WPX boosts its 2017 production forecast by 10 percent

By Patrick C. Miller | August 08, 2017

As a result of a record output of 58,600 barrels per day from operations in the Delaware and Williston basins, WPX Energy Inc. reports oil production in the second quarter this year was 27 percent higher than the first quarter.

In its second quarter report, the company said it plans to raise its 2017 forecast for oil production from a 30 percent increase to 40 percent. WPX has seen a 51 percent jump in its Bakken production since the second quarter of 2016.

“Since my first quarterly webcast at WPX three years ago, we’ve undertaken more than $7 billion of transactions, transformed the company’s portfolio and doubled our oil production,” said Rick Muncrief, chairman, president and CEO. “Without question, we’re reaping attractive results from our long-term strategy. Most importantly, we remain intensely focused on reaching our deleveraging goals by year-end 2018.”

Oil and NGL sales of $249 million accounted for 86 percent of WPX’s second-quarter total product revenues of $289 million. Quarterly oil sales grew by 59 percent compared to the same period a year ago, driven by higher production volumes and higher average prices.

Total product revenues of $542 million during the first half of 2017 were 79 percent higher than $303 million in the first half of 2016. Oil revenues of $414 million during the first half of 2017 were 73 percent higher than the same period a year ago.

WPX’s second-quarter 2017 net income of $72 million included $116 million of net gains associated with its hedge book. For the first half of the year, WPX posted net income of $160 million, compared with a net loss of $221 million in the first half of 2016.

For the remainder of 2017, WPX will have 50,750 barrels per day of oil hedged at a weighted average price of $50.26 per barrel. The company also has 170,000 million BTUs (MMBTU) per day of natural gas hedged at a weighted average price of $3.02 per MMBTU.

For 2018, WPX has 55,500 barrels of oil per day hedged at a weighted average price of $52.69 per barrel and 185,000 MMBTU per day of natural gas hedged at a weighted average price of $2.98 per MMBTU. In addition, the company has extended its hedging program into 2019. For 2019, WPX has 17,000 barrels per day of oil hedged at a weighted average price of $50.95 per barrel.

During the second quarter, WPX signed an agreement with Howard Energy Partners to jointly develop oil gathering and natural gas processing infrastructure in the Stateline area of the Delaware Basin. After closing, WPX is expected to receive $300 million upfront representing its strategic partner’s contribution per the terms of the agreement, along with a $132 million capital carry.

Before the close of the second quarter, WPX also signed a long-term agreement with Oryx Midstream Services to provide the company with 100,000 barrels per day of firm crude oil capacity from the Stateline area to Midland and Crane and a minority equity position in the related pipeline project. The project is expected to be in service during the latter half of 2018 and will initially provide approximately 400,000 barrels per day of capacity.

WPX reported that it has initiated a process to market its legacy natural gas position in the northern end of the San Juan Basin comprising both its operated and non-operated properties. WPX’s oil operations in the San Juan Basin’s Gallup oil play are not included in the sales process. If its marketing effort is successful, WPX will work to complete a transaction by the end of 2017.