Continuing Long-Term Strategy to Expand Margins
4Q 2014 Oil Volumes Jumped 25% vs. 3Q 2014
TULSA, Okla.--(BUSINESS WIRE)--
WPX Energy (NYSE: WPX) today announced a 2015 capital investment plan of
approximately $725 million (midpoint), in line with the company’s
projected operating cash flow.
As part of its long-term strategy, WPX will continue to diversify its
historically gas-weighted portfolio. WPX’s oil production grew 56
percent in 2014 year over year, far exceeding its plan for 40 percent
growth last year.
In fourth-quarter 2014, oil volumes rose 6,500 barrels per day to
approximately 32,300 barrels per day, accounting for nearly 20 percent
of the company’s equivalent production. This marked a 25 percent
sequential-quarter increase over third-quarter 2014 oil production of
25,800 barrels per day.
The company’s 2015 capital plan is roughly half the amount of its
capital plan last year, excluding acquisition capital.
“Our capital plan is prudent, disciplined and consistent with our
long-term focus,” said
Rick Muncrief
, WPX president and chief executive
officer.
“At the same time, we have financial and operational flexibility because
of how well we executed over the past year, completing asset sales,
increasing oil volumes and heavily hedging our 2015 production at very
favorable prices.
“We’ll stay primed to accelerate development, even as we take
appropriate steps to respond to current prices,” Muncrief added.
WPX expects its oil production to climb again in 2015. The company is
targeting 15 to 20 percent oil growth this year even as it decreases
capital spending and builds an inventory of wells awaiting completion
for when commodity prices are more favorable.
The company’s expected increase in oil production this year will be
offset, in part, by an expected decline of about 4 percent in overall
equivalent production from reduced development activity – normalized for
divestitures over the past year.
WPX has hedged approximately three-fourths of its anticipated 2015
natural gas production at a weighted average price of $4.10 per MMbtu
and approximately two-thirds of expected oil production this year at an
average price of $94.88 per barrel.
WPX also recently generated nearly $600 million cash through selling its
international interests and part of its operations in the Marcellus
Shale. As previously announced, the company is focusing on its core
assets in the Williston, San Juan and Piceance basins.
The company’s 2015 capital program includes $275 million to $300 million
for San Juan Basin development, $200 million to $225 million for
Williston Basin activity, $200 million to $225 million for Piceance
Basin development and $25 million for land and exploration.
WPX started the year with five rigs in the Williston Basin and is
ramping down to one rig by late spring for the balance of the year.
WPX started the year with three rigs in the San Juan Basin and already
ramped down to two rigs for the balance of the year.
WPX plans to deploy three rigs in the Piceance Basin for the balance of
the year, including a rig for Niobrara Shale resource assessment. WPX
started the year with eight rigs in the Piceance Basin.
“Head winds bring challenges and opportunities. We’re ready for both.
It’s why we have a long-term plan to reshape WPX and grow our margins
and cash flow. Margin expansion comes from diversifying our production
and right-sizing our cost structure,” Muncrief added.
The company’s 2015 guidance and plans are based on NYMEX commodity price
assumptions of $55 per barrel oil and $3.00 per MMbtu natural gas.
WPX anticipates that the cash expenditures it reports in 2015 will
exceed $725 million. This difference primarily relates to capital costs
incurred in 2014 but paid for in 2015. Additional information about
WPX’s 2015 capital plan, including a reconciliation to the 2015 cash
expenditures that WPX expects to report, is available in a brief
presentation at www.wpxenergy.com
under the investors tab.
About WPX Energy, Inc.
WPX Energy develops and operates oil and gas producing properties
in North Dakota, New Mexico and Colorado. The company has a long history
of innovation and stakeholder engagement, recognized through more than
40 local, state, federal and industry awards.
This press release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, included in this
press release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are beyond
the control of the company. Statements regarding future drilling
and production are subject to all of the risks and uncertainties
normally incident to the exploration for and development and production
of oil and gas. These risks include, but are not limited to, the
volatility of oil, natural gas and NGL prices; uncertainties inherent in
estimating oil, natural gas and NGL reserves; drilling risks;
environmental risks; and political or regulatory changes. Investors
are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ
materially from those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the date
of this press release, even if subsequently made available by WPX Energy
on its website or otherwise. WPX Energy does not undertake and
expressly disclaims any obligation to update the forward-looking
statements as a result of new information, future events or otherwise.
Investors are urged to consider carefully the disclosure in our
filings with the Securities and Exchange Commission, available from us
at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa,
Okla., 74102, or from the SEC’s website at www.sec.gov.
Additionally, the SEC requires oil and gas companies, in filings made
with the SEC, to disclose proved reserves, which are those quantities of
oil and gas, which, by analysis of geoscience and engineering data, can
be estimated with reasonable certainty to be economically producible –
from a given date forward, from known reservoirs, under existing
economic conditions, operating methods, and governmental regulations.
The SEC permits the optional disclosure of probable and possible
reserves. From time to time, we elect to use “probable” reserves and
“possible” reserves, excluding their valuation. The SEC defines
“probable” reserves as “those additional reserves that are less certain
to be recovered than proved reserves but which, together with proved
reserves, are as likely as not to be recovered.” The SEC
defines“possible” reserves as “those additional reserves that are less
certain to be recovered than probable reserves.” The Company has applied
these definitions in estimating probable and possible reserves.
Statements of reserves are only estimates and may not correspond to the
ultimate quantities of oil and gas recovered. Any reserve estimates
provided in this presentation that are not specifically designated as
being estimates of proved reserves may include estimated reserves not
necessarily calculated in accordance with, or contemplated by, the SEC’s
reserves reporting guidelines. Investors are urged to consider closely
the disclosure in our SEC filings that may be accessed through the SEC’s
website at www.sec.gov.
The SEC’s rules prohibit us from filing resource estimates. Our
resource estimations include estimates of hydrocarbon quantities for (i)
new areas for which we do not have sufficient information to date to
classify as proved, probable or even possible reserves, (ii) other areas
to take into account the low level of certainty of recovery of the
resources and (iii) uneconomic proved, probable or possible reserves.
Resource estimates do not take into account the certainty of resource
recovery and are therefore not indicative of the expected future
recovery and should not be relied upon. Resource estimates might never
be recovered and are contingent on exploration success, technical
improvements in drilling access, commerciality and other factors.
Source: WPX Energy Inc