Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )
Current WPX Stock Info

WPX focused on growing three prolific plays; projects 25% oil growth in 2017; 50% oil growth in 2018

WPX Energy released its Q3 numbers Wednesday, reporting a loss of $245 million, $238 million of which was due to the divestment of transportation contracts. The company continues to keep line-of-sight on growing its production, however, and is anticipating a 25% increase in oil production in 2017, according to guidance given by WPX in its presentation.

ON its Q3 news release, WPX unveiled its strategy to grow oil production and EBITDAX at a compound annual growth rate of 20-35 percent over the next four years. “The projected growth is funded with operating cash flow, cash on-hand and assumes no incremental debt,” WPX said.

Investing half the 2017 capital budget in the Delaware

The company is estimating its 2017 capital budget at $835-$905 million, roughly 95% of which will be utilized for drilling and completions. The majority of the wells WPX plans to drill next year will be in the Delaware Basin the company indicated in its press release Wednesday. Of the company’s $800-$860 million drilling and completion budget, $410-$430 million will go to the Delaware, WPX said. The next largest capital allocation will go to the Williston, but the company plans to drill more wells in the San Juan even though the company’s third core area will receive the least amount of capital.

WPX 2017 full-year guidance

WPX is focused on growth even in a down market

Despite the loss it reported in the third quarter, WPX remains focused on growing even amid a global crude oil glut. WPX CEO Rick Muncrief was brought on because of his familiarity with the Bakken from his time at Continental Resources (ticker: CLR). Also, a period of rapid growth at Continental during Muncrief’s tenure led WPX to install Muncrief as its top executive, with the hope he can do the same at WPX. Muncrief took over WPX as CEO in May 2014 and now it looks like he is using the Delaware to drive WPX to reach its strong growth goals.

WPX has amassed more than 100,000 net acres in the Delaware with more than 5,500 gross drillableWPX Wolfcamp delineation locations across stacked pay, which the company says will offer decades of drilling opportunities. The company plans to delineate the Wolfcamp C bench of its acreage in 2017, and test 330 foot spacing and 56% longer laterals in the Wolfcamps A and X/Y, the company said in its presentation.

During an interview with Oil & Gas 360® WPX VP of Drilling and Completions Tom Hellman said that spacing will prove to be one of the pieces to the Delaware puzzle that unlocks significant value.

“If I had to pick one element that could be a real surprise to the upside [in the Delaware Basin], it will be unlocking how we quickly understand optimum well spacing,” said Hellman. “There is some really brilliant work in this area. Our reservoir advisors are working with our subsurface managers.  New methods could quickly help us optimize to the exact well spacing for each zone/well cost/oil price combination.”

WPX plans to post even greater growth in oil production for 2018

The company’s goal is to continue growing production through 2017 and 2018, according to its presentation. WPX is forecasting oil growth of 50% for 2018, and a compound annual growth rate of 35% through the end of the decade.

This plan is supported by the company’s strong financial position, which includes 1.03 billion on an undrawn revolver and cash and equivalents of $623 million. After taking into consideration the company’s 2017 notes, WPX has more than $1.5 billion in liquidity at its disposal to drill in the hottest oil play in the U.S. right now.

WPX liquidity, hedges adn debt maturities as of Q3'16


Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.