WPX Energy Announces Third-Quarter 2012 Results

  WPX Energy Announces Third-Quarter 2012 Results

Business Wire

TULSA, Okla. -- November 01, 2012

WPX Energy (NYSE:WPX) today announced its unaudited operating and financial
results for the third-quarter of 2012. Recent highlights include:

  *3Q Bakken oil production increased 66% to 9,600 barrels per day from 5,800
    a year ago
  *October Bakken oil production surpassed 10,500 barrels per day
  *WPX on track to hold Bakken acreage by production; initial multi-well pad
    drilling beginning
  *Natural gas production in the Marcellus Shale rose four-fold to 65 MMcf/d
    vs. 15 MMcf/d a year ago
  *Liquidity remains strong at $1.7 billion
  *Lower 3Q natural gas production vs. a year ago a result of fewer wells
    drilled due to capital discipline

FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $64 million
for third-quarter 2012, or a loss of $0.32 per share on a fully diluted basis,
compared with net income of $14 million, or $0.07 per share, in third-quarter
2011.

The decrease in third-quarter 2012 was driven primarily by lower natural gas
and NGL commodity prices vs. the 2011 period. Revenues in the 2012 period –
not including gas management activities – declined 24 percent vs.
third-quarter 2011, driven by significantly lower net realized average prices
for natural gas and NGL production.

Third-quarter 2012 results also were impacted by approximately $22 million in
net losses on derivatives not designated as hedges, compared with $12 million
in net gains in third-quarter 2011.

Excluding unrealized mark-to-market gains (losses), WPX had an adjusted loss
from continuing operations of $47 million, or a loss of $0.23 per share on a
diluted basis, for third-quarter 2012, compared with adjusted income from
continuing operations of $14 million, or $0.07 per share on a diluted basis,
for the same period in 2011. A reconciliation is included in the statements
that accompany this press release.

For the first nine months of 2012, WPX reported an unaudited net loss
attributable to WPX Energy of $117 million, or a loss of $0.59 per share on a
diluted basis, compared with net income of $36 million, or $0.18 per share,
for the same period in 2011.

In addition to lower net realized average prices for the company’s production,
results for the first nine months of 2012 were impacted by $117 million in
non-cash impairment charges stemming from a decline in forward natural gas
prices during the first half of 2012. These charges were recorded in the first
and second quarter.

As described in previous quarters this year, WPX’s accounting for costs of
certain acquired unproved reserves is based on discounted cash flows. As a
result, declines in forward commodity prices can drive impairments in the
absence of a change in the underlying reserve estimates.

Excluding the impairment charges and unrealized mark-to-market gains (losses),
WPX had an adjusted loss from continuing operations of $84 million, or a loss
of $0.42 per share on a diluted basis, for the first three quarters of 2012,
compared with adjusted income from continuing operations of $55 million, or
$0.28 per share on a diluted basis, for the same period in 2011. A
reconciliation is included in the statements that accompany this press
release.

WPX’s adjusted EBITDAX (a non-GAAP measure) for third-quarter 2012 was $230
million, compared with $337 million for the same measure a year ago. A
reconciliation is included below.

For the first three quarters of 2012, adjusted EBITDAX was $744 million,
compared with $963 million for the same period in 2011. The primary factor
affecting 2012 adjusted EBITDAX was a decrease in the company’s domestic net
realized average prices.

                                                
EBITDAX (non-GAAP)           Third Quarter               YTD
                             2012       2011           2012       2011
                             millions     millions       millions     millions
Net income (loss)            ($61  )      $16            ($107  )     $43
Interest expense             $25          –              $77          $97
Provision
(benefit) for                ($28  )      $10            ($71   )     $30
income taxes
Depreciation,
depletion and                $243         $239           $719         $670
amortization
Exploration                  $22         $74           $60         $100
expenses
EBITDAX                      $201        $339          $678        $940
                                                                      
Impairments                  –            –              $117         –
Unrealized MTM               $31          ($5   )        ($28   )     $10
(gains) losses
(Income) Loss from
discontinued                 ($2   )      $3            ($23   )     $13
operations
Adjusted EBITDAX             $230        $337          $744        $963
                                                                      

EBITDAX represents earnings before interest expense, income taxes,
depreciation, depletion and amortization and exploration expenses. Adjusted
EBITDAX includes adjustments for impairments, unrealized mark-to-market gains
(losses) and discontinued operations.

WPX believes that these non-GAAP measures provide useful information regarding
its ability to meet future debt service, capital expenditures and working
capital requirements.

MANAGEMENT PERSPECTIVE

“Despite a 10-year low for natural gas prices and the fall-off in NGL prices
that we saw this year, we have a resilient portfolio and we still expect to
achieve more than $1 billion dollars of adjusted EBITDAX with the recent
strengthening in natural gas prices,” said Ralph Hill, president and CEO.

“Along those lines, we are encouraged by the recent rebound in natural gas
prices. At the appropriate time, we can be among the first and fastest to grow
gas volumes again given our low-cost, competitive advantage in the Piceance.

“Operationally, we’re levered toward a gas price recovery, particularly in the
Piceance Basin and in Susquehanna County in the Marcellus Shale. In the
Piceance alone, we have more than 10,000 remaining gross 3P locations.

“The pullback in our third-quarter natural gas production is a direct result
of our capital discipline and the corresponding change in our rig count this
year. As we’ve demonstrated before, we can redeploy capital and ramp up
volumes quickly as higher returns materialize.

“Our quarterly growth in the Bakken was masked by completions that were
delayed from the second quarter to the third, but our third-quarter average
production of 9,600 barrels per day has already increased 9 percent in October
to 10,500 and we expect to reach our planned December monthly exit rate.

“As a clear example of our growing efficiencies in the Bakken, we expect to
complete 14 wells in the fourth quarter, compared to 22 wells during the first
nine months of the year. The commencement of pad drilling is on schedule and
we expect those efficiencies will drive down costs in 2013.

“Overall, lower commodity prices in 2012 have been a challenge, but we’ve
maintained our strong and stable financial condition, we’re bullish on our
large resource base and we’re on target to meet our 2012 production goal of
1,380 million cubic feet equivalent per day.

“WPX has a rich resource potential, a history of efficiency and a capital
allocation strategy that is based on rates of return. Combining our strong
balance sheet with the diversity of our portfolio gives us flexibility on when
and where to drill,” Hill added.

PRODUCTION

WPX’s overall domestic and international production averaged 1,359 MMcfe/d in
third-quarter 2012, down 2 percent from a year ago. This planned decrease
represents reduced development activity associated with the steps the company
announced in early 2012 in response to falling natural gas prices.

Oil production in the Bakken Shale averaged 9,600 barrels per day in the third
quarter. This represents a 66 percent increase vs. a year ago.

Overall oil production of 17,900 barrels per day in third-quarter 2012
increased 30 percent vs. third-quarter 2011. Overall third-quarter 2012 NGL
production of 28,900 barrels per day was up 1 percent over the prior-year
quarter.

Total natural gas production of 1,078 MMcf/d in third-quarter 2012 declined 5
percent vs. third-quarter 2011. The primary driver was lower production in the
Piceance, Powder River and San Juan basins in response to decade-low gas
prices and the subsequent redeployment of capital to oil assets.

Natural gas production in the Marcellus Shale continued to improve.
Third-quarter 2012 volumes of 65 MMcf/d were up more than four-fold vs. a year
ago, despite an estimated 30 MMcf/d that was curtailed by infrastructure
challenges.

                                                                
Average Daily            3Q                                             YTD
Production
                         2012          2011     Change              2012
Natural gas (MMcf/d)                 
Piceance Basin           652              704       -7%                 685
Marcellus Shale          65               15        333%                60
Powder River Basin       203              233       -13%                213
San Juan Basin           128              153       -16%                130
Other                   30            29       3%                  29
Subtotal (MMcf/d)        1,078            1,134     -5%                 1,117
                                                                        
NGLs (Mbbl/d)
Piceance                 27.5             27.2      1%                  29.0
Other                   1.4           1.3      8%                  1.2
Subtotal (Mbbl/d)        28.9             28.5      1%                  30.2
                                                                        
Oil (Mbbl/d)
Bakken Shale             9.6              5.8       66%                 8.9
Piceance                 2.0              2.1       -5%                 2.5
International            6.2              5.8       7%                  6.0
Other                   0.1           0.1      NM                  0.1
Subtotal (Mbbl/d)        17.9             13.8      30%                 17.5
                                                                        
Total Production         1,359         1,388    -2%                 1,403
(MMcfe/d)
                                                                        
Figures exclude volumes for discontinued operations in the Barnett Shale and
Arkoma Basin.


The domestic net realized average price for natural gas, inclusive of hedges,
was $3.35 per Mcf in third-quarter 2012, down 21 percent from $4.25 per Mcf a
year ago.

The domestic net realized average price for NGL was $24.43 per barrel in
third-quarter 2012, down 43 percent from $42.54 per barrel a year ago.

The net realized average price for domestic oil, inclusive of hedges, was
$82.31 per barrel in third-quarter 2012, down 3 percent from $84.75 per barrel
a year ago.

Compared with the most recent quarter, the domestic net realized average price
for natural gas – inclusive of hedges – improved 11 percent in the third
quarter.

EXPENSES: KEY PER-UNIT COSTS REMAIN FLAT OR DECREASE EVEN WITH LOWER 3Q
PRODUCTION

Through the first three quarters of 2012, overall expenses – including
transition costs related to WPX’s spin-off – were 9 percent lower than the
first three quarters in 2011.

On a per-unit basis, WPX’s domestic lease operating expense (LOE) in
third-quarter 2012 was $0.51 per Mcfe, which was equal to the same period a
year ago.

Domestic gathering, processing and transportation charges decreased 2 percent
to $1.04 per Mcfe in third-quarter 2012 vs. $1.06 per Mcfe in third-quarter
2011.

Taxes other than income for domestic operations decreased 36 percent to $0.14
per Mcfe in third-quarter 2012 vs. $0.22 per Mcfe in third-quarter 2011,
reflecting lower commodity prices.

Domestic general and administrative expenses (G&A) decreased 4 percent to
$0.53 per Mcfe in third-quarter 2012 vs. $0.55 per Mcfe in third-quarter 2011.

Domestic depreciation, depletion and amortization expenses (DD&A) increased 4
percent to $1.98 per Mcfe in third-quarter 2012 vs. $1.90 per Mcfe in
third-quarter 2011, reflecting a decline in the 12-month average commodity
price used in the calculation of the company’s DD&A rate.

CASH AND LIQUIDITY

Net cash provided by operating activities for the first nine months of 2012
was $589 million, including $148 million in the third quarter.

At Sept. 30, 2012, WPX had approximately $240 million in cash and cash
equivalents – including $31 million for international operations.

The company’s total liquidity at the end of the third quarter was
approximately $1.7 billion, including an undrawn $1.5 billion revolving credit
agreement.

GUIDANCE FOR PRODUCTION, ADJUSTED EBITDAX AND CAPITAL SPENDING

WPX is re-affirming its 2012 production goal of 1,380 million cubic feet
equivalent per day at year-end, which consists of 1.1 billion cubic feet per
day of natural gas, 18,100 barrels per day of oil and 29,400 barrels per day
of natural gas liquids.

For full-year 2012, WPX expects adjusted EBITDAX of $1 billion to $1.05
billion. WPX’s original estimate of $1.175 billion at the beginning of the
year assumed the impact of existing hedges and plan commodity prices of $3
NYMEX natural gas, $99 per barrel oil and $51 per barrel NGL.

For the first nine months of 2012, WPX made approximately $1.12 billion of
capital investments in its domestic operations, including $320 million in the
third quarter. These investments are predominantly in the Bakken Shale,
Piceance Basin and Marcellus Shale where the company generates its highest
returns.

For full-year 2012, WPX expects $1.45 billion to $1.5 billion of total capital
spending, including amounts for land purchases in oil-focused properties that
are expected to close prior to year-end.

DEVELOPMENT ACTIVITY

For the first nine months of 2012, WPX domestic operations participated in 421
gross (309 net) wells, including 121 gross (93 net) in the third quarter.
These figures represent the number of wells that were completed and began
commercial delivery of production.

Highlights for the company’s operated wells in its core growth areas are
provided below. The balance of gross (net) wells is accounted for in
non-operated interests, as well as WPX’s own properties in the San Juan and
Powder River basins.

In the liquids-rich Piceance Basin, WPX completed 204 gross (185 net) wells
during the first three quarters of 2012. WPX expects to continue to operate
five rigs in this area for the remainder of 2012. WPX is currently nearing
total depth on its first horizontal well in the Niobrara formation to explore
the Piceance Basin’s deeper gas potential.

WPX also continues to improve drilling times in the Piceance, drilling a
Valley well in a record 3.8 days. WPX’s average drilling time in the Valley
for 2012 is approximately nine days per well.

In the Bakken Shale, WPX completed 22 gross (18 net) wells through the first
three quarters of the year. WPX expects to complete 14 gross (10 net) wells on
its Bakken acreage in the fourth quarter.

The George Evans/Mason infill density science unit was completed during the
third quarter as planned. These wells were drilled on WPX’s first multi-well
pad sites in the area, averaging 26 days per well. All seven wells – four in
the Bakken and three in the Three Forks – in the 1,280-acre unit are on
production.

During the infill drilling, WPX successfully recovered 372 feet of continuous
core through the entire Bakken and Three Forks formations, along with portions
of the Lodgepole and Birdbear formations. This is a valuable step in targeting
the most geologically productive zones, understanding ways to optimize
completion designs and evaluating the feasibility of increasing the number of
drilling locations and the company’s reserves potential.

WPX has finished converting its rig fleet in the Bakken Shale to five new
fit-for-purpose rigs. Going forward, the majority of drilling will be on
multi-well pad sites.

In the Marcellus Shale, WPX completed 28 gross (23 net) wells during the first
three quarters of 2012. WPX currently has two fit-for-purpose rigs in
Susquehanna County.

Efficiencies continue to be reflected in Marcellus drilling times. WPX’s new
record drilling time in the area is 11.4 days, which was set in the third
quarter. The company also has reduced its completion costs in Susquehanna
County by 35 percent since the fourth quarter of 2011.

TODAY’S CONFERENCE CALL

WPX management will discuss third-quarter results during a webcast starting at
9:30 a.m. Eastern today. Participants can access the audio and the slides for
the event via the homepage at www.wpxenergy.com.

A limited number of phone lines also will be available at (800) 992-7413. The
passcode is 3084847.  International callers should dial (719) 325-2282 and use
the same passcode. A replay will be available on the company’s website for one
year following the event.

Form 10-Q

WPX plans to file its third-quarter Form 10-Q with the Securities and Exchange
Commission this week. Once filed, the document will be available on both the
SEC and WPX websites.

About WPX Energy, Inc.

WPX Energy is an exploration and production company focused on developing its
significant oil and gas reserves, particularly in the liquids-rich Piceance
Basin, the Bakken and Three Forks oil shales and the Marcellus Shale. WPX also
has domestic operations in the San Juan and Powder River basins, as well as a
69 percent interest in Apco Oil and Gas International. Go to
http://www.wpxenergy.com/investors/subscribe-to-email/ to join our e-mail
list.

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.

                                                                                                      
  WPX Energy, Inc.
  Consolidated
  (UNAUDITED)
      
                              2011                                                    2012
  (Dollars in millions)    1st Qtr  2nd Qtr  3rd Qtr  4th Qtr    Year        1st Qtr  2nd Qtr  3rd Qtr  YTD
                                                                                          
    Revenues:
      Product revenues:
          Natural gas         $ 408     $ 423     $ 440     $ 423       $ 1,694       $ 357     $ 312     $ 331     $ 1,000
          sales
          Natural gas           85        107       110       106         408           93        78        65        236
          liquid sales
          Oil and
          condensate           52     83     84     93       312         106    122    118    346   
          sales
              Total
              product           545       613       634       622         2,414         556       512       514       1,582
              revenues
        Gas management          408       337       347       336         1,428         337       187       186       710
        Net gain (loss)
        on derivatives          2         6         12        9           29            14        71        (22 )     63
        not designated
        as hedges
        Other                  3      3      2      3        11          3      5      (1  )   7     
              Total             958       959       995       970         3,882         910       775       677       2,362
              revenues
                                                                                                                    
    Costs and expenses:
        Lease and
        facility                63        61        70        68          262           67        67        68        202
        operating
        Gathering,
        processing and          112       121       130       124         487           135       120       124       379
        transportation
        Taxes other             30        43        32        29          134           30        25        23        78
        than income
        Gas management,
        including
        charges for             417       344       359       351         1,471         355       194       200       749
        unutilized
        pipeline
        capacity
        Exploration             12        14        74        26          126           19        19        22        60
        Depreciation,
        depletion and           207       224       239       232         902           228       248       243       719
        amortization
        Impairment of
        producing
        properties and
        costs of                -         -         -         367         367           52        65        -         117
        acquired
        unproved
        reserves
        General and             67        63        70        75          275           68        71        67        206
        administrative
        Other-net              1      4      (1  )   (4    )   -           5      (2  )   5      8     
              Total
              costs and         909       874       973       1,268       4,024         959       807       752       2,518
              expenses
                                                                                                                    
    Operating income            49        85        22        (298  )     (142  )       (49 )     (32 )     (75 )     (156  )
    (loss)
                                                                                                                    
    Interest expense            (49 )     (48 )     -         (20   )     (117  )       (26 )     (26 )     (25 )     (77   )
    Interest                    4         4         -         1           9             2         3         2         7
    capitalized
    Investment income          6      6      7      7        26          10     8      7      25    
    and other
                                                                                                                    
    Income (loss) from
    continuing                $ 10      $ 47      $ 29      $ (310  )   $ (224  )     $ (63 )   $ (47 )   $ (91 )   $ (201  )
    operations before
    income taxes
    Provision (benefit)        3      17     10     (104  )   (74   )      (25 )   (18 )   (28 )   (71   )
    for income taxes
    Income (loss) from
    continuing                $ 7       $ 30      $ 19      $ (206  )   $ (150  )     $ (38 )   $ (29 )   $ (63 )   $ (130  )
    operations
    Income (loss) from
    discontinued               (8  )   (2  )   (3  )   (129  )   (142  )      (2  )   23     2      23    
    operations
    Net income (loss)         $ (1  )   $ 28      $ 16      $ (335  )   $ (292  )     $ (40 )   $ (6  )   $ (61 )   $ (107  )
      Less: Net income
      attributable to          2      3      2      3        10          3      4      3      10    
      noncontrolling
      interests
    Net income (loss)
    attributable to WPX       $ (3  )  $ 25    $ 14    $ (338  )  $ (302  )     $ (43 )  $ (10 )  $ (64 )  $ (117  )
    Energy
                                                                                           
    Adjusted EBITDAX
      Reconciliation to
      net income
      (loss):
          Net income          $ (1  )   $ 28      $ 16      $ (335  )   $ (292  )     $ (40 )   $ (6  )   $ (61 )   $ (107  )
          (loss)
          Interest              49        48        -         20          117           26        26        25        77
          expense
          Provision
          (benefit) for         3         17        10        (104  )     (74   )       (25 )     (18 )     (28 )     (71   )
          income taxes
          Depreciation,
          depletion and         207       224       239       232         902           228       248       243       719
          amortization
          Exploration          12     14     74     26       126         19     19     22     60    
          expenses
              EBITDAX           270       331       339       (161  )     779           208       269       201       678
        Impairment of
        producing
        properties and
        costs of                -         -         -         367         367           52        65        -         117
        acquired
        unproved
        reserves
        Unrealized MTM          18        (3  )     (5  )     1           11            1         (60 )     31        (28   )
        (gains) losses
        (Income) loss
        from                   8      2      3      129      142         2      (23 )   (2  )   (23   )
        discontinued
        operations
              Adjusted        $ 296   $ 330   $ 337   $ 336     $ 1,299      $ 263   $ 251   $ 230   $ 744   
              EBITDAX
                                                                                                                            

                                                                                                                                       
  WPX Energy, Inc.
  Domestic Segment
  (UNAUDITED)
           
                                   2011                                                                      2012
  (Dollars in millions)        1st Qtr      2nd Qtr      3rd Qtr      4th Qtr      Year           1st Qtr      2nd Qtr      3rd Qtr      YTD
                                                                                                                          
    Revenues:
          Product
          revenues:
               Natural gas         $ 404         $ 419         $ 436         $ 419         $ 1,678           $ 353         $ 307         $ 327         $ 987
               sales
               Natural gas
               liquid                84            106           109           105           404               92            77            65            234
               sales
               Oil and
               condensate           34         63         62         67         226             80         95         87         262     
               sales
                  Total
                  product            522           588           607           591           2,308             525           479           479           1,483
                  revenues
            Gas management           408           337           347           336           1,428             337           187           186           710
            Net gain
            (loss) on
            derivatives              2             6             12            9             29                14            71            (22     )     63
            not designated
            as hedges
            Other                   2          2          1          2          7               3          4          (1      )   6       
                  Total              934           933           967           938           3,772             879           741           642           2,262
                  revenues
                                                                                                                                                       
    Costs and expenses:
            Lease and
            facility                 58            55            63            59            235               61            60            60            181
            operating
            Gathering,
            processing and           112           121           130           124           487               135           120           124           379
            transportation
            Taxes other              27            37            26            23            113               25            18            17            60
            than income
            Gas
            management,
            including
            charges for              417           344           359           351           1,471             355           194           200           749
            unutilized
            pipeline
            capacity
            Exploration              11            13            74            25            123               14            16            19            49
            Depreciation,
            depletion and            202           219           233           226           880               222           242           236           700
            amortization
            Impairment of
            producing
            properties and
            costs of                 -             -             -             367           367               52            65            -             117
            acquired
            unproved
            reserves
            General and              64            61            67            71            263               65            68            64            197
            administrative
            Other-net               -          4          (2      )   (5      )   (3      )        5          -          4          9       
                  Total
                  costs              891           854           950           1,241         3,936             934           783           724           2,441
                  and
                  expenses
                                                                                                                                                       
    Operating income                 43            79            17            (303    )     (164    )         (55     )     (42     )     (82     )     (179    )
    (loss)
                                                                                                                                                       
    Interest expense                 (49     )     (48     )     -             (20     )     (117    )         (26     )     (26     )     (25     )     (77     )
    Interest capitalized             4             4             -             1             9                 2             3             2             7
    Investment income and           1          2          2          1          6               2          -          1          3       
    other
                                                                                                                                                       
    Income (loss) from
    continuing operations          $ (1      )  $ 37        $ 19        $ (321    )  $ (266    )       $ (77     )  $ (65     )  $ (104    )  $ (246    )
    before income taxes
                                                                                                                          
                                                                                                                          
    Summary of Production
    Volumes(1)
    Natural gas (MMcf)               92,473        95,207        102,615       98,485        388,780           101,346       102,163       97,310        300,819
    Natural gas liquids              2,425         2,527         2,567         2,539         10,057            2,746         2,779         2,613         8,138
    (MBbls)
    Oil (MBbls)                      384           714           736           816           2,651             948           1,123         1,076         3,147
    Combined equivalent              109,331       114,655       122,430       118,614       465,030           123,511       125,574       119,443       368,528
    volumes (MMcfe)(2)
                                                                                                                                                       
    (1)   Excludes production from our Arkoma Basin and Barnett Shale operations which were classified as discontinued operations and comprised less than 6
          percent of our total production.
    (2)   Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet
          of natural gas.
                                                                                                                          
                                                                                                                          
    Realized average price per unit, including the impact of hedges (1)
          Natural gas (per         $ 4.37        $ 4.41        $ 4.25        $ 4.25        $ 4.32            $ 3.48        $ 3.01        $ 3.35        $ 3.28
          Mcf)
          Natural gas
          liquids (per             $ 34.84       $ 41.90       $ 42.54       $ 41.14       $ 40.17           $ 33.46       $ 27.96       $ 24.43       $ 28.68
          barrel)
          Oil (per barrel)         $ 87.13       $ 87.51       $ 84.75       $ 83.10       $ 85.30           $ 84.54       $ 83.89       $ 82.31       $ 83.54
                                                                                                                                                       
    (1)   Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
                                                                                                                          
    Expenses per Mcfe (1)
          Lease and
          facility                 $ 0.52        $ 0.48        $ 0.51        $ 0.51        $ 0.51            $ 0.50        $ 0.47        $ 0.51        $ 0.49
          operating
          Gathering,
          processing and           $ 1.02        $ 1.06        $ 1.06        $ 1.04        $ 1.05            $ 1.09        $ 0.95        $ 1.04        $ 1.03
          transportation
          Taxes other than         $ 0.24        $ 0.33        $ 0.22        $ 0.19        $ 0.24            $ 0.20        $ 0.15        $ 0.14        $ 0.16
          income
          Depreciation,
          depletion and            $ 1.84        $ 1.92        $ 1.90        $ 1.91        $ 1.89            $ 1.80        $ 1.93        $ 1.98        $ 1.90
          amortization
          General and              $ 0.58        $ 0.53        $ 0.55        $ 0.60        $ 0.57            $ 0.52        $ 0.54        $ 0.53        $ 0.53
          administrative
                                                                                                                                                       
    (1)   Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
          

                                                                                                           
  WPX Energy, Inc.
  International Segment
  (UNAUDITED)
            
                                   2011                                                   2012
  (Dollars in millions)         1st Qtr  2nd Qtr  3rd Qtr  4th Qtr  Year        1st Qtr  2nd Qtr    3rd Qtr  YTD
                                                                                              
    Revenues:
            Product
            revenues:
                 Natural gas       $ 4       $ 4       $ 4       $ 4       $ 16           $ 4       $ 5         $ 4       $ 13
                 sales
                 Natural gas
                 liquid              1         1         1         1         4              1         1           -         2
                 sales
                 Oil and
                 condensate         18      20      22      26      86            26      27       31      84     
                 sales
                    Total
                    product          23        25        27        31        106            31        33          35        99
                    revenues
              Gas management         -         -         -         -         -              -         -           -         -
              Net gain
              (loss) on
              derivatives            -         -         -         -         -              -         -           -         -
              not designated
              as hedges
              Other                 1       1       1       1       4             -       1        -       1      
                    Total            24        26        28        32        110            31        34          35        100
                    revenues
                                                                                                                          
    Costs and expenses:
              Lease and
              facility               5         6         7         9         27             6         7           8         21
              operating
              Gathering,
              processing and         -         -         -         -         -              -         -           -         -
              transportation
              Taxes other            3         6         6         6         21             5         7           6         18
              than income
              Gas
              management,
              including
              charges for            -         -         -         -         -              -         -           -         -
              unutilized
              pipeline
              capacity
              Exploration            1         1         -         1         3              5         3           3         11
              Depreciation,
              depletion and          5         5         6         6         22             6         6           7         19
              amortization
              Impairment of
              producing
              properties and
              costs of               -         -         -         -         -              -         -           -         -
              acquired
              unproved
              reserves
              General and            3         2         3         4         12             3         3           3         9
              administrative
              Other-net             1       -       1       1       3             -       (2    )   1       (1     )
                    Total
                    costs            18        20        23        27        88             25        24          28        77
                    and
                    expenses
                                                                                                                          
    Operating income (loss)          6         6         5         5         22             6         10          7         23
                                                                                                                          
    Interest expense                 -         -         -         -         -              -         -           -         -
    Interest capitalized             -         -         -         -         -              -         -           -         -
    Investment income and           5       4       5       6       20            8       8        6       22     
    other
                                                                                                                          
    Income (loss) from
    continuing operations          $ 11     $ 10     $ 10     $ 11     $ 42           $ 14     $ 18      $ 13     $ 45     
    before income taxes
                                                                                              
                                                                                              
    Summary of Net
    Production Volumes (1)
    Natural gas (MMcf)               1,826     1,940     1,726     1,896     7,389          1,737     1,726       1,861     5,324
    Natural gas liquids              44        47        55        37        183            45        44          45        134
    (MBbls)
    Oil (MBbls)                      473       509       529       542       2,054          507       562         573       1,643
    Combined equivalent              4,926     5,280     5,231     5,373     20,810         5,052     5,362       5,569     15,983
    volumes (MMcfe)(2)
                                                                                                                          
    (1)  Reflects approximately 69 percent of Apco's production (which corresponds to our ownership interest in Apco) and other
          minor directly held interests.
    (2)  Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas
          liquids to six thousand cubic feet of natural gas.
          

                                                                                                                
  WPX Energy, Inc.
  Reconciliation- Adjusted Income (Loss) from Continuing Operations
  (UNAUDITED)
            
                           2011                                                            2012
  (Dollars in
  millions, except      1st Qtr    2nd Qtr    3rd Qtr    4th Qtr    Year         1st Qtr    2nd Qtr    3rd Qtr    YTD
  per share amounts)
                                                                                                   
    Income (loss)
    from continuing
    operations
    attributable to        $ 5       $ 27      $ 17      $ (209  )  $ (160  )       $ (41   )  $ (33   )  $ (66   )  $ (140  )
    WPX Energy, Inc.
    available to
    common
    stockholders
    Income (loss)
    from continuing
    operations -           $ 0.03    $ 0.13    $ 0.09    $ (1.06 )  $ (0.81 )       $ (0.21 )  $ (0.17 )  $ (0.33 )  $ (0.70 )
    diluted earnings
    per share
    Adjustments:
    Impairment of
    producing
    properties and
    costs of               $ -         $ -         $ -         $ 367       $ 367           $ 52        $ 65        $ -         $ 117
    acquired
    unproved
    reserves
    Unrealized MTM         $ 18      $ (3    )  $ (5    )  $ 1       $ 11           $ 1       $ (60   )  $ 31      $ (28   )
    (gains) losses
    Total                  $ 18        $ (3    )   $ (5    )   $ 368       $ 378           $ 53        $ 5         $ 31        $ 89
    adjustments
    Less tax effect        $ (7    )  $ 1       $ 2       $ (135  )  $ (138  )       $ (19   )  $ (2    )  $ (12   )  $ (33   )
    for above items
    Adjusted income
    (loss) from
    continuing
    operations             $ 16      $ 25      $ 14      $ 24      $ 80           $ (7    )  $ (30   )  $ (47   )  $ (84   )
    available to
    common
    stockholders
    Adjusted diluted
    earnings (loss)        $ 0.08    $ 0.13    $ 0.07    $ 0.12    $ 0.40         $ (0.04 )  $ (0.15 )  $ (0.23 )  $ (0.42 )
    per common share
    Weighted-average
    shares -diluted          197.1       197.1       197.1       197.1       197.1           198.1       198.9       199.1       198.7
    - millions (1)
                       
    (1) For comparative purposes and to provide a more meaningful calculation for weighted average shares, we have assumed the amount of
    common stock issued at December 31, 2011 to be outstanding for all 2011 periods presented.
           


WPX Energy, Inc.
Consolidated Statement of Operations
(Unaudited)
                                                            
                        Three months ended September     Nine months ended
                        30,                              September 30,
                        2012           2011             2012       2011
                        (Millions, except per share amounts)
Revenues:
  Product
  revenues:
  Natural gas           $  331          $  440           $ 1,000     $ 1,271
  sales
  Natural gas              65              110             236         302
  liquid sales
  Oil and
  condensate              118           84            346       219   
  sales
  Total product            514             634             1,582       1,792
  revenues
  Gas management           186             347             710         1,092
  Net gain (loss)
  on derivatives           (22    )        12              63          20
  not designated
  as hedges
  Other                   (1     )       2             7         8     
Total revenues             677             995             2,362       2,912
Costs and
expenses:
  Lease and
  facility                 68              70              202         194
  operating
  Gathering,
  processing and           124             130             379         363
  transportation
  Taxes other              23              32              78          105
  than income
  Gas management,
  including
  charges for              200             359             749         1,120
  unutilized
  pipeline
  capacity
  Exploration              22              74              60          100
  Depreciation,
  depletion and            243             239             719         670
  amortization
  Impairment of
  costs of
  acquired                 -               -               117         -
  unproved
  reserves
  General and              67              70              206         200
  administrative
  Other - net             5             (1     )       8         4     
Total costs and            752             973             2,518       2,756
expenses
                                                                     
Operating income           (75    )        22              (156  )     156
(loss)
Interest expense           (25    )        -               (77   )     (97   )
Interest                   2               -               7           8
capitalized
Investment income         7             7             25        19    
and other
Income (loss)
from continuing            (91    )        29              (201  )     86
operations before
income taxes
Provision
(benefit) for             (28    )       10            (71   )    30    
income taxes
Income (loss)
from continuing            (63    )        19              (130  )     56
operations
Income (loss)
from discontinued         2             (3     )       23        (13   )
operations
Net income (loss)          (61    )        16              (107  )     43
  Less: Net
  income
  attributable to         3             2             10        7     
  noncontrolling
  interests
Net income (loss)
attributable to         $  (64    )     $  14           $ (117  )   $ 36    
WPX Energy
                                                                     
Amounts
attributable to
WPX Energy, Inc.:
Basic and diluted
earnings (loss)
per common share:
  Income (loss)
  from continuing       $  (0.33  )     $  0.09          $ (0.70 )   $ 0.25
  operations
  Income (loss)
  from                    0.01          (0.02  )       0.11      (0.07 )
  discontinued
  operations
  Net income            $  (0.32  )     $  0.07         $ (0.59 )   $ 0.18  
  (loss)
                                                                     
Weighted-average           199.1           197.1           198.7       197.1
shares
                                                                     


WPX Energy, Inc.
Consolidated Balance Sheet
(Unaudited)
                                                    
                                   September 30, 2012      December 31, 2011
ASSETS                             (Dollars in millions, except per share
                                   amounts)
Current assets:
Cash and cash                      $    240                  $    526
equivalents
Accounts receivable, net
of allowance of $10 at                  385                       509
September 30, 2012 and $
13 at December 31, 2011
Derivative assets                       159                       506
Inventories                             71                        73
Other                                  32                      60       
Total current assets                    887                       1,674
Investments                             143                       125
Properties and equipment
(successful efforts                     13,170                    12,199
method of accounting)
Less: Accumulated
depreciation, depletion                (4,757    )              (3,977   )
and amortization
Properties and                          8,413                     8,222
equipment, net
Derivative assets                       9                         10
Other noncurrent assets                131                     401      
Total assets                       $    9,583               $    10,432   
                                                             
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                   $    441                  $    702
Accrued and other                       170                       186
current liabilities
Deferred income taxes                   28                        116
Derivative liabilities                 42                      152      
Total current                           681                       1,156
liabilities
Deferred income taxes                   1,459                     1,556
Long-term debt                          1,509                     1,503
Derivative liabilities                  1                         7
Asset retirement                        311                       283
obligations
Other noncurrent                        126                       168
liabilities
                                                             
Equity:
Stockholders' equity:
Preferred Stock (100
million shares                          -                         -
authorized at $0.01 par
value; no shares issued)
Common Stock (2 billion
shares authorized at
$0.01 par value; 199.1
million shares issued at                2                         2
September 30, 2012 and
197.1 million shares
issued at December 31,
2011)
Additional                              5,465                     5,457
paid-in-capital
Accumulated deficit                     (117      )               -
Accumulated other                      55                      219      
comprehensive income
Total stockholders'                     5,405                     5,678
equity
Noncontrolling interests
in consolidated                        91                      81       
subsidiaries
Total equity                           5,496                   5,759    
Total liabilities and              $    9,583               $    10,432   
equity
                                                                           


WPX Energy, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
                                                            
                                               Nine months ended September 30,
                                               2012              2011
                                               (Millions)
Operating Activities
Net income (loss)                              $  (107    )         $ 43
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
    Depreciation, depletion and                   727                 704
    amortization
    Deferred income tax benefit                   (90     )           (6     )
    Provision for impairment of
    properties and equipment (including           160                 120
    certain exploration expenses)
    Amortization of stock-based awards            22                  -
    (Gain) loss on sale of assets                 (42     )           -
    Cash provided (used) by operating
    assets and liabilities:
           Accounts receivable                    128                 (39    )
           Inventories                            2                   (5     )
           Margin deposits and customer           (5      )           (25    )
           margin deposits payable
           Other current assets                   9                   (10    )
           Accounts payable                       (142    )           78
           Accrued and other current              (20     )           31
           liabilities
           Changes in current and
           noncurrent derivative assets           (28     )           7
           and liabilities
           Other, including changes in
           other noncurrent assets and           (25     )          (10    )
           liabilities
Net cash provided by operating                   589               888    
activities
                                                                    
Investing Activities
Capital expenditures (a)                          (1,165  )           (1,088 )
Proceeds from sale of assets                      310                 17
Purchases of investments                          (2      )           (8     )
Other                                            3                 23     
Net cash used in investing activities            (854    )          (1,056 )
                                                                    
Financing Activities
Proceeds from common stock                        2                   -
Proceeds from long-term debt                      6                   -
Net increase in notes payable to                  -                   159
Willliams
Net changes in Williams' net investment           -                   33
Revolving debt facility costs                     -                   (8     )
Other                                            (29     )          (3     )
Net cash provided by (used in) financing         (21     )          181    
activities
                                                                    
Net increase (decrease) in cash and cash          (286    )           13
equivalents
Cash and cash equivalents at beginning           526               37     
of period
Cash and cash equivalents at end of            $  240              $ 50     
period
                                                                    
   
(a) Increase to properties and equipment       $  (1,073  )         $ (1,095 )
Changes in related accounts payable              (92     )          7      
Capital expenditures                           $  (1,165  )         $ (1,088 )

Contact:

WPX Energy
Media Contact:
Kelly Swan, 539-573-4944
or
Investor Contact:
David Sullivan, 539-573-9360
 
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