Lower Well Costs and 25% Increase in EURs Drives Decision to Resume
Completions and Add Two Rigs
TULSA, Okla.--(BUSINESS WIRE)--
WPX Energy (NYSE: WPX) plans to increase its activity in the Williston
Basin during the second half of 2015 by resuming completions and
increasing its rig count from one to three before year-end.
The decision follows significant process improvements, structural
changes to lower costs, successful discussions with key vendors, a
technical analysis of WPX’s well performance that led to higher
estimated ultimate recoveries (EURs) and favorable results from larger
stimulations.
WPX has rapidly driven costs out of its Williston operations. The
company’s estimated drilling and completion costs in the basin are
approaching $8 million per well with 6 million pound completions,
representing a decrease of more than 30 percent vs. its average in 2014.
The company is now recognizing a blended type curve of approximately 750
Mboe for its wells in the Middle Bakken and Three Forks formations, up
25 percent per well from previous estimates of 600 Mboe. This is based
on historical well performance and the success of incremental completion
changes WPX performed in late 2014.
“The combination of cost reductions and higher EURs gives us the
opportunity to generate returns in excess of 30 percent in today’s
commodity price environment,” says Rick Muncrief, president and chief
executive officer.
“This helps set us up for 20 percent oil volume growth in 2016. We’re
realizing the value we have on this acreage to a fuller extent through
technical excellence, improving the way we develop the asset, and
looking at the operations through a new lens,” Muncrief added.
WPX has more than 85,000 net acres in the core of the Williston Basin
and reported proved reserves of 119 million barrels of oil equivalent
for its Williston operations at year-end 2014.
NEXT STEPS
The company currently has an inventory of 14 Williston wells awaiting
completion. This work is scheduled to resume in August, starting with a
four-well pad.
WPX is scheduled to test 10-million-pound stimulations with more stages,
more entry points and a higher pump rate in the second half of 2015
using 100 percent sand on its Williston wells. The company previously
used a combination of sand and ceramic proppant.
WPX’s completion modifications include moving toward a higher intensity
slick-water design targeting the potential to increase initial
production rates and EURs even further.
“Increasing the stimulation size is about pursuing additional upside for
our EURs. The collaboration we’re seeing from service providers makes
this the perfect time to proceed,” Muncrief added.
The company estimates $9 million drilling and completion costs per well
to perform the larger 10-million-pound stimulations.
WPX currently has one rig deployed on its Williston acreage. The company
plans to go with a second rig in August and a third in November.
STAYING WITHIN CASH FLOW
Funding for additional Williston activity primarily is derived by
redeploying cost savings the company is incurring and reallocating
capital from its Piceance Basin operations to its Williston development.
WPX plans to move to a one-rig program in the Piceance during the second
half of the year and evaluate the extent of Piceance-related completions
based on commodity prices.
Total planned capital investments for full-year 2015 remain in line with
the company’s previous guidance of staying within its projected
operating cash flow.
Additional information about WPX’s EURs in the Williston Basin is
available in a short presentation in the investor section at www.wpxenergy.com.
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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150625005158/en/
Source: WPX Energy Inc