs


(1,123
)


315



1,095Total

$
6,502


$
300


$
7,293   Reserve
    Quantity Information
   F-42




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  UNAUDITED
    SUPPLEMENTARY INFORMATION  (Continued)
    December 31,2008

2007

2006Prices utilitzed in the reserve estimates before adjustments:Year-end West Texas Intermediate posted oil price per Bbl

$
41.00


$
92.50


$
57.75Year-end Henry Hub spot market natural gas price per MMBtu

$
5.71


$
6.80


$
5.64       2008

2007

2006Oil and

Natural



Oil and

Natural



Oil and

NaturalCondensate

Gas

Total

Condensate

Gas

Total

Condensate

Gas

Total(MBbls)

(MMcf)

(MBoe)

(MBbls)

(MMcf)

(MBoe)

(MBbls)

(MMcf)

(MBoe)Total Proved Reserves:Balance, January 1


53,361



225,837



91,000



44,322



200,818



77,792



9,658



49,530



17,913Purchase of
    minerals-in-place


20,837



56,022



30,174



105



354



164



27,163



137,963



50,157Sales of
    minerals-in-place














(1
)






(1
)










Discoveries and extensions(a)


24,194



73,380



36,424



13,140



48,751



21,265



10,226



39,427



16,797Revisions of previous estimates


(7,521
)


(34,323
)


(13,242
)


(1,191
)


(12,022
)


(3,195
)


(430
)


(16,595
)


(3,196
)Production


(4,586
)


(14,968
)


(7,081
)


(3,014
)


(12,064
)


(5,025
)


(2,295
)


(9,507
)


(3,880
)Balance, December 31


86,285



305,948



137,275



53,361



225,837



91,000



44,322



200,818



77,791Proved Developed Reserves:January 1


27,617



128,872



49,096



23,443



112,423



42,180



6,502



34,160



12,195December 31


46,661



179,124



76,515



27,617



128,872



49,096



23,443



112,423



42,180     (a)
    
    The 2008, 2007 and 2006 discoveries and extensions included
    14,533, 9,601 and 5,211 net MBoe, respectively, related to
    additions from the Companys infill drilling activities.  Standardized
    Measure of Discounted Future Net Cash Flows
     F-43




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  UNAUDITED
    SUPPLEMENTARY INFORMATION  (Continued)
      December 31,2008


2007


2006(In thousands)Oil and gas producing activities:Future cash inflows

$
5,785,109


$
6,507,955


$
3,560,326Future production costs


(1,666,380
)


(1,517,415
)


(995,335
)Future development and abandonment costs(a)


(668,005
)


(484,140
)


(484,462
)Future income tax expense


(919,251
)


(1,482,633
)


(530,212
)2,531,473



3,023,767



1,550,31710% annual discount factor


(1,332,488
)


(1,591,993
)


(839,968
)Standardized measure of discounted future cash flows

$
1,198,985


$
1,431,774


$
710,349     (a)
    
    Includes $28.8 million, $19.5 million and
    $25.3 million of undiscounted asset retirement cash inflow
    estimated at December 31, 2008, 2007 and 2006,
    respectively, using current estimates of future salvage values
    less future abandonment costs. See Note E for corresponding
    information regarding the Companys discounted asset
    retirement obligations.  Changes
    in Standardized Measure of Discounted Future Net Cash
    Flows
    Years Ended December 31,2008


2007


2006(In thousands)Oil and gas producing activities:Purchases of
    minerals-in-place

$
1,014,689


$
4,054


$
795,072Sales of
    minerals-in-place


(24
)


(54
)


Extensions and discoveries


426,208



511,519



156,266Net changes in prices and production costs


(1,622,800
)


802,584



(109,264
)Oil and gas sales, net of production costs


(473,841
)


(249,866
)


(166,236
)Changes in future development costs


74,160



72,441



(6,085
)Revisions of previous quantity estimates


(283,557
)


(82,299
)


(51,147
)Accretion of discount


255,660



85,533



23,085Changes in production rates, timing and other


104,137



35,834



(10,119
)Change in present value of future net revenues


(505,368
)


1,179,746



631,572Net change in present value of future income taxes


272,579



(458,321
)


(144,985
)(232,789
)


721,425



486,587Balance, beginning of year


1,431,774



710,349



223,762Balance, end of year

$
1,198,985


$
1,431,774


$
710,349  F-44




---



##### Table of Contents



CONCHO
    RESOURCES INC.
  UNAUDITED
    SUPPLEMENTARY INFORMATION  (Continued)
  Selected
    Quarterly Financial Results
    QuarterFirst


Second


Third


Fourth(In thousands, except per share data)Year ended December 31, 2008:Total operating revenues

$
106,711


$
137,383


$
170,457


$
119,238Operating costs and expenses (excluding gains (losses) on
    derivatives not designated as hedges)


(48,205
)


(54,942
)


(90,889
)


(121,229
)Gains (losses) on derivatives not designated as hedges


(17,178
)


(102,456
)


163,312



206,192Income (loss) from operations


41,328



(20,015
)


242,880



204,201Net income (loss)

$
22,365


$
(14,420
)

$
141,928


$
128,829Net income (loss) available to common stockholders

$
22,365


$
(14,420
)

$
141,928


$
128,829Net income (loss) per common share  Basic

$
0.30


$
(0.19
)

$
1.75


$
1.53Net income (loss) per common share  Diluted

$
0.29


$
(0.19
)

$
1.72


$
1.51Year ended December 31, 2007:Total operating revenues

$
60,346


$
66,103


$
69,098


$
98,786Operating costs and expenses (excluding gains (losses) on
    derivatives not designated as hedges)


(41,938
)


(46,324
)


(49,690
)


(60,170
)Gains (losses) on derivatives not designated as hedges










3,088



(23,362
)Income from operations


18,408



19,779



22,496



15,254Net income

$
4,623


$
5,925


$
7,954


$
6,858Net income available to common stockholders

$
4,589


$
5,914


$
7,954


$
6,858Net income per common share  Basic

$
0.08


$
0.10


$
0.12


$
0.09Net income per common share  Diluted

$
0.08


$
0.10


$
0.11


$
0.09  F-45




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##### Table of Contents



Index of
    Exhibits
  ExhibitNumber

Exhibit2
.1

Purchase Agreement, dated June 5, 2008, by and among Concho
    Resources Inc., James C. Henry and Paula Henry, Henry Securities
    Ltd., Henchild LLC, Henry Family Investment Group, Henry Holding
    LP, Henry Energy LP, Aguasal Holding, HELP Investment LLC, Henry
    Capital LLC, Henry Operating LLC, Henry Petroleum LP, Quail
    Ranch LLC, Aguasal Management LLC, and Aguasal LP (filed as
    Exhibit 2.1 to the Companys Current Report on
    Form 8-K on June 9, 2008, and incorporated herein by
    reference).3
.1

Restated Certificate of Incorporation (filed as Exhibit 3.1
    to the Companys Current Report on Form 8-K on
    August 6, 2007, and incorporated herein by reference).3
.2

Amended and Restated Bylaws of Concho Resources Inc., as amended
    March 25, 2008 (filed as Exhibit 3.1 to the
    Companys Current Report on Form 8-K on March 26,
    2008, and incorporated herein by reference).4
.1

Specimen Common Stock Certificate (filed as Exhibit 4.1 to
    the Companys Current Report on
    Form S-1/A
    on July 5, 2007, and incorporated herein by reference).10
.1

Credit Agreement, dated as of February 24, 2006, by and
    among Concho Resources Inc., JPMorgan Chase Bank, N.A., as
    administrative agent, Bank of America, N.A., as syndication
    agent, Wachovia Bank, National Association, and BNP Paribas, as
    documentation agents, and other lenders party thereto(filed as
    Exhibit 10.1 to the Companys Current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.2

Second Lien Credit Agreement, dated as of March 23, 2007,
    among Concho Resources Inc., Bank of America, N.A., as
    administrative agent, and Banc of America LLC, as sole lead
    arranger and sole booking manager (filed as Exhibit 10.2 to
    the Companys Current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.3

Form of Drilling Agreement with Silver Oak Drilling, LLC (filed
    as Exhibit 10.4 to the Companys Current Report on
    Form S-1/A
    on July 5, 2007, and incorporated herein by reference).10
.4

Salt Water Disposal System Ownership and Operating Agreement
    dated February 24, 2006, among COG Operating LLC, Chase Oil
    Corporation, Caza Energy LLC and Mack Energy Corporation (filed
    as Exhibit 10.5 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.5

Transition Services Agreement dated April 23, 2007, between
    COG Operating LLC and Mack Energy Corporation (filed as
    Exhibit 10.3 to the Companys Current Report on
    Form S-1 on April 24, 2007, and incorporated herein by
    reference).10
.6

Combination Agreement dated February 24, 2006, among Concho
    Resources Inc., Concho Equity Holdings Corp., Chase Oil
    Corporation, Caza Energy LLC and the other signatories thereto
    (filed as Exhibit 2.1 to the Companys Current Report
    on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).
    The Combination Agreement filed as Exhibit 2.1 omits
    certain of the schedules and exhibits to the Combination
    Agreement in accordance with Item 601 (b)(2) of
    Regulation S-K.
    A list briefly identifying the contents of all omitted schedules
    and exhibits is included with the Combination Agreement filed as
    Exhibit 2.1. Concho Resources agrees to furnish
    supplementally a copy of any omitted schedule or exhibit to the
    Securities and Exchange Commission upon request.10
.7

Software License Agreement dated March 2, 2006, between
    Enertia Software Systems and Concho Resources Inc. (filed as
    Exhibit 10.6 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.8

Leasehold Acquisition Agreement dated April 1, 2005, by and
    between Trey Resources, Inc. and COG Oil and Gas LP (filed as
    Exhibit 10.7 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.9

Transfer of Operating Rights (Sublease) in a Lease for Oil and
    Gas for Valhalla properties (filed as Exhibit 10.8 to the
    Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.10

Assignment of Oil and Gas Leases from Caza Energy LLC (filed as
    Exhibit 10.9 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.11**

Escrow Agreement dated February 27, 2006, among Concho
    Resources Inc., Timothy A. Leach, Steven L. Beal, David W.
    Copeland, Curt F. Kamradt and E. Joseph Wright and the other
    signatories thereto (filed as Exhibit 10.10 to the
    Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber

Exhibit10
.12

Business Opportunities Agreement dated February 27, 2006,
    among Concho Resources Inc. and the other signatories thereto
    (filed as Exhibit 10.11 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.13

Registration Rights Agreement dated February 27, 2006,
    among Concho Resources Inc. and the other signatories thereto
    (filed as Exhibit 10.12 to the Companys Current
    Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.14**

Concho Resources Inc. 2006 Stock Incentive Plan (filed as
    Exhibit 10.13 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.15**

Concho Resources Inc. Summary of Executive Officer Compensation
    Program (filed as Exhibit 10.15 to the Companys Current
    Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10
.16**

Form of Nonstatutory Stock Option Agreement (filed as
    Exhibit 10.16 to the Companys Current Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10
.17**

Form of Restricted Stock Agreement (for employees) (filed as
    Exhibit 10.16 to the Companys Current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.18**

Form of Restricted Stock Agreement (for non-employee directors)
    (filed as Exhibit 10.18 to the Companys Current
    Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10
.19**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Timothy A. Leach (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.20**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Steven L. Beal (filed as
    Exhibit 10.2 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.21**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and E. Joseph Wright (filed as
    Exhibit 10.3 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.22**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Darin G. Holderness (filed as
    Exhibit 10.4 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.23**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and David W. Copeland (filed as
    Exhibit 10.5 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.24**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Matthew G. Hyde (filed as
    Exhibit 10.6 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.25**

Employment Agreement dated December 19, 2008, between
    Concho Resources Inc. and Jack F. Harper (filed as
    Exhibit 10.7 to the Companys current Report on
    Form 8-K
    on December 19, 2008, and incorporated herein by reference).10
.26**

Form of Indemnification Agreement between Concho Resources Inc.
    and each of the officers and directors thereof (filed as
    Exhibit 10.23 to the Companys current Report on
    Form S-1
    on April 24, 2007, and incorporated herein by reference).10
.27**

Indemnification Agreement, dated May 21, 2008, by and
    between Concho Resources, Inc. and Matthew G. Hyde (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on May 28, 2008, and incorporated herein by reference).10
.28**

Indemnification Agreement, dated August 25, 2008, by and
    between Concho Resources, Inc. and Darin G. Holderness (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K on August 29, 2008, and incorporated herein
    by reference).10
.29**

Indemnification Agreement, dated February 27, 2008, by and
    between Concho Resources, Inc. and William H. Easter III
    (filed as Exhibit 10.1 to the Companys current Report
    on
    Form 8-K
    on March 4, 2008, and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber

Exhibit10
.30

Gas Purchase Contract between COG Oil & Gas LP and Duke
    Energy Field Services, LP dated November 1, 2006 (filed as
    Exhibit 10.25 to the Companys current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).
    Confidential treatment of certain provisions of this exhibit has
    previously been granted by the Securities and Exchange
    Commission. Omitted material for which confidential treatment
    has been granted has been filed separately with the Securities
    and Exchange Commission.10
.31

Letter Agreement between COG Operating LLC and Navajo Refining
    Company, L.P. dated January 15, 2007 (filed as
    Exhibit 10.26 to the Companys current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.32

First Amendment to Credit Agreement, dated as of July 6,
    2006, among Concho Resources Inc., certain of its subsidiaries,
    JPMorgan Chase Bank, N.A. and the other leaders party thereto
    (filed as Exhibit 10.27 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.33

Second Amendment to Credit Agreement, dated as of March 7,
    2007, among Concho Resources Inc., certain of its subsidiaries,
    JPMorgan Chase Bank, N.A. and the other leaders party thereto
    (filed as Exhibit 10.28 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.34**

Third Amendment to Credit Agreement, dated as of May 19,
    2008, by and among Concho Resources Inc., certain of its
    subsidiaries, JPMorgan Chase Bank, N.A. and the other leaders
    party thereto (filed as Exhibit 10.1 to the Companys
    Current Report on
    Form 8-K
    on May 23, 2008, and incorporated herein by reference).10
.35**

Form of option letter agreement among Concho Resources Inc.,
    Concho Equity Holdings Corp. and each of Messrs. Leach and Beal
    (filed as Exhibit 10.29 to the Companys current
    Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.36**

Form of option letter agreement among Concho Resources Inc.,
    Concho Equity Holdings Corp. and each of Messrs. Copeland,
    Kamradt, Thomas and Wright (filed as Exhibit 10.30 to the
    Companys current Report on
    Form S-1
    on June 6, 2007, and incorporated herein by reference).10
.37**

Form of Amendment to Stock Option Award Agreement with executive
    officers related to the Pre-Combination Options (filed as
    Exhibit 10.1 to the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10
.38**

Form of Amendment to Nonstatutory Stock Option Agreement with
    executive officers related to the June 2006 Options (filed as
    Exhibit 10.2 to the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10
.39**

Form of Restricted Stock Agreement with executive officers
    related to the June 2006 Options (filed as Exhibit 10.3 to
    the Companys current Report on
    Form 8-K
    on November 20, 2007, and incorporated herein by reference).10
.40

Summary of Director Compensation Program (filed as
    Exhibit 10.41 to the Companys Current Report on
    Form 10-K
    on March 28, 2008, and incorporated herein by reference).10
.41

Common Stock Purchase Agreement, dated June 5, 2008, by and
    among Concho Resources Inc. and the purchasers named therein
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    on June 9, 2008, and incorporated herein by reference).10
.42

Registration Rights Agreement, dated July 31, 2008, by and
    between Concho Resources Inc. and the purchasers named therein
    (filed as Exhibit 10.1 to the Companys Current Report
    on
    Form 8-K
    on August 6, 2008, and incorporated herein by reference).10
.43

Amended and Restated Credit Agreement, dated July 31, 2008,
    by and among Concho Resources Inc., JP Morgan Chase Bank, N.A.,
    Bank of America, N.A., Calyon New York Branch, ING Capital LLC
    and BNP Paribas and certain other lenders party thereto (filed
    as Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    on August 6, 2008, and incorporated herein by reference).21
.1(a)

Subsidiaries of Concho Resources Inc.23
.1(a)

Consent of Grant Thornton LLP23
.2(a)

Consent of Netherland, Sewell & Associates, Inc.23
.3(a)

Consent of Cawley, Gillespie & Associates, Inc.31
.1(a)

Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.




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##### Table of Contents



ExhibitNumber

Exhibit31
.2(a)

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1(b)

Certification of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2(b)

Certification of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     (a)
    
    Filed herewith.(b)
    
    Furnished herewith.**
    
    Management contract or compensatory plan or arrangement.