WPX Energy's second-quarter production higher than expected

By Patrick C. Miller | August 07, 2018

WPX Energy pushed its oil production in the Delaware and Williston basins nearly 6 percent higher than originally forecast for the second quarter of 2018.

Oil volumes were 80,800 barrels per day (bpd) for the quarter, about 5,000 bpd more than forecast. WPX expects full-year oil volumes of 78,000 to 82,000 bpd, 3 percent higher than its original forecast of 75,000 to 80,000 bpd. Most volume growth is expected in the fourth quarter based on the timing of anticipated first sales in the Willison Basin.

“During the second quarter, WPX continued to deliver strong results as our produced volumes, especially crude oil, grew at an impressive rate,” said Rick Muncrief, chairman and CEO. “In addition, we’re reaping some of the best basis differentials in the Permian Basin among our peers. We expect this to continue over the next couple of years, which is an outcome of our proactive midstream and marketing strategy.”

WPX reported an unaudited second-quarter 2018 net loss from continuing operations available to common shareholders of $83 million (21 cents per share on a diluted basis). The loss was driven by $154 million of net losses associated with its hedge book resulting from higher forward oil prices, along with a $71 million loss on extinguishment of debt.

In the Delaware Basin, WPX’s production averaged 74,400 barrels of oil equivalent per day (boepd) in second-quarter of 2018, up 18 percent compared to the first-quarter of 2018 and 83 percent higher than the same period a year ago. WPX had 20 wells with first sales in the basin during the second quarter, including 15 long laterals of at least 1.5 miles each. Most of the activity occurred in the Wolfcamp A interval.

Seven 1.5-mile laterals on the Tucker Draw pad posted 24-hour highs averaging more than 2,400 barrels of oil per day during initial production on restricted flow. The Tucker Draw wells are averaging approximately 1,200 barrels of oil per day for each well after 60 days of production, with cumulative oil volumes approaching 500,000 barrels. Cumulative production for the wells is roughly 1,000,000 boe.

On the Lindsay pad, the 1.5-mile 10-3B-2H lateral posted a high of approximately 3,600 barrels of oil per day during initial production from the Wolfcamp X/Y interval. It produced nearly 50,000 barrels of oil in its first 20 days. Cumulative production exceeds 85,000 boe. WPX increased cluster spacing and used 100 percent 100 mesh frack sand in the completion design.

Average lateral lengths of 7,500 feet in the Delaware during 2018 are on track to be approximately 20 percent longer than in 2017. WPX has now roughly doubled its average lateral lengths in the Delaware since entering the basin in 2015 via its acquisition of RKI E&P.

“Along with peer-leading well results in both of our basins, our Permian team has actively engaged in acreage swaps which give us the ability to drill more long laterals,” Muncrief said. “With that, we’ve nearly doubled our average lateral lengths in the basin over the past three years. This has a tremendous impact on returns for an asset with decades of development to come.”

WPX’s Williston Basin production averaged 50,600 boed in second-quarter 2018, up 28 percent compared to the most recent quarter and 45 percent higher than the same period a year ago. The company completed 12 Williston wells during the second quarter, evenly split between the Bakken and Three Forks formations. All of the wells are two-mile laterals. Three of the wells were in the North Sunday Island area.

The North Sunday Island wells on the Mandan North pad have cumulative 90-day production of more than 530,000 boe (81 percent oil). Initial production highs averaged 4,326 boepd per well, with a high of 4,558 boepd on the Mandan North 13-24HB well.

Another well on the Mandan pad (13-24HA completed on March 30) has posted an even higher IP than previously reported. Its new high for a 24-hour volume is 5,990 boepd, made possible by being the first of the four 2018 wells on the pad to begin flowback. This well now has cumulative production of more than 215,000 boe (81 percent oil) after its first 100 days.

Five wells on the Mandaree South pad were part of WPX’s second-quarter completions. After 60 days, the wells have cumulative production of more than 426,000 boe (81 percent oil). Initial production highs averaged 2,714 boepd per well, with a high of 3,335 boepd on the Mandaree South 19-18HA well. Two other second-quarter completions on the Joseph Eagle pad posted 24-hour highs of 3,596 boepd and 3,465 boepd, each at 81 percent oil.

WPX’s first two wells in the North Sunday Island area—the Hidatsa North 14-23HX well and the Mandan North 13-24HW well—now have combined cumulative production of more than 910,000 Boe (81 percent oil). The Hidatsa well has been online for roughly 300 days. The Mandan well has been online for roughly 260 days. The two wells are currently averaging more than 1,500 boepd per well.

The 7-well Arikara pad in the North Sunday Island area that went online during late first-quarter 2018 now has cumulative volumes of more than 1,445,000 boe (81 percent oil) after roughly 130 days of production. The top producer is the Arikara 15-22HB, with nearly 230,000 boe after its first 130 days.