WPX Energy Provides 2013 Guidance
Strategy Emphasizes Greater Oil Production, Disciplined Gas Drilling, Lower
Costs and New Opportunities
TULSA, Okla. -- February 27, 2013
WPX Energy (NYSE: WPX) today announced that it is forecasting production of
1,261 MMcfe/d to 1,295 MMcfe/d for 2013 inclusive of ethane rejection. Bakken
oil volumes are expected to grow 25 to 30 percent. Marcellus natural gas
volumes are expected to climb 75 to 80 percent.
WPX also expects to continue lowering well costs, particularly in the Bakken.
RecentBakken costs have decreased10 to 20 percent through multi-well pad
drilling and completion efficiencies.
This improvementin well costsplaces WPX essentially equal to or better
thantheindustry averagein the Bakkenon the Fort Berthold Indian
Reservation, where WPX’s costsalso include theuse of ceramic proppantwhich
provides stronger well performance.
“We’re focused on increasing oil production, being disciplined in our gas
drilling while remaining poised for growth at the appropriate time, reducing
costs and pursuing new opportunities like our Niobrara discovery in the
Piceance and exploratory oil efforts that are under way in new areas,” said
Ralph A. Hill, president and chief executive officer.
“Our capital allocation strategy aims to capture the most attractive returns
from our portfolio as we create both near-term and long-term shareholder
value,” Hill added.
WPX’s 2013 forecasts are based on commodity price ranges for the company’s
three production streams – natural gas, oil and natural gas liquids (NGL).
Details are provided below:
Commodity Prices 2013 Forecast Ranges
Low Base High
Natural Gas (Mmbtu) – NYMEX $ 3.20 $ 3.50 $ 4.00
Oil (Bbl) – WTI $ 85.00 $ 92.50 $ 95.00
NGL (Bbl) – Mont Belvieu $ 38.00 $ 41.00 $ 45.00
Approximately 75 to 80 percent of WPX’s 2013 capital budget of $1 billion to
$1.2 billion is allocated to oil and NGL resource plays, including oil-focused
exploration and development activities. WPX’s NGL production comes primarily
from its operations in the Piceance Basin.
The balance of the capital plan supports natural gas development, land
acquisition and WPX’s international interests.
Capital Investments 2013 Forecast
Low Base High
Piceance $ 320 $ 340 $ 380
Bakken $ 360 $ 370 $ 380
Marcellus $ 85 $ 125 $ 190
Core Development $ 765 $ 835 $ 950
Oil Exploration $ 95 $ 95 $ 95
Oil Development $ 40 $ 40 $ 55
Land/Other $ 30 $ 30 $ 30
International (self-funding) $ 70 $ 70 $ 70
Total $ 1,000 $ 1,070 $ 1,200
WPX expects to drill approximately 220 gross operated wells under its
base-case scenario by deploying an average of 11 rigs during 2013, with plans
for five in the liquids-rich Piceance, four focused on oil drilling in the
Bakken, one in the Marcellus and one for oil exploration in new plays the
company has identified.
Ten of the 11 rigs in the base-case scenario are scheduled for oil and liquids
resource plays. Depending on commodity prices, the actual number of rigs at
any point during the year may average from nine to 13. WPX would consider
adding rigs contingent upon stronger commodity prices or additional cost
Rig Count 2013 Forecast
Low Base High
Piceance Valley 3 4 5
Piceance Highlands 1 1 1
Bakken 4 4 4
Marcellus 0 1 2
Exploration 1 1 1
Total 9 11 13
The Bakken development program reflects a 25 percent efficiency gain in rig
deployment, accomplished by drilling a comparable number of wells in 2013 as
2012 but with fewer rigs.
For 2013, WPX expects to grow its Bakken Shale oil production by 25 to 30
percent vs. 2012. Overall consolidated oil production is expected to rise
approximately 21 percent.
Consolidated Annual Production 2013 Forecast
Low Base High
Natural Gas - MMcf/d 1,008 1,028 1,039
Oil - Mbbl/d 21.7 21.7 21.8
NGL - Mbbl/d 20.5 20.8 20.9
Total - MMcfe/d 1,261 1,283 1,295
Assumes a 53% ethane rejection rate in NGL volumes.
In 2012, the ethane rejection rate was 23%.
For 2013 – assuming comparable ethane recovery rates – WPX’s base-case
production would decline an estimated 4.5 percent on an equivalent basis vs.
2012.Taking into account the anticipated impact of ethane rejection in NGL
volumes, production equivalency is expected to be impacted an additional 3
percent. This year’s production reflects WPX’s decision to not grow natural
gas volumes in the current price environment.
PURSUING NEW OPPORTUNITIES
On Jan. 22, WPX announced a Niobrara Shale natural gas discovery on the
company’s acreage in the Piceance Basin. The discovery well has registered an
average production rate of 10.6 million cubic feet per day over its first 60
days, despite being choked back substantially.
For comparison, the production from the Niobrara discovery well in the first
60 days is eight times greater than what a typical well in the Piceance Valley
produces in its first 60 days.
WPX already has extensive processing and takeaway capacity under contract in
the Piceance to support Niobrara production.
WPX now plans to drill four horizontal Niobrara wells in 2013 – up from the
original plan of two. The drilling plan is designed to prove up adjacent
acreage and test the repeatability of the play on additional acreage the
company owns. This capital is included in WPX’s Piceance Basin budget.
WPX has the lease rights to approximately 180,000 net acres of the
Niobrara/Mancos shale play in western Colorado. Over time, the Niobrara
discovery has the potential to more than double the company’s proved, probable
and possible (3P) reserves.
For 2013, WPX also has allocated $95 million in its capital budget for oil
exploration and leasing in new areas. The company plans to drill eight
exploratory oil wells in 2013. WPX has allocated an additional $40 million to
$55 million in its capital budget to begin development if the results are
In other efforts to strengthen the WPX portfolio, the company plans to open a
data room in early March to explore opportunities for the potential
monetization of its holdings in Wyoming’s Powder River Basin, including the
deep rights on its acreage.
WPX is providing the following estimates on a consolidated per-unit basis for
2013 which includes both domestic and international expenses:
Consolidated Expenses 2013 Forecast
Low Base High
Lease operating $ 0.66 $ 0.66 $ 0.66
Gathering, processing & $ 0.87 $ 0.89 $ 0.89
Taxes other than income $ 0.29 $ 0.30 $ 0.33
General & administrative $ 0.64 $ 0.63 $ 0.63
DD&A $ 1.96 $ 1.96 $ 1.95
Annual Expenses (in millions) 2013 Forecast
Low Base High
Interest Expense $ 105 $ 105 $ 104
Exploration $ 78 $ 82 $ 82
Equity Earnings ($28 ) ($28 ) ($28 )
Tax provision 33-38 % 33-38 % 33-38 %
WPX management will discuss the company’s 2013 outlook and 2012 year-end
results during a Feb. 28 webcast that will be broadcast at 10 a.m. Eastern on
Interviews with WPX’s management about the company’s vision and the strength
of its diversified portfolio, balance sheet, community involvement, employees
and commitment to the environment are available at www.wpxenergy.com.
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.aspx 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.
Kelly Swan, 539-573-4944
David Sullivan, 539-573-9360
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