2nd Quarter Earnings Call - WPX Energy
August 6, 2014
2nd Quarter Earnings Call Rick Muncrief, Chief Executive Officer
Disclaimer The information contained in this summary has been prepared to assist you in making your own evaluation of the Company and does not purport to contain all of the information you may consider important in deciding whether to invest in shares of the Company’s common stock. In all cases, it is your obligation to conduct your own due diligence. All information contained herein, including any estimates or projections, is based upon information provided by the Company. Any estimates or projections with respect to future performance have been provided to assist you in your evaluation but should not be relied upon as an accurate representation of future results. No persons have been authorized to make any representations other than those contained in this summary, and if given or made, such representations should not be considered as authorized. Certain statements, estimates and financial information contained in this summary constitute forward-looking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the results implied or expressed in such forward-looking statements or information. While presented with numerical specificity, certain forward-looking statements or information are based (1) upon assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, competitive uncertainties, contingencies and risks including, without limitation, the ability to obtain debt and equity financings, capital costs, construction costs, well production performance, operating costs, commodity pricing, differentials, royalty structures, field upgrading technology, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the Company's control, and (2) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the results implied or expressed in such forward-looking statements or information or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the results implied or expressed in such forward-looking statements or information. Under no circumstances should the inclusion of the forward-looking statements or information be regarded as a representation, undertaking, warranty or prediction by the Company or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that the Company will achieve or is likely to achieve any particular results. The forward-looking statements or information are made as of the date hereof and the Company disclaims any intent or obligation to update publicly or to revise any of the forward-looking statements or information, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein.
WPX 2nd Quarter Earnings Call | August 6, 2014
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Reserves Disclaimer 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. We have elected to use in this presentation “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 regarding our business 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 2nd Quarter Earnings Call | August 6, 2014
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2nd Quarter Highlights Domestic oil production up 57% 2Q ’14 vs. 2Q ’13 ►
Domestic oil production grew 23% 2Q ’14 vs. 1Q ’14
Adjusted EBITDAX increased 40% 2Q ’14 vs. 2Q ’13 ►
Domestic oil revenue grew 60% quarter over quarter
Adding nearly 200 locations in the Williston ►
Premium location adds in the highest quality rock in the play
Initial stimulation pilot test yields encouraging results in Williston Increasing San Juan Gallup spuds from 29 to 40 ►
~40% increase in spuds without increasing rig count
San Juan Gallup 30-day IP average rates up 30% versus 2013 ►
626 boe/d vs. 474 boe/d
Closed Legacy transaction (Piceance Basin working interest)
WPX 2nd Quarter Earnings Call | August 6, 2014
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Base Production Growth after Normalizing for Legacy Transaction 4Q ’14 Growth vs. 4Q ’13 ► ►
Equivalent production expected to be up by 9% Oil production expected to be up by 60%
Production Growth Excluding Legacy Impact 1,400 1,350
MMcfe/d
1,300 1,250 1,200 1,150 1,100 1,050
1,000 4Q’13
1Q ’14 Base Production
2Q ’14 Legacy
3Q ’14
4Q ’14 Midpoint Guidance
WPX 2nd Quarter Earnings Call | August 6, 2014
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Piceance 2nd Quarter Highlights 2nd quarter activity ► ►
Spud 72 wells in 2Q Spud 140 wells 2Q YTD
2nd quarter net production 691 MMcfe/d ► ► ►
Natural gas 584 MMcf/d NGL 15.8 Mbbl/d Oil 2.0 Mbbl/d
Hold 9 rigs for remainder of 2014
Lifting cost $4.7MM lower through 2Q ► ►
Water sharing agreements with other operators Continued scrutiny/negotiations in cost of chemicals, water hauling and equipment
Potential impact of 2,000ʹ setback ►
Less than 5% of our 12,475 drillable locations
WPX 2nd Quarter Earnings Call | August 6, 2014
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Williston Continues to Drive Strong Production Growth Production exceeds 2Q target ►
►
Oil production up 53% 2Q ’14 vs. 2Q ’13 Oil production up 21% 2Q ’14 vs. 1Q ’14
Average 30 day IP: 1,176 BOPD Middle Bakken 1,095 BOPD Three Forks
Increased proppant completions ►
Positive initial results from moderate 25% increase of proppant ►
►
►
33% increase Middle Bakken first 180 days production 60% increase Three Forks first 180 days production
Doubling proppant to 6MM pounds in remaining 2014 wells
Currently capturing up to ~90% of gas volumes ►
Placed 1st liquid capture skid on new Glenn Fox 3-well pad ►
Produced more than 100,000 gals of NGLs as of mid-July
Downspacing creating additional inventory and NAV ► ►
199 locations added 10 years of drillable locations using 2014 run rate
WPX 2nd Quarter Earnings Call | August 6, 2014
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San Juan Gallup Accelerating Production Growth Production exceeds 2Q target ► ►
Oil production up 500% 2Q ’14 vs. 2Q ’13 Oil production up 76% 2Q ’14 vs. 1Q ’14
2306 06L #178H FIRST SALES: 3/9/2014 AVG. 30-DAY IP: 433 BOPD 2308 09A #149H FIRST SALES: 5/20/2014 AVG. 30 DAY IP: 595 BOPD
Development program advancing ►
►
►
►
2Q oil production 25% higher than target, 3.0 Mbo/d vs. 2.4 Mbo/d Reduced well cost to $5.2MM, targeting $4.8MM by year-end Average 2014 30-day IP is 626 boe/d vs. 2013 average of 474 boe/d Total net sales since January 2013 project inception exceeds 875 Mboe, or 697 Mbo
2308 09A #150H FIRST SALES: 5/29/2014 AVG. 30 DAY IP: 558 BOPD
2306 06L #239H FIRST SALES: 3/9/2014 AVG. 30-DAY IP: 420 BOPD
2308 09A #145H FIRST SALES: 4/16/2014 AVG . 30 DAY IP: 426 BOPD
2307 12E #169H FIRST SALES: 5/5/2014 AVG. 30 DAY IP: 495 BOPD
2308 09A #146H FIRST SALES: 4/21/2014 AVG. 30 DAY IP: 481 BOPD
2307 13L #238H FIRST SALES: 5/4/2014 AVG. 30 DAY IP: 392 BOPD
2308 16I #148H FIRST SALES: 5/29/2014 AVG. 30 DAY IP: 576 BOPD 2307 13L #174H FIRST SALES: 4/24/2014 AVG. 30 DAY IP: 456 BOPD 2306 19M #190H FIRST SALES: 6/20/2014 AVG. 30 DAY IP: 498 BOPD
Efficiencies driving accelerated development ►
►
2306 06L #179H FIRST SALES: 3/6/2014 AVG. 30-DAY IP: 407 BOPD
Increasing spuds from 29 to 40, while maintaining same rig count Currently two rigs running, plus top-setting rig
2206 02H #226H FIRST SALES: 6/17/2014 AVG. 30 DAY IP: 676 BOPD
2206 02H #272H FIRST SALES: 7/9/2014
WPX-Drilling Horizontal Oil Wells WPX-Completed Horizontal Oil Wells WPX Acreage (Shallow/Deep Rights)
WPX 2nd Quarter Earnings Call | August 6, 2014
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San Juan Gallup 2014 Well Performance Exceeding 2013
Avg Gross Cumulative Oil Production (Mbbl)
70 60
13 Wells 15 Wells
50
~40% Increase from 2013 to 2014
40 30 20
2013 Spuds
10
2014 Spuds
0 0
100
200
300 Days
400
500
600
Improving oil production from 2013 to 2014 ► ►
Average gross cumulative oil production grew by ~40% First 140 days of production
WPX 2nd Quarter Earnings Call | August 6, 2014
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Financial Results Kevin Vann, Chief Financial Officer
2nd Quarter Results 2Q
YTD Avg.
2014
2013
2014
2013
Gas (MMcf/d)
965
1,007
970
1,014
Oil (Mbbl/d)
29.0
21.2
26.7
20.3
NGLs (Mbbl/d)
18.3
21.3
18.2
21.5
Equivalent (MMcfe/d)
1,249
1,262
1,239
1,265
Adjusted EBITDAX
294
210
614
413
Adjusted Net Income (Loss) from Continuing Operations
11
(44)
55
(95)
Capital Expenditures
376
277
728
548
Dollars in millions, except production numbers
Daily Production
Note: Adjusted EBITDAX and adjusted net income are non-GAAP measures. A reconciliation to relevant measures included in GAAP is provided in this presentation.
WPX 2nd Quarter Earnings Call | August 6, 2014
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2014 Full-Year Consolidation Guidance Production Natural Gas MMcf/d Oil Mbbl/d NGL Mbbl/d Total MMcfe/d
Cap Ex ($ in Millions)7
Full Year 2014 920 - 950 30.2 - 32.0 18.0 - 19.0 1,209 - 1,256
Full Year 2014
Growth Basins Piceance Williston San Juan Gallup Other Appalachia Other1 Land Exploration Total Domestic International2 Total Capital
20 - 30 10 - 15 75 - 85 40 - 45 $1,470 - $1,540 90 - 100 $1,560- $1,640
Number of Rigs
Full Year 2014
Piceance Valley Piceance Highlands Piceance Niobrara Total Piceance Williston San Juan Gallup Total Rigs
$475 - $495 640 - 650 210 - 220
6 2 1 9 5 2 16
% of Net Realized Price3 Natural Gas - NYMEX Oil - WTI NGL - OPIS/Mt Belvieu5
Expenses
Tax Provision
80% - 86% 81% - 87% 76% - 80%
Full Year 2014
$ per Mcfe LOE DD&A GP&T SG&A Production Tax $ in Millions Gas Management (Inc)/Exp4 Exploration Interest Expense Equity (Earnings) Loss
Tax Rate
Full Year 2014
$0.73 - $0.75 1.95 - 2.00 0.92- 0.97 0.63 - 0.67 0.42 - 0.46 ($25) - ($35) 85 - 95 125 - 130 (20) - (25)
Full Year 2014 33% - 37%6
1 Other
includes expenditures for Powder River and other basins. is a self-funded entity and does not receive any cash from WPX Energy. 3 Percentage of realized price ranges for NYMEX, WTI and OPIS exclude hedges, but include basis differential and revenue adjustments. 4 Gas Management impact is net of revenues and expenses and includes unutilized transport capacity. Includes impact realized hedges on non-equity production. 5 Assumed NGL composite barrel: Ethane 37%, Propane 28%, Isobutane 8%, NormButane 7% and Natural Gasoline 20%. 6 Excludes impact of $9MM tax expense accrual for new legislation in 1Q ’14. 7Excludes acquisition capital 2 International
WPX 2nd Quarter Earnings Call | August 6, 2014
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WPX Long-Term Vision Coming Into Focus Strategy development process underway ► ► ►
Full-scale review of the entire portfolio Multi-year strategy this fall Status quo is not an option
Transition to pure play E&P mindset ► ►
► ►
More nimble Greater risk tolerance Look at the asset base in a different way Establish culture focused on profitability
Organization must be: ► ► ► ►
Dynamic Responsive Efficient Accountable
Build on the successes from the first half of 2014
WPX 2nd Quarter Earnings Call | August 6, 2014
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Appendix
WPX Portfolio Piceance
Williston
San Juan
Appalachia
Powder River
Apco1
3,019 Bcfe Proved 11,878 Bcfe 3P 221,186 Net Acres
105 MMboe Proved 176 MMboe 3P 88,6973 Net Acres
517 Bcfe Proved 1,645 Bcfe 3P 160,825 Net Acres
328 Bcfe Proved 1,555 Bcfe 3P 87,994 Net Acres
245 Bcfe Proved 657 Bcfe 3P 360,002 Net Acres
22 MMboe Proved 58 MMboe 3P 385,796 Net Acres
Total 2Domestic
WILLISTON BASIN
4,905 Bcfe Proved 17,211 Bcfe 3P 1,562,596 Net Acres3
POWDER RIVER BASIN
APPALACHIAN BASIN
PICEANCE BASIN
SAN JUAN BASIN
ARGENTINA
Natural Gas Oil Natural Gas and Natural Gas Liquids Note: Acreage, proved and 3P numbers are as of 12/31/13. 1 Reflects WPX’s 69% ownership in APCO, as well as additional acreage 2 Total includes other reserves and acreage not depicted on slide. 3
owned by WPX.
Includes mineral interest acreage
WPX 2nd Quarter Earnings Call | August 6, 2014
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Hedging Overview
As of 7/21/2014
3Q - 4Q 2014 Volumes
3Q - 4Q 2014 Price
2015 Volumes
2015 Price
(BBtu/d)
($MMBtu)
(BBtu/d)
($MMBtu)
Fixed Price Swaps 1,3
328
$4.21
182
$4.35
Collars
190
$4.04 - $4.66
50
$4.00 - $4.50
(bbl/d)
($/bbl)
(bbl/d)
($/bbl)
14,975
$96.01
15,736
$95.46
Natural Gas Liquids
(bbl/d)
($/gallon)
(bbl/d)
($/gallon)
Ethane Swaps
3,261
$0.29
‒
‒
Propane Swaps
489
$1.17
‒
‒
Isobutane Swaps
652
$1.37
‒
‒
Normal Butane Swaps
652
$1.34
‒
‒
1,630
$2.06
‒
‒
Natural Gas1
Crude Oil Fixed Price Swaps1,2,3
Natural Gasoline Swaps
1Details
for natural gas basis swaps can be found in our most recent quarterly report. ²Details for crude oil basis swaps can be found in our most recent quarterly report. 3In connection with several natural gas swaps, we entered into swaptions with the swap counterparties granting the counterparty the right, but not the obligation, to enter into an underlying swap with us in the future. For the balance of 2014, we have 50k MMBtu/d capped at a monthly settlement price of $4.24 per MMBtu. For 2015, we have 50k MMBtu/d of natural gas capped at a settlement price of $4.38 per MMBtu and 6,132 bbl/d of crude oil capped at a settlement price of $95.38. And for 2016, we have 5,250 bbl/d of crude oil capped at a settlement price of $97.55.
WPX 2nd Quarter Earnings Call | August 6, 2014
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Key Statistics by Basin Net Acreage (YE2013)
2014 Average Rig Count (Op)
2013 Production (MMcfe/d)
Oil/NGL Focused
Drillable Locations4
Proved Reserves (YE2013 Bcfe)
3P Reserves (YE2013 Bcfe)
Piceance1
221,186
9
727
X
12,475
3,019
11,878
Williston
88,6976
5
14.8 Mboe/d
X
6525
San Juan2
160,825
2
123
X
2,966
517
1,645
Appalachia
87,994
0
83
618
328
1,555
Total
558,702
16
1,022
16,512
4,497
16,133
2,872
245
657
664
22 MMboe
58 MMboe
2,820
20
72
Primary Areas of Focus
105.5 MMboe 176 MMboe
Exploration Exploration
X
Other Powder River
360,002
0
174
Apco3
385,796
0
9.0 Mboe/d
Other
258,096
0
8.0
X
1
Piceance includes Niobrara acreage, which underlies existing leasehold acreage. Juan Legacy includes both shallow and deep rights. 3 Reflects WPX’s 69% ownership, except 3P drilling locations, which are gross. 4 Includes operated and non-operated gross locations 5Includes impact of tighter infill density 6Includes mineral interest acreage 2 San
Chart numbers affected by rounding.
WPX 2nd Quarter Earnings Call | August 6, 2014
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2013-14 Daily Production 1Q
2Q
2013 3Q
4Q
Avg Total
1Q
2Q
2014
Avg
Gas (MMcf/d)
1,005
989
993
953
985
956
945
950
Oil (Mbbl/d)
13.8
15.1
17.1
18.9
16.2
19.3
23.7
21.5
NGLs (Mbbl/d)
21.2
20.8
19.7
19.7
20.3
17.6
17.9
17.8
MMcfe/d
1,215
1,205
1,214
1,184
1,204
1,177
1,195
1,186
Gas (MMcf/d)
17
18
19
19
18
19
20
20
Oil (Mbbl/d)
5.6
6.1
5.3
5.3
5.6
5.2
5.2
5.2
NGLs (Mbbl/d)
0.5
0.5
0.5
0.4
0.5
0.5
0.4
0.4
MMcfe/d
53
57
53
53
54
53
54
54
Gas (MMcf/d)
1,021
1,007
1,012
971
1,003
975
965
970
Oil (Mbbl/d)
19.4
21.2
22.4
24.2
21.8
24.5
29.0
26.7
NGLs (Mbbl/d)
21.7
21.3
20.1
20.1
20.8
18.1
18.3
18.2
MMcfe/d
1,268
1,262
1,267
1,237
1,258
1,230
1,249
1,239
Domestic Production
International Production
Total Production
WPX 2nd Quarter Earnings Call | August 6, 2014
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Domestic Price Realization for 2014 Gas ($/Mcf) 1Q ’14
2Q ’14
Weighted-Average Sales Price
$4.89
Revenue Adjustments1
2Q ’14
$44.18
$88.40
$88.94
(10.87)
(10.60)
(2.16)
.30
0.00
0.00
0.00
0.00
0.00
$4.40
$3.62
$38.27
$33.58
$86.24
$89.24
Realized Portion of Derivatives Not Designated as Hedges(3)
(0.52)
(.11)
(0.48)
(.30)
(2.30)
(3.40)
Net Price Including All Derivatives
$3.88
$3.51
$37.79
$33.28
$83.94
$85.84
1Q ’14
2Q ’14
Impact of Rockies Sale-for-Resale Contract exp. in Nov. ’14
$(0.34)
$(0.35)
Weighted-Average Sales Price Excluding Rex
$4.22
$3.86
Net Price
(2)
1Q ’14
2Q ’14
$4.03
$49.14
(0.49)
(.41)
0.00
3Q ’14
4Q ’14
Oil ($/bbl) 1Q ’14
Hedge Impact
3Q ’14
NGL ($/bbl) 3Q ’14
4Q ’14
3Q ’14
4Q ’14
4Q ’14 ►
2Q: Rockies sale-for-resale agreement impacted net realized gas price ($0.35). Contract expires in November 2014.
1Natural
gas revenue adjustments are primarily related to field compression fuel. NGL revenue adjustments include T&F and revenue sharing. Of the oil revenue adjustments, gathering deductions represent $(1.44). 2“Net
Price” equals income statement product revenues by commodity, divided by volume.
3Represents
the realized cash flows that occurred during each quarter, which are attributable to derivatives that were not designated as hedges for accounting purposes.
WPX 2nd Quarter Earnings Call | August 6, 2014
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Piceance Basin Orange: Highlands Yellow: Valley 1 Net acreage: 221,186 Current rig count: 9 Drillable locations: 12,4751 Composition: Gas/NGL focused
1 Acreage
and drilling locations are as of 12/31/13
Niobrara Dedicated Rig
WPX 2nd Quarter Earnings Call | August 6, 2014
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Piceance Composite NGL Barrel and Realized Price (2Q 2014) Product Mix
$/Gal
Ethane (1)
33%
0.29
Propane
31%
1.06
Isobutane
9%
1.30
Normal Butane
8%
1.25
NGL Product
Weighted Average NGL $/barrel
Net Realized Price
**$0.59 per Mcf NGL
Natural Gasoline
19%
2.21
Uplift in 2Q 2014
* Included in revenue as a deduction ** Total NGL sales revenue minus any associated cost, divided by total Piceance gas sales volumes (1) Lower ethane percentage as a component of the composite barrel was driven by reduced ethane recovery
WPX 2nd Quarter Earnings Call | August 6, 2014
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Williston Basin Net acreage: 88,6971,4 Current rig count 2014: 5 Drillable Locations: 6521,2,3 Composition: Oil focused
1 Acreage
and drilling locations are as of 6/30/2014 Does not include the impact of downspacing 3Includes impact of tighter infill density 4Includes mineral interest acreage 2
WPX-operated rig WPX non-operated rig
WPX 2nd Quarter Earnings Call | August 6, 2014
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Downspacing Adds Premium Locations Per 1,280 DSU ► ►
6 Middle Bakken (previously 4) 5 Three Forks (previously 3)
199 locations added ► ►
44% increase in locations 88% in Mandaree area
YE ’13 7-Well Pattern
Increased 11-Well Pattern
Updated Total
Middle Bakken
198
83
281
3 Forks (1st Bench)
203
116
319
401
199
600
52
0
52
453
199
652
Remaining Location Count 1280 ac. Laterals
Total 640 ac. Laterals Middle Bakken Total Undev Locations
WPX 2nd Quarter Earnings Call | August 6, 2014
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Williston Netback Price Analysis Estimated Volume % (Jul - Sep 2014)
Sales Outlets Basin-Priced Sales
58%
Rail Deals
30%
Enbridge Capacity
12%
Total Sales Outlets
100%
Assumed 3Q 2014 total netback of WTI less $12 - $14 per barrel Our current sales agreements consist of the following: ► ► ►
Basin Sales: Arrow CDP WASP and lease sales Rail: Receive Gulf, West and East Coast pricing Enbridge: Receive Enbridge Clearbrook, Minn., price
Our sales agreements in 2014-16 are expected to consist of the following: ► ► ► ►
Basin sales: Receive a basket price from sales to third-party marketers Rail: Receive Gulf, West and East Coast pricing less associated fees Enbridge: Receive Clearbrook, Minn., price less associated transportation fees Unit train rail options: WPX has up to 9,250 bbl/d of committed rail capacity until mid-2016, receiving West, East or Gulf Coast pricing less associated transportation fees
WPX 2nd Quarter Earnings Call | August 6, 2014
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San Juan Basin
Green: Deep/Shallow Yellow: Shallow Net Acreage: 160,8251 Current rig count: 2 Drillable locations: 2,9661 Composition: Gas/Oil 1Acreage
and drilling locations are as of 12/31/13
WPX 2nd Quarter Earnings Call | August 6, 2014
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Apco Highlights Argentina Continued 6-well Neuquén horizontal drilling program ► ► ►
Early results encouraging Three conventional horizontal wells put on production Three wells waiting to be drilled
Vaca Muerta Exposure Neuquén Basin (Vaca Muerta acreage) ► ►
Eleven development wells spud during 2Q
►
Received approval for the government’s gas incentive program to obtain higher gas pricing
►
Colombia
►
Entre Lomas Bajada del Palo Agua Amarga Coiron Amargo Charco del Palenque Total
96,000 net acres 59,000 net acres 37,000 net acres 45,000 net acres 12,000 net acres 249,000 net acres
Llanos 32 block ► ►
► ►
Kananaskis-1 well – on production at 5,000 bbl/d gross Carmentea-1 well – tested 4,300 bbl/d and it’s on production at a restricted rate of 2,000 bbl/d gross Spud 2 development wells and 1 disposal well during 2Q Production facilities to be constructed during 2nd half of 2014
Llanos 40 block ►
►
►
Begonia-1 well – waiting for government approval to put on production Celtis 1 well – waiting for government approval to put on production Completed 1 disposal well during 2Q
WPX 2nd Quarter Earnings Call | August 6, 2014
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Argentina Asset Map Acambuco: Noreste Basin
1.5% WI
Agua Amarga:
Entre Lomas: 23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%)
23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%)
Nequen Basin
Coirón Amargo: 45% WI
Bajada del Palo: 23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%) San Jorge Basin
Tierra del Fuego:
Sur Rio Deseado Este:
26% WI Austral Basin
44% WI
Concession/Contract Basin
WPX 2nd Quarter Earnings Call | August 6, 2014
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Colombia Asset Map
Valle Medio Del Magdalena Basin
Turpial Block 50% WI 100,000 acres
Llanos 40 Block 50% WI 163,000 acres
Llanos Orientales Basin
Llanos 32 Block 20% WI 111,000 acres
Block Basin
WPX 2nd Quarter Earnings Call | August 6, 2014
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Non-GAAP
WPX Non-GAAP Disclaimer This presentation may include certain financial measures, including adjusted EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses), that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. This presentation is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare a company’s performance. Management believes that these measures provide investors an enhanced perspective of the operating performance of the company and aid investor understanding. Management also believes that these non-GAAP measures provide useful information regarding our ability to meet future debt service, capital expenditures and working capital requirements. These non-GAAP financial measures should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
WPX 2nd Quarter Earnings Call | August 6, 2014
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Reconciliation-Adjusted Income (Loss) from Continuing Operations (Unaudited) 2013 (Dollars in millions, except per share amounts)
1Q
2Q
Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders
$ (116) $
Income (loss) from continuing operations – diluted earnings per share
18
2014
3Q
4Q
Year
1Q
2Q
3Q
4Q
YTD
$ (114) $ (973) $ (1,185)
$
18 $ (135)
$ (117)
$(0.58) $ 0.09
$(0.57) $(4.85) $(5.91)
$ 0.09 $ (0.66)
$ (0.58)
Impairment of producing properties, costs of acquired unproved reserves, leasehold and equity method investment (1)
$
-
$
-
$
19
$1,361
$1,380
$
-
$
-
$
-
Impairments – exploratory related
$
-
$
-
$
-
$
$
$
-
$
36
$
36
Gain on sale of Powder River Basin deep rights leasehold
$
-
$
-
$
-
$ (36)
$ (36)
$
-
$
-
$
-
Loss on sale of working interests in the Piceance Basin
$
-
$
-
$
-
$
-
$
-
$
-
$ 195
$ 195
Accrual for litigation
$
-
$
-
$
7
$
1
$
8
$
-
$
-
$
-
Costs related to chief executive officer separation
$
-
$
-
$
-
$
4
$
4
$
-
$
-
$
-
Buyout of transportation agreement
$
-
$
-
$
-
$
9
$
9
$
-
$
-
$
-
Unrealized MTM (gain) loss
$ 103
$ (98)
$
13
$
89
$ 107
$
27 $
-
$
27
Total pre-tax adjustments
$ 103
$ (98)
$
39
$1,428
$1,472
$
27 $ 231
$ 258
Less tax effect for above items
$ (38)
$
36
$ (14)
$ (521) $ (537)
$
(10) $ (85)
$ (95)
Impact of new Argentine capital tax law (1)
$
-
$
-
$
6
$
-
$
6
$
-
Impact of new state tax law in New York (net of federal benefit)
$
-
$
-
$
-
$
-
$
-
$
9 $
Total adjustments, after-tax
$
65
$ (62)
$
31
$ 907
$ 941
$
26 $ 146
$ 172
Adjusted income (loss) from continuing operations available to common stockholders
$ (51)
$ (44)
$ (83)
$ (66)
$ (244)
$
44 $
$
Adjusted diluted earnings (loss) per common share
$(0.25) $(0.22) $(0.41) $(0.34) $(1.22)
$ 0.21 $ 0.06
$ 0.27
Diluted weighted-average shares (millions)
$ 199.9 $ 203.8 $ 200.7 $ 200.9 $ 200.4
$ 205.2 $ 202.7
$ 202.1
Pre-tax adjustments:
-
-
-
11
$
9
55
(1) These items are presented net of amounts attributable to noncontrolling interests. WPX 2nd Quarter Earnings Call | August 6, 2014
31
Reconciliation – EBITDAX (Unaudited) 2013 (Dollars in millions)
1Q
2Q
2014
3Q
4Q
YTD
1Q
2Q
3Q
4Q
YTD
Adjusted EBITDAX
Reconciliation to net income (loss): Net income (loss)
22
$ (116)
$ 19
$ (133)
$ (114)
26
28
28
26
108
29
28
57
Provision (benefit) for income taxes
(63)
11
(32)
(571)
(655)
23
(68)
(45)
Depreciation, depletion and amortization
231
227
241
241
940
207
215
422
19
20
21
371
431
15
57
72
100
308
142
(917)
(367)
293
99
392
Impairment of producing properties, costs of acquired unproved reserves and equity investments
-
-
19
1,056
1,075
-
-
-
(Gain) on sale of Powder River Basin deep rights leasehold
-
-
-
(36)
(36)
-
-
-
Loss on sale of working interests in the Piceance Basin
-
-
-
-
-
-
195
195
Net (gain) loss on derivatives not designated as hedges
94
(78)
15
93
124
195
17
212
9
(20)
(2)
(4)
(17)
(168)
(17)
(185)
$ 203
$ 210
$ 174
$ 192
$ 779
$ 320
$ 294
Interest expense
Exploration expenses EBITDAX
Net cash received (paid) related to settlement of derivatives not designated as hedges Adjusted EBITDAX
$ (113)
$
$ (984) $ ( 1,191)
WPX 2nd Quarter Earnings Call | August 6, 2014
$
614
32
2nd Quarter Earnings Call Rick Muncrief, Chief Executive Officer
Disclaimer The information contained in this summary has been prepared to assist you in making your own evaluation of the Company and does not purport to contain all of the information you may consider important in deciding whether to invest in shares of the Company’s common stock. In all cases, it is your obligation to conduct your own due diligence. All information contained herein, including any estimates or projections, is based upon information provided by the Company. Any estimates or projections with respect to future performance have been provided to assist you in your evaluation but should not be relied upon as an accurate representation of future results. No persons have been authorized to make any representations other than those contained in this summary, and if given or made, such representations should not be considered as authorized. Certain statements, estimates and financial information contained in this summary constitute forward-looking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the results implied or expressed in such forward-looking statements or information. While presented with numerical specificity, certain forward-looking statements or information are based (1) upon assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, competitive uncertainties, contingencies and risks including, without limitation, the ability to obtain debt and equity financings, capital costs, construction costs, well production performance, operating costs, commodity pricing, differentials, royalty structures, field upgrading technology, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the Company's control, and (2) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the results implied or expressed in such forward-looking statements or information or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the results implied or expressed in such forward-looking statements or information. Under no circumstances should the inclusion of the forward-looking statements or information be regarded as a representation, undertaking, warranty or prediction by the Company or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that the Company will achieve or is likely to achieve any particular results. The forward-looking statements or information are made as of the date hereof and the Company disclaims any intent or obligation to update publicly or to revise any of the forward-looking statements or information, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein.
WPX 2nd Quarter Earnings Call | August 6, 2014
2
Reserves Disclaimer 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. We have elected to use in this presentation “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 regarding our business 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 2nd Quarter Earnings Call | August 6, 2014
3
2nd Quarter Highlights Domestic oil production up 57% 2Q ’14 vs. 2Q ’13 ►
Domestic oil production grew 23% 2Q ’14 vs. 1Q ’14
Adjusted EBITDAX increased 40% 2Q ’14 vs. 2Q ’13 ►
Domestic oil revenue grew 60% quarter over quarter
Adding nearly 200 locations in the Williston ►
Premium location adds in the highest quality rock in the play
Initial stimulation pilot test yields encouraging results in Williston Increasing San Juan Gallup spuds from 29 to 40 ►
~40% increase in spuds without increasing rig count
San Juan Gallup 30-day IP average rates up 30% versus 2013 ►
626 boe/d vs. 474 boe/d
Closed Legacy transaction (Piceance Basin working interest)
WPX 2nd Quarter Earnings Call | August 6, 2014
4
Base Production Growth after Normalizing for Legacy Transaction 4Q ’14 Growth vs. 4Q ’13 ► ►
Equivalent production expected to be up by 9% Oil production expected to be up by 60%
Production Growth Excluding Legacy Impact 1,400 1,350
MMcfe/d
1,300 1,250 1,200 1,150 1,100 1,050
1,000 4Q’13
1Q ’14 Base Production
2Q ’14 Legacy
3Q ’14
4Q ’14 Midpoint Guidance
WPX 2nd Quarter Earnings Call | August 6, 2014
5
Piceance 2nd Quarter Highlights 2nd quarter activity ► ►
Spud 72 wells in 2Q Spud 140 wells 2Q YTD
2nd quarter net production 691 MMcfe/d ► ► ►
Natural gas 584 MMcf/d NGL 15.8 Mbbl/d Oil 2.0 Mbbl/d
Hold 9 rigs for remainder of 2014
Lifting cost $4.7MM lower through 2Q ► ►
Water sharing agreements with other operators Continued scrutiny/negotiations in cost of chemicals, water hauling and equipment
Potential impact of 2,000ʹ setback ►
Less than 5% of our 12,475 drillable locations
WPX 2nd Quarter Earnings Call | August 6, 2014
6
Williston Continues to Drive Strong Production Growth Production exceeds 2Q target ►
►
Oil production up 53% 2Q ’14 vs. 2Q ’13 Oil production up 21% 2Q ’14 vs. 1Q ’14
Average 30 day IP: 1,176 BOPD Middle Bakken 1,095 BOPD Three Forks
Increased proppant completions ►
Positive initial results from moderate 25% increase of proppant ►
►
►
33% increase Middle Bakken first 180 days production 60% increase Three Forks first 180 days production
Doubling proppant to 6MM pounds in remaining 2014 wells
Currently capturing up to ~90% of gas volumes ►
Placed 1st liquid capture skid on new Glenn Fox 3-well pad ►
Produced more than 100,000 gals of NGLs as of mid-July
Downspacing creating additional inventory and NAV ► ►
199 locations added 10 years of drillable locations using 2014 run rate
WPX 2nd Quarter Earnings Call | August 6, 2014
7
San Juan Gallup Accelerating Production Growth Production exceeds 2Q target ► ►
Oil production up 500% 2Q ’14 vs. 2Q ’13 Oil production up 76% 2Q ’14 vs. 1Q ’14
2306 06L #178H FIRST SALES: 3/9/2014 AVG. 30-DAY IP: 433 BOPD 2308 09A #149H FIRST SALES: 5/20/2014 AVG. 30 DAY IP: 595 BOPD
Development program advancing ►
►
►
►
2Q oil production 25% higher than target, 3.0 Mbo/d vs. 2.4 Mbo/d Reduced well cost to $5.2MM, targeting $4.8MM by year-end Average 2014 30-day IP is 626 boe/d vs. 2013 average of 474 boe/d Total net sales since January 2013 project inception exceeds 875 Mboe, or 697 Mbo
2308 09A #150H FIRST SALES: 5/29/2014 AVG. 30 DAY IP: 558 BOPD
2306 06L #239H FIRST SALES: 3/9/2014 AVG. 30-DAY IP: 420 BOPD
2308 09A #145H FIRST SALES: 4/16/2014 AVG . 30 DAY IP: 426 BOPD
2307 12E #169H FIRST SALES: 5/5/2014 AVG. 30 DAY IP: 495 BOPD
2308 09A #146H FIRST SALES: 4/21/2014 AVG. 30 DAY IP: 481 BOPD
2307 13L #238H FIRST SALES: 5/4/2014 AVG. 30 DAY IP: 392 BOPD
2308 16I #148H FIRST SALES: 5/29/2014 AVG. 30 DAY IP: 576 BOPD 2307 13L #174H FIRST SALES: 4/24/2014 AVG. 30 DAY IP: 456 BOPD 2306 19M #190H FIRST SALES: 6/20/2014 AVG. 30 DAY IP: 498 BOPD
Efficiencies driving accelerated development ►
►
2306 06L #179H FIRST SALES: 3/6/2014 AVG. 30-DAY IP: 407 BOPD
Increasing spuds from 29 to 40, while maintaining same rig count Currently two rigs running, plus top-setting rig
2206 02H #226H FIRST SALES: 6/17/2014 AVG. 30 DAY IP: 676 BOPD
2206 02H #272H FIRST SALES: 7/9/2014
WPX-Drilling Horizontal Oil Wells WPX-Completed Horizontal Oil Wells WPX Acreage (Shallow/Deep Rights)
WPX 2nd Quarter Earnings Call | August 6, 2014
8
San Juan Gallup 2014 Well Performance Exceeding 2013
Avg Gross Cumulative Oil Production (Mbbl)
70 60
13 Wells 15 Wells
50
~40% Increase from 2013 to 2014
40 30 20
2013 Spuds
10
2014 Spuds
0 0
100
200
300 Days
400
500
600
Improving oil production from 2013 to 2014 ► ►
Average gross cumulative oil production grew by ~40% First 140 days of production
WPX 2nd Quarter Earnings Call | August 6, 2014
9
Financial Results Kevin Vann, Chief Financial Officer
2nd Quarter Results 2Q
YTD Avg.
2014
2013
2014
2013
Gas (MMcf/d)
965
1,007
970
1,014
Oil (Mbbl/d)
29.0
21.2
26.7
20.3
NGLs (Mbbl/d)
18.3
21.3
18.2
21.5
Equivalent (MMcfe/d)
1,249
1,262
1,239
1,265
Adjusted EBITDAX
294
210
614
413
Adjusted Net Income (Loss) from Continuing Operations
11
(44)
55
(95)
Capital Expenditures
376
277
728
548
Dollars in millions, except production numbers
Daily Production
Note: Adjusted EBITDAX and adjusted net income are non-GAAP measures. A reconciliation to relevant measures included in GAAP is provided in this presentation.
WPX 2nd Quarter Earnings Call | August 6, 2014
11
2014 Full-Year Consolidation Guidance Production Natural Gas MMcf/d Oil Mbbl/d NGL Mbbl/d Total MMcfe/d
Cap Ex ($ in Millions)7
Full Year 2014 920 - 950 30.2 - 32.0 18.0 - 19.0 1,209 - 1,256
Full Year 2014
Growth Basins Piceance Williston San Juan Gallup Other Appalachia Other1 Land Exploration Total Domestic International2 Total Capital
20 - 30 10 - 15 75 - 85 40 - 45 $1,470 - $1,540 90 - 100 $1,560- $1,640
Number of Rigs
Full Year 2014
Piceance Valley Piceance Highlands Piceance Niobrara Total Piceance Williston San Juan Gallup Total Rigs
$475 - $495 640 - 650 210 - 220
6 2 1 9 5 2 16
% of Net Realized Price3 Natural Gas - NYMEX Oil - WTI NGL - OPIS/Mt Belvieu5
Expenses
Tax Provision
80% - 86% 81% - 87% 76% - 80%
Full Year 2014
$ per Mcfe LOE DD&A GP&T SG&A Production Tax $ in Millions Gas Management (Inc)/Exp4 Exploration Interest Expense Equity (Earnings) Loss
Tax Rate
Full Year 2014
$0.73 - $0.75 1.95 - 2.00 0.92- 0.97 0.63 - 0.67 0.42 - 0.46 ($25) - ($35) 85 - 95 125 - 130 (20) - (25)
Full Year 2014 33% - 37%6
1 Other
includes expenditures for Powder River and other basins. is a self-funded entity and does not receive any cash from WPX Energy. 3 Percentage of realized price ranges for NYMEX, WTI and OPIS exclude hedges, but include basis differential and revenue adjustments. 4 Gas Management impact is net of revenues and expenses and includes unutilized transport capacity. Includes impact realized hedges on non-equity production. 5 Assumed NGL composite barrel: Ethane 37%, Propane 28%, Isobutane 8%, NormButane 7% and Natural Gasoline 20%. 6 Excludes impact of $9MM tax expense accrual for new legislation in 1Q ’14. 7Excludes acquisition capital 2 International
WPX 2nd Quarter Earnings Call | August 6, 2014
12
WPX Long-Term Vision Coming Into Focus Strategy development process underway ► ► ►
Full-scale review of the entire portfolio Multi-year strategy this fall Status quo is not an option
Transition to pure play E&P mindset ► ►
► ►
More nimble Greater risk tolerance Look at the asset base in a different way Establish culture focused on profitability
Organization must be: ► ► ► ►
Dynamic Responsive Efficient Accountable
Build on the successes from the first half of 2014
WPX 2nd Quarter Earnings Call | August 6, 2014
13
Appendix
WPX Portfolio Piceance
Williston
San Juan
Appalachia
Powder River
Apco1
3,019 Bcfe Proved 11,878 Bcfe 3P 221,186 Net Acres
105 MMboe Proved 176 MMboe 3P 88,6973 Net Acres
517 Bcfe Proved 1,645 Bcfe 3P 160,825 Net Acres
328 Bcfe Proved 1,555 Bcfe 3P 87,994 Net Acres
245 Bcfe Proved 657 Bcfe 3P 360,002 Net Acres
22 MMboe Proved 58 MMboe 3P 385,796 Net Acres
Total 2Domestic
WILLISTON BASIN
4,905 Bcfe Proved 17,211 Bcfe 3P 1,562,596 Net Acres3
POWDER RIVER BASIN
APPALACHIAN BASIN
PICEANCE BASIN
SAN JUAN BASIN
ARGENTINA
Natural Gas Oil Natural Gas and Natural Gas Liquids Note: Acreage, proved and 3P numbers are as of 12/31/13. 1 Reflects WPX’s 69% ownership in APCO, as well as additional acreage 2 Total includes other reserves and acreage not depicted on slide. 3
owned by WPX.
Includes mineral interest acreage
WPX 2nd Quarter Earnings Call | August 6, 2014
15
Hedging Overview
As of 7/21/2014
3Q - 4Q 2014 Volumes
3Q - 4Q 2014 Price
2015 Volumes
2015 Price
(BBtu/d)
($MMBtu)
(BBtu/d)
($MMBtu)
Fixed Price Swaps 1,3
328
$4.21
182
$4.35
Collars
190
$4.04 - $4.66
50
$4.00 - $4.50
(bbl/d)
($/bbl)
(bbl/d)
($/bbl)
14,975
$96.01
15,736
$95.46
Natural Gas Liquids
(bbl/d)
($/gallon)
(bbl/d)
($/gallon)
Ethane Swaps
3,261
$0.29
‒
‒
Propane Swaps
489
$1.17
‒
‒
Isobutane Swaps
652
$1.37
‒
‒
Normal Butane Swaps
652
$1.34
‒
‒
1,630
$2.06
‒
‒
Natural Gas1
Crude Oil Fixed Price Swaps1,2,3
Natural Gasoline Swaps
1Details
for natural gas basis swaps can be found in our most recent quarterly report. ²Details for crude oil basis swaps can be found in our most recent quarterly report. 3In connection with several natural gas swaps, we entered into swaptions with the swap counterparties granting the counterparty the right, but not the obligation, to enter into an underlying swap with us in the future. For the balance of 2014, we have 50k MMBtu/d capped at a monthly settlement price of $4.24 per MMBtu. For 2015, we have 50k MMBtu/d of natural gas capped at a settlement price of $4.38 per MMBtu and 6,132 bbl/d of crude oil capped at a settlement price of $95.38. And for 2016, we have 5,250 bbl/d of crude oil capped at a settlement price of $97.55.
WPX 2nd Quarter Earnings Call | August 6, 2014
16
Key Statistics by Basin Net Acreage (YE2013)
2014 Average Rig Count (Op)
2013 Production (MMcfe/d)
Oil/NGL Focused
Drillable Locations4
Proved Reserves (YE2013 Bcfe)
3P Reserves (YE2013 Bcfe)
Piceance1
221,186
9
727
X
12,475
3,019
11,878
Williston
88,6976
5
14.8 Mboe/d
X
6525
San Juan2
160,825
2
123
X
2,966
517
1,645
Appalachia
87,994
0
83
618
328
1,555
Total
558,702
16
1,022
16,512
4,497
16,133
2,872
245
657
664
22 MMboe
58 MMboe
2,820
20
72
Primary Areas of Focus
105.5 MMboe 176 MMboe
Exploration Exploration
X
Other Powder River
360,002
0
174
Apco3
385,796
0
9.0 Mboe/d
Other
258,096
0
8.0
X
1
Piceance includes Niobrara acreage, which underlies existing leasehold acreage. Juan Legacy includes both shallow and deep rights. 3 Reflects WPX’s 69% ownership, except 3P drilling locations, which are gross. 4 Includes operated and non-operated gross locations 5Includes impact of tighter infill density 6Includes mineral interest acreage 2 San
Chart numbers affected by rounding.
WPX 2nd Quarter Earnings Call | August 6, 2014
17
2013-14 Daily Production 1Q
2Q
2013 3Q
4Q
Avg Total
1Q
2Q
2014
Avg
Gas (MMcf/d)
1,005
989
993
953
985
956
945
950
Oil (Mbbl/d)
13.8
15.1
17.1
18.9
16.2
19.3
23.7
21.5
NGLs (Mbbl/d)
21.2
20.8
19.7
19.7
20.3
17.6
17.9
17.8
MMcfe/d
1,215
1,205
1,214
1,184
1,204
1,177
1,195
1,186
Gas (MMcf/d)
17
18
19
19
18
19
20
20
Oil (Mbbl/d)
5.6
6.1
5.3
5.3
5.6
5.2
5.2
5.2
NGLs (Mbbl/d)
0.5
0.5
0.5
0.4
0.5
0.5
0.4
0.4
MMcfe/d
53
57
53
53
54
53
54
54
Gas (MMcf/d)
1,021
1,007
1,012
971
1,003
975
965
970
Oil (Mbbl/d)
19.4
21.2
22.4
24.2
21.8
24.5
29.0
26.7
NGLs (Mbbl/d)
21.7
21.3
20.1
20.1
20.8
18.1
18.3
18.2
MMcfe/d
1,268
1,262
1,267
1,237
1,258
1,230
1,249
1,239
Domestic Production
International Production
Total Production
WPX 2nd Quarter Earnings Call | August 6, 2014
18
Domestic Price Realization for 2014 Gas ($/Mcf) 1Q ’14
2Q ’14
Weighted-Average Sales Price
$4.89
Revenue Adjustments1
2Q ’14
$44.18
$88.40
$88.94
(10.87)
(10.60)
(2.16)
.30
0.00
0.00
0.00
0.00
0.00
$4.40
$3.62
$38.27
$33.58
$86.24
$89.24
Realized Portion of Derivatives Not Designated as Hedges(3)
(0.52)
(.11)
(0.48)
(.30)
(2.30)
(3.40)
Net Price Including All Derivatives
$3.88
$3.51
$37.79
$33.28
$83.94
$85.84
1Q ’14
2Q ’14
Impact of Rockies Sale-for-Resale Contract exp. in Nov. ’14
$(0.34)
$(0.35)
Weighted-Average Sales Price Excluding Rex
$4.22
$3.86
Net Price
(2)
1Q ’14
2Q ’14
$4.03
$49.14
(0.49)
(.41)
0.00
3Q ’14
4Q ’14
Oil ($/bbl) 1Q ’14
Hedge Impact
3Q ’14
NGL ($/bbl) 3Q ’14
4Q ’14
3Q ’14
4Q ’14
4Q ’14 ►
2Q: Rockies sale-for-resale agreement impacted net realized gas price ($0.35). Contract expires in November 2014.
1Natural
gas revenue adjustments are primarily related to field compression fuel. NGL revenue adjustments include T&F and revenue sharing. Of the oil revenue adjustments, gathering deductions represent $(1.44). 2“Net
Price” equals income statement product revenues by commodity, divided by volume.
3Represents
the realized cash flows that occurred during each quarter, which are attributable to derivatives that were not designated as hedges for accounting purposes.
WPX 2nd Quarter Earnings Call | August 6, 2014
19
Piceance Basin Orange: Highlands Yellow: Valley 1 Net acreage: 221,186 Current rig count: 9 Drillable locations: 12,4751 Composition: Gas/NGL focused
1 Acreage
and drilling locations are as of 12/31/13
Niobrara Dedicated Rig
WPX 2nd Quarter Earnings Call | August 6, 2014
20
Piceance Composite NGL Barrel and Realized Price (2Q 2014) Product Mix
$/Gal
Ethane (1)
33%
0.29
Propane
31%
1.06
Isobutane
9%
1.30
Normal Butane
8%
1.25
NGL Product
Weighted Average NGL $/barrel
Net Realized Price
**$0.59 per Mcf NGL
Natural Gasoline
19%
2.21
Uplift in 2Q 2014
* Included in revenue as a deduction ** Total NGL sales revenue minus any associated cost, divided by total Piceance gas sales volumes (1) Lower ethane percentage as a component of the composite barrel was driven by reduced ethane recovery
WPX 2nd Quarter Earnings Call | August 6, 2014
21
Williston Basin Net acreage: 88,6971,4 Current rig count 2014: 5 Drillable Locations: 6521,2,3 Composition: Oil focused
1 Acreage
and drilling locations are as of 6/30/2014 Does not include the impact of downspacing 3Includes impact of tighter infill density 4Includes mineral interest acreage 2
WPX-operated rig WPX non-operated rig
WPX 2nd Quarter Earnings Call | August 6, 2014
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Downspacing Adds Premium Locations Per 1,280 DSU ► ►
6 Middle Bakken (previously 4) 5 Three Forks (previously 3)
199 locations added ► ►
44% increase in locations 88% in Mandaree area
YE ’13 7-Well Pattern
Increased 11-Well Pattern
Updated Total
Middle Bakken
198
83
281
3 Forks (1st Bench)
203
116
319
401
199
600
52
0
52
453
199
652
Remaining Location Count 1280 ac. Laterals
Total 640 ac. Laterals Middle Bakken Total Undev Locations
WPX 2nd Quarter Earnings Call | August 6, 2014
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Williston Netback Price Analysis Estimated Volume % (Jul - Sep 2014)
Sales Outlets Basin-Priced Sales
58%
Rail Deals
30%
Enbridge Capacity
12%
Total Sales Outlets
100%
Assumed 3Q 2014 total netback of WTI less $12 - $14 per barrel Our current sales agreements consist of the following: ► ► ►
Basin Sales: Arrow CDP WASP and lease sales Rail: Receive Gulf, West and East Coast pricing Enbridge: Receive Enbridge Clearbrook, Minn., price
Our sales agreements in 2014-16 are expected to consist of the following: ► ► ► ►
Basin sales: Receive a basket price from sales to third-party marketers Rail: Receive Gulf, West and East Coast pricing less associated fees Enbridge: Receive Clearbrook, Minn., price less associated transportation fees Unit train rail options: WPX has up to 9,250 bbl/d of committed rail capacity until mid-2016, receiving West, East or Gulf Coast pricing less associated transportation fees
WPX 2nd Quarter Earnings Call | August 6, 2014
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San Juan Basin
Green: Deep/Shallow Yellow: Shallow Net Acreage: 160,8251 Current rig count: 2 Drillable locations: 2,9661 Composition: Gas/Oil 1Acreage
and drilling locations are as of 12/31/13
WPX 2nd Quarter Earnings Call | August 6, 2014
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Apco Highlights Argentina Continued 6-well Neuquén horizontal drilling program ► ► ►
Early results encouraging Three conventional horizontal wells put on production Three wells waiting to be drilled
Vaca Muerta Exposure Neuquén Basin (Vaca Muerta acreage) ► ►
Eleven development wells spud during 2Q
►
Received approval for the government’s gas incentive program to obtain higher gas pricing
►
Colombia
►
Entre Lomas Bajada del Palo Agua Amarga Coiron Amargo Charco del Palenque Total
96,000 net acres 59,000 net acres 37,000 net acres 45,000 net acres 12,000 net acres 249,000 net acres
Llanos 32 block ► ►
► ►
Kananaskis-1 well – on production at 5,000 bbl/d gross Carmentea-1 well – tested 4,300 bbl/d and it’s on production at a restricted rate of 2,000 bbl/d gross Spud 2 development wells and 1 disposal well during 2Q Production facilities to be constructed during 2nd half of 2014
Llanos 40 block ►
►
►
Begonia-1 well – waiting for government approval to put on production Celtis 1 well – waiting for government approval to put on production Completed 1 disposal well during 2Q
WPX 2nd Quarter Earnings Call | August 6, 2014
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Argentina Asset Map Acambuco: Noreste Basin
1.5% WI
Agua Amarga:
Entre Lomas: 23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%)
23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%)
Nequen Basin
Coirón Amargo: 45% WI
Bajada del Palo: 23% WI, 40.7% Stock Interest in Petrolera (Effective Interest – 52.8%) San Jorge Basin
Tierra del Fuego:
Sur Rio Deseado Este:
26% WI Austral Basin
44% WI
Concession/Contract Basin
WPX 2nd Quarter Earnings Call | August 6, 2014
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Colombia Asset Map
Valle Medio Del Magdalena Basin
Turpial Block 50% WI 100,000 acres
Llanos 40 Block 50% WI 163,000 acres
Llanos Orientales Basin
Llanos 32 Block 20% WI 111,000 acres
Block Basin
WPX 2nd Quarter Earnings Call | August 6, 2014
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Non-GAAP
WPX Non-GAAP Disclaimer This presentation may include certain financial measures, including adjusted EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses), that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. This presentation is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare a company’s performance. Management believes that these measures provide investors an enhanced perspective of the operating performance of the company and aid investor understanding. Management also believes that these non-GAAP measures provide useful information regarding our ability to meet future debt service, capital expenditures and working capital requirements. These non-GAAP financial measures should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
WPX 2nd Quarter Earnings Call | August 6, 2014
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Reconciliation-Adjusted Income (Loss) from Continuing Operations (Unaudited) 2013 (Dollars in millions, except per share amounts)
1Q
2Q
Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders
$ (116) $
Income (loss) from continuing operations – diluted earnings per share
18
2014
3Q
4Q
Year
1Q
2Q
3Q
4Q
YTD
$ (114) $ (973) $ (1,185)
$
18 $ (135)
$ (117)
$(0.58) $ 0.09
$(0.57) $(4.85) $(5.91)
$ 0.09 $ (0.66)
$ (0.58)
Impairment of producing properties, costs of acquired unproved reserves, leasehold and equity method investment (1)
$
-
$
-
$
19
$1,361
$1,380
$
-
$
-
$
-
Impairments – exploratory related
$
-
$
-
$
-
$
$
$
-
$
36
$
36
Gain on sale of Powder River Basin deep rights leasehold
$
-
$
-
$
-
$ (36)
$ (36)
$
-
$
-
$
-
Loss on sale of working interests in the Piceance Basin
$
-
$
-
$
-
$
-
$
-
$
-
$ 195
$ 195
Accrual for litigation
$
-
$
-
$
7
$
1
$
8
$
-
$
-
$
-
Costs related to chief executive officer separation
$
-
$
-
$
-
$
4
$
4
$
-
$
-
$
-
Buyout of transportation agreement
$
-
$
-
$
-
$
9
$
9
$
-
$
-
$
-
Unrealized MTM (gain) loss
$ 103
$ (98)
$
13
$
89
$ 107
$
27 $
-
$
27
Total pre-tax adjustments
$ 103
$ (98)
$
39
$1,428
$1,472
$
27 $ 231
$ 258
Less tax effect for above items
$ (38)
$
36
$ (14)
$ (521) $ (537)
$
(10) $ (85)
$ (95)
Impact of new Argentine capital tax law (1)
$
-
$
-
$
6
$
-
$
6
$
-
Impact of new state tax law in New York (net of federal benefit)
$
-
$
-
$
-
$
-
$
-
$
9 $
Total adjustments, after-tax
$
65
$ (62)
$
31
$ 907
$ 941
$
26 $ 146
$ 172
Adjusted income (loss) from continuing operations available to common stockholders
$ (51)
$ (44)
$ (83)
$ (66)
$ (244)
$
44 $
$
Adjusted diluted earnings (loss) per common share
$(0.25) $(0.22) $(0.41) $(0.34) $(1.22)
$ 0.21 $ 0.06
$ 0.27
Diluted weighted-average shares (millions)
$ 199.9 $ 203.8 $ 200.7 $ 200.9 $ 200.4
$ 205.2 $ 202.7
$ 202.1
Pre-tax adjustments:
-
-
-
11
$
9
55
(1) These items are presented net of amounts attributable to noncontrolling interests. WPX 2nd Quarter Earnings Call | August 6, 2014
31
Reconciliation – EBITDAX (Unaudited) 2013 (Dollars in millions)
1Q
2Q
2014
3Q
4Q
YTD
1Q
2Q
3Q
4Q
YTD
Adjusted EBITDAX
Reconciliation to net income (loss): Net income (loss)
22
$ (116)
$ 19
$ (133)
$ (114)
26
28
28
26
108
29
28
57
Provision (benefit) for income taxes
(63)
11
(32)
(571)
(655)
23
(68)
(45)
Depreciation, depletion and amortization
231
227
241
241
940
207
215
422
19
20
21
371
431
15
57
72
100
308
142
(917)
(367)
293
99
392
Impairment of producing properties, costs of acquired unproved reserves and equity investments
-
-
19
1,056
1,075
-
-
-
(Gain) on sale of Powder River Basin deep rights leasehold
-
-
-
(36)
(36)
-
-
-
Loss on sale of working interests in the Piceance Basin
-
-
-
-
-
-
195
195
Net (gain) loss on derivatives not designated as hedges
94
(78)
15
93
124
195
17
212
9
(20)
(2)
(4)
(17)
(168)
(17)
(185)
$ 203
$ 210
$ 174
$ 192
$ 779
$ 320
$ 294
Interest expense
Exploration expenses EBITDAX
Net cash received (paid) related to settlement of derivatives not designated as hedges Adjusted EBITDAX
$ (113)
$
$ (984) $ ( 1,191)
WPX 2nd Quarter Earnings Call | August 6, 2014
$
614
32
