WPX Energy loses $59M in Q1 but optimistic for Permian Basin production

Adjusted net loss from operations in Q1 was $59 million, or a loss of $0.21 per share

2016

Rick Muncrief, WPX president and CEO

TULSA, Okla. – WPX Energy says that it is increasing its estimated ultimate recoveries (EURs) for its Delaware Basin wells in the Permian to 900 Mboe, up 34 per cent from its acquisition type curve of 670 Mboe.

The company plans to increase its rig count in the Delaware from two to three during the second half of the year without increasing its capital budget, it announced in a press release.

WPX’s guidance for total drilling and completion (D&C) capital for 2016 remains unchanged at $350 million to $450 million.

Based on improving well costs and productivity, WPX believes it can generate returns in excess of 40 per cent in the Delaware Basin at current commodity prices.

WPX has made rapid progress toward its vision for Wolfcamp A wells in the Delaware Basin, says Rick Muncrief, President and CEO.

“We accomplished a great deal this quarter and delivered solid results, despite challenging commodity prices,” he said.

The company expects D&C costs – including facilities and artificial lift – to approach $5.3 million per well during the second quarter, down from $6 million at the end of 2015 and from $7 million at the time of WPX’s acquisition of RKI Exploration & Production last summer.

The $5.3 million projection includes larger completions using 2,000 pounds of sand per foot.

“Our transformation is on track, evidenced by lower operating costs, record oil volumes, higher EURs, the close of two more asset sales and stronger liquidity,” said Muncrief.

“We also have retired debt early and will continue to manage our balance sheet in a responsible manner.”

In the Williston Basin, WPX is now recognizing a blended type curve of 850 Mboe for its wells in the Middle Bakken and Three Forks formations, up 13 percent from previous estimates of 750 Mboe. Current D&C costs – including facilities and artificial lift – are approximately $5.9 million per well, down from $8.5 million in the first quarter a year ago.

WPX reported an unaudited first-quarter 2016 net loss attributable to common shareholders of $17 million, or a loss of$0.06 per share on a diluted basis, including a $198 million gain on the sale of assets.

The adjusted net loss from continuing operations in the first quarter was $59 million, or a loss of $0.21 per share.

Oil revenues of $97 million accounted for more than 75 per cent of total product revenues in a quarter for the first time. Total product revenues were $127 million in first-quarter 2016.

WPX’s total liquidity at the close of business on May 3 was approximately $1.6 billion, consisting of $1.025 billion in undrawn capacity on the company’s revolving credit facility that was amended in March and approximately $580 million in unrestricted cash and cash equivalents.

WPX completed the previously announced sales of its San Juan Basin gathering system in March and its Piceance subsidiary in April for approximately $1.2 billion combined.

The company applied a portion of these funds for debt reduction to repay borrowings on its revolver and to repurchase 29 per cent of its outstanding 5.250 per cent senior notes due in 2017.

Total company production volumes were 80.1 Mboe per day in the first quarter.

Oil volumes accounted for 52 percent of production, reaching a new company best of 41,500 barrels per day. Total liquids accounted for 62 percent of production.

Posted in: Energy Financial

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