Concho Resources Inc. reported record production from the core Permian Basin during the third quarter, thanks to improved efficiencies through enhanced completions and longer laterals, as it continues to trim its rig count. Meanwhile, the Midland, TX-based independent is reportedly seeking to acquire one of its basin rivals.

The producer beat its production guidance for 3Q2015, with record total output of 13.7 million boe, an average 149,304 boe/d. That marked a 31.6% increase from the 10.4 million boe (113,492 boe/d) produced in 3Q2014. Production from horizontal wells in the Delaware sub-basin of the Permian was 88,500 boe/d, a 60% increase year/year and 8% above 2Q2015. Production guidance for 4Q2015 is 139,000-143,000 boe/d.

The company in 3Q015 drilled or participated in 77 gross wells (57 operated), and completed 70 gross wells. The company drilled 45 gross wells (35 operated) in the Delaware, 11 gross wells (all operated) in the Midland sub-basin and 21 gross wells (11 operated) in the New Mexico Shelf of the Permian. Of the completed wells, 42 gross were in the Delaware, eight were in the Midland and 20 were in the New Mexico Shelf.

Of the 45 gross wells drilled in the Delaware Basin, 27 targeted the Bone Spring, 11 targeted the Wolfcamp Shale and seven the oil-rich Avalon Shale. The company currently has 10 horizontal rigs deployed in the Delaware, two in the Midland and one in the New Mexico Shelf. Concho has dropped 24 rigs since 4Q2014.

The company plans to spend $1.4 billion on capital expenditures (capex) in 2016, including $1.2 billion on drilling and completions (D&C), and $200 million for opportunities in leasehold, the midstream and other facilities. By comparison, the company spent $2.6 billion on capex in 2014 (including $2.4 billion on D&C), and is projected to spend $1.9 billion on capex in 2015 ($1.7 billion on D&C) (see Shale Daily, Jan. 6).

Although Concho executives made no specific mention of any company during the 3Q2015 earnings call earlier this month, CEO Timothy Leach said the current environment for acquisitions/divestitures in the Permian is “robust.”

“The blocking and tackling that we’ve talked about at the end of this quarter, and the real high quality acreage we were able to add in our core areas at really good prices, that’s the kind of activity we’re going to continue to stay focused on,” Leach said. “We live in the Permian Basin, so we think we’re aware of everything that’s going on out here. Our day-to-day business is this focus on our core areas and the smaller stuff.”

Concho has completed $255 million in acquisitions and leasehold additions this year, totaling 25,000 net acres with 15,000 boe/d of production. The acquired properties are primarily located within the core area in the Delaware.

Last Thursday, Bloomberg reported that Concho is seeking to buy Clayton Williams Energy Inc. (CWEI), another Midland-based independent with operations in the Permian and in East Texas. CWEI executives said last month that they were considering several options — including selling core assets, a corporate reorganization or a merger — and an analyst identified Concho as a potential buyer (see Shale Daily, Oct. 15).

Concho reported net income of $180 million ($1.49/diluted share) in 3Q2015, a 41.1% decline from the $305.2 million ($2.69) reported for 3Q2014.