Current WPX Stock Info

Spending down 23% production growth down 8%

By Richard Rostad, analyst, Oil & Gas 360

WPX Energy (stock ticker: WPX) is tapping the brakes on its growth plans, becoming the latest oil company to moderate guidance in the face of lower oil prices.

WPX first released 2019 guidance in its Q3 earnings report in late October. WTI was $65.31 at the time, down moderately from the $76.41 reached in early October but well above both the $42.53 seen in late December and the current price of $54.48.

The sustained decline in prices has forced WPX to reevaluate its capital plans, as the company assumed $65 oil. The new capital plan assumes $50 WTI, a much safer assumption based on the past month.

WPX has significantly decreased its expected 2019 capital spending, dropping CapEx from $1.55 billion to a midpoint of $1.19 billion, a 23% drop. The company will release two rigs in Q1 to average five in the Permian and three in the Williston for the rest of 2019.

Despite this major drop in CapEx, WPX’s production guidance has been only moderately affected by the change. The company expects to produce about 155 MBOEPD in the year, compared to a previous forecast of 165 MBOEPD. Yearly output growth will drop from 30% to 23%, though much of this comes from building on the robust growth the company displayed in 2018. Production in Q4 2019 will only be 5% to 10% above production from Q4 2018.

Perhaps most importantly, though, this reduced spending will allow the company to grow within cash flows at $50 oil. Investor priorities have increasingly centered around growth within cash flow for established companies, and free cash generation, if possible.

WPX chairman and CEO Rick Muncrief commented on the company’s 2019 plans, saying “We’ve worked hard over the past few years to position the company to spend within cash flows in a $50 world and still deliver nice growth. We’re also going to keep our balance sheet strong, continue the technical work that’s driving savings and cost efficiencies, and maintain the optionality we have with our two producing assets and our midstream ownership.”


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