Concho Resources Inc., on its way to becoming one of the largest Permian Basin pure-plays, has raised its full-year production growth outlook to 18-20% after increasing crude oil production volumes in the first quarter by 11% sequentially.

The Midland, TX-based independent last month agreed to acquire RSP Permian Inc. in an all-stock transaction valued at $9.5 billion. Once completed, Concho would control an estimated 640,000 net acres in West Texas and southeastern New Mexico.

On its own, however, Concho between January and March boosted its Permian output by about 14,000 b/d to 144,000 b/d. Total production climbed 26% year/year and was 8% higher sequentially at 21 million boe, or 228,000 boe/d, which exceeded the high end of guidance.

Not including the RSP portfolio, Concho expects to build its production by 18-20% from 2017 while maintaining capital expenditure guidance, said CEO Tim Leach. The previous guidance was 14-16% growth,

“Our results reflect our focus on large-scale project development, which enables us to maximize ultimate recovery, efficiencies and returns,” Leach said. The pending transaction with RSP “reinforces our scale advantage.”

Average crude oil production in 1Q2018 totaled 144,000 b/d, 27% higher year/year and 11% higher sequentially. Natural gas production totaled 505 MMcf/d.

Concho averaged 20 rigs in the first quarter, four more than in 4Q2017. It drilled a total of 71 wells across the Permian during the period, including 57 operated wells. It also completed a total of 56 wells, including 41 that it operates. The company today has nine rigs running in the northern Delaware sub-basin, six rigs in the southern Delaware and five in the Midland sub-basin.

Concho plans to add one rig each this month to the northern Delaware and to the New Mexico Shelf. The company also has six completion crews working.

In the northern Delaware, Concho added 12 wells with at least 60 days of production during the first quarter with average 30-day peak rates of 1,993 boe/d and average 60-day peak rates of 1,900 boe/d. In addition, 10 of the 12 wells were long lateral wells, reaching a record average of 8,544 feet.

Twenty-one wells were added in the southern Delaware with at least 60 days of output, with average 30-day peak rates of 2,070 boe/d -- a record -- and 60-day peak rates of 1,787 boe/d. The average lateral lengths were 9,204 feet.

In the Midland sub-basin, Concho added 20 wells. The average 30-day peak was 1,156 boe/d and the 60-day rate was 1,114 boe/d with average lateral lengths of 10,156 feet.

The average realized price for crude oil was $61.29/bbl in 1Q2018, with natural gas fetching an average of $3.39/Mcf.

Net income in 1Q2018 was $835 million ($5.58/share), compared with year-ago net profits of $650 million ($4.37). Concho’s effective income tax rate was 23%, versus 36% a year earlier, primarily because of the reduction of the U.S. federal statutory corporate income tax rate.

Excluding the RSP portfolio, Concho expects 2Q2018 production to average 226,000-230,000 boe/d. Crude oil price realizations for full-year 2018 were updated to minus $1.50-2.00/bbl to reflect pricing deductions and to exclude the regional Midland-Cushing price differential.

For the remainder of 2018, Concho has crude oil swap contracts covering about 112,000 b/d at a weighted average price of $54.20/bbl, and it has Midland/Cushing basis swaps covering about 94,000 b/d at a weighted average price of minus 85 cents/bbl.