EX-99.1 2 d622752dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

DATE: Nov. 7, 2013

 

MEDIA CONTACT:

Kelly Swan

(539) 573-4944

  

INVESTOR CONTACT:

David Sullivan

(539) 573-9360

WPX Energy Announces Third-Quarter 2013 Results

TULSA, Okla. – WPX Energy (NYSE:WPX) today announced its unaudited results for the third quarter of 2013. Items driving the company’s operations and financial performance include:

 

    Initial Niobrara well hits 2 Bcf in cumulative production; 2nd Niobrara well continues impressive results

 

    Company stems gas production decline; sequential quarter gas volumes higher

 

    Oil production at all-time high; Bakken oil up 46% vs. 3Q last year

 

    Bakken oil volumes on track for year-end exit rate of 15,000 bbl/d

 

    First nine San Juan Gallup oil wells average initial flow rate of 728 boe/d

 

    3Q results negatively impacted by lower natural gas price realizations

 

    Other items negatively affecting 3Q include an impairment, litigation accrual and tax provisions

CEO PERSPECTIVE

“During the third quarter, WPX made progress on expanding the foundation to create shareholder value. Our oil production is at an all-time high. Our natural gas production grew. We continue to achieve lower costs in the Bakken. And we advanced our Niobrara and Gallup discoveries, providing additional long-term growth potential,” said Ralph A. Hill, WPX’s president and chief executive officer.

“As promised, the Piceance production decline has been arrested and volumes are beginning to grow again. Bakken oil volumes are on track to grow 25 to 30 percent, with an exit rate of 15,000 barrels per day at the end of the year. And production in the San Juan Gallup Sandstone is on track to meet a year-end target of 3,400 barrels of oil equivalent per day – 70 percent of which is oil.

“WPX’s results this year continue to build the foundation for 2014 and beyond. We have a strong portfolio with attractive projects.


“As we have stressed in the past, we remain committed to optimizing our portfolio over time. Our strategy is to be discerning with capital, focusing on our highest-return basins. The Bakken and the Gallup oil plays, as well as our liquids-rich Piceance position, currently generate the most attractive returns. We are also advancing the delineation of our significant Piceance Niobrara discovery as fast and prudently as possible,” Hill said.

“Operationally, our base business is performing very well across all of our basins, with the exception of delays associated with third-party infrastructure in the Marcellus. While we achieved 40 percent growth in the Marcellus, we had expected greater production at this point. We are very efficient in the basin with our costs and operations, but are disappointed by the infrastructure constraints in our area.

“In light of the persisting infrastructure constraints, our 2014 capital budget will allocate minimal capital to our Marcellus position. We are confident we will be able to hold all of our economic acreage by amending and extending our current leases, requiring limited incremental investment in the region.

“As always, we will continue to reassess our plans in light of changing market conditions, infrastructure development and capital availability,” Hill said.

“Our quarterly results are also impacted by lower price realizations, due in part to a legacy 2009 sales agreement where we receive Appalachia pricing for 200 million gross cubic feet per day of our Rockies production. That gas is transported on the Rex pipeline under an agreement with a firm shipper. The contract expires in November 2014, at which point our revenues should improve by $80 million to $100 million on an annualized basis.

“We expect 2013 capital spending to come in at our $1.2 billion guidance level. Due to the Marcellus infrastructure problems, production volumes are expected to come in at the lower end of the 2013 forecast range,” Hill said.

NIOBRARA SHALE UPDATE

Over its first 10 months, WPX’s initial Niobrara Shale discovery well has produced 2 billion cubic feet of natural gas. The discovery well is currently producing at a rate of 3.5 MMcf/d at a flowing tubing pressure of 1,950 pounds per square inch (psi).


WPX’s second Niobrara well was completed at the end of September, posting an initial rate of 11.8 MMcf/d at a flowing casing pressure of 5,700 psi. With a reservoir pressure of 8,300 psi, the well found pressure gradients of 0.94 psi/foot that were even higher than the initial discovery well, despite being in a shallower part of the basin.

The second Niobrara well is three miles to the southeast of the initial discovery well, where the Niobrara formation is shallowest on the company’s acreage. It was drilled to a total vertical depth of 9,062 feet with a 4,883-foot horizontal lateral. Completion operations included 19 frac stages.

The Unconventional Oil & Gas Center ranks WPX’s initial discovery well as the No. 1 Niobrara Shale producing well in the United States. WPX’s latest well ranks No. 2.

A third Niobrara horizontal well was drilled during July and August, located approximately 2,000 feet to the west of WPX’s initial discovery well. This well will be sidetracked due to a casing failure that occurred before completion operations could be commenced.

Drilling on the company’s next two Niobrara wells is starting. A vertical delineation well located 12 miles to the east of the discovery well was spud on Nov. 5. A horizontal step-out located three miles north of the discovery well is scheduled to spud this weekend. The vertical well marks an acceleration of WPX’s delineation work. The well was originally scheduled for 2014.

As previously announced, WPX plans to more than double its Niobrara drilling in 2014, with 10 to 12 wells expected. Combined with previous Niobrara activity, this will serve to delineate 80 percent of WPX’s Valley acreage.

GALLUP OIL UPDATE

WPX has now drilled and completed a total of nine Gallup Sandstone oil wells in the San Juan Basin’s Mancos formation, including the four exploratory wells. Another two wells are expected to begin production in the next week. Another well is currently being drilled.

The company’s initial estimate of resource potential is approximately 66 million barrels of oil equivalent. WPX has 31,000 net acres under lease and expects to acquire additional acreage.


WPX’s nine Gallup oil wells have flowed – on average – at an initial rate of 611 barrels of oil per day, or 728 barrels per day on an equivalent basis. The production stream is approximately 70 percent oil and 30 percent natural gas.

The company expects to have a year-end 2013 Gallup oil exit rate of 2,388 bbl/d, or 3,400 bbl/d on an equivalent basis. WPX plans to more than double its Gallup oil drilling in 2014 with 37 wells expected next year. WPX expects the new activity to drive a 2014 exit rate of 6,620 bbl/d, or 8,400 bbl/d on an equivalent basis.

WPX is now on pace to drill a total of 15 Gallup Sandstone wells during 2013, which is ahead of its original plan to drill a total of 12 to 14. Drilling activities in this area of the San Juan Basin are not subject to seasonal closures.

WPX based its 2013 plan for the Gallup Sandstone on a 28-day drilling schedule for each well. The company’s four most recent development wells were drilled in an average of 17 days. WPX’s fastest Gallup well was drilled in just 14.6 days – more than twice as fast as the company’s first Gallup well.

The company’s Gallup Sandstone wells – on average – have been drilled to a total depth of 5,400 feet, with horizontal laterals averaging 4,300 feet. WPX receives a WTI price minus a differential of $11.50 per barrel.

THIRD-QUARTER FINANCIAL RESULTS

WPX reported an unaudited net loss from continuing operations attributable to WPX Energy of $114 million for third-quarter 2013, or a loss of $0.57 per share on a diluted basis, compared with a net loss of $66 million, or a loss of $0.33 per share, in the same period a year ago.

Third-quarter 2013 results were negatively impacted by overall lower price realization (including hedges) for natural gas, a $19 million impairment charge related to the company’s costs of acquired unproved reserves, a $9 million tax provision related to the increase in a valuation allowance on certain state deferred tax assets, a $7 million litigation accrual and a $6 million impact from changes to Argentine tax law affecting WPX’s investment in Apco Oil and Gas International.

On the impairment, 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 further impairment regardless of whether there was a change in the underlying reserve estimates.


For the first nine months of 2013, WPX reported an unaudited net loss from continuing operations attributable to WPX Energy of $212 million, or a loss of $1.06 per share on a diluted basis, compared with net loss of $140 million, or a loss of $0.70 per share, for the same period in 2012.

WPX had an adjusted loss from continuing operations of $83 million, or a loss of $0.41 per share on a diluted basis, for third-quarter 2013, compared with an adjusted loss from continuing operations of $47 million, or a loss of $0.23 per share, for the same period in 2012. A reconciliation accompanies this press release.

For the first nine months of 2013, WPX had an adjusted loss from continuing operations of $178 million, or a loss of $0.89 per share on a diluted basis, compared with an adjusted loss from continuing operations of $84 million, or a loss of $0.42 per share, for the first nine months of 2012. A reconciliation accompanies this press release.

The adjusted loss from continuing operations for the third-quarter and year-to-date results excludes unrealized mark-to-market gains (losses), a $19 million impairment charge, a $7 million litigation accrual and a $6 million impact from changes to Argentine tax law affecting WPX’s investment in Apco Oil and Gas International.

Consolidated oil revenues increased 55 percent quarter-over-quarter, natural gas revenues decreased 24 percent and natural gas liquids (NGL) revenues decreased 12 percent.

The domestic net realized average price for natural gas excluding hedge impact was $2.72 per Mcf in third-quarter 2013, up 20 percent from $2.26 per Mcf a year ago. The 2012 period also benefitted from $107 million in realized gains on derivatives designated as hedges, or an additional $1.09 per Mcf.

The net realized average price for domestic oil was $97.91 per barrel in third-quarter 2013, an increase of 19 percent from $82.31 per barrel a year ago. The 2012 period is inclusive of hedges.

The domestic net realized average price for NGL was $31.19 per barrel in third-quarter 2013, up 28 percent from $24.43 per barrel a year ago.


ADJUSTED EBITDAX

WPX’s adjusted EBITDAX (a non-GAAP measure) for third-quarter 2013 was $174 million, compared with $230 million for the same period a year ago.

The primary factors contributing to the quarter-over-quarter decrease in adjusted EBITDAX were lower revenues (inclusive of hedges) for both natural gas and NGL, partially offset by higher domestic oil revenues.

For the first nine months of 2013, WPX’s adjusted EBITDAX was $587 million, compared with $744 million for the first nine months of 2012.

 

EBITDAX (non-GAAP)    Third Quarter     YTD  
     2013     2012     2013     2012  
     millions     millions     millions     millions  

Net income (loss)

   ($ 116   ($ 61   ($ 207   ($ 107

Interest expense

   $ 28      $ 25      $ 82      $ 77   

Provision (benefit) for income taxes

   ($ 32   ($ 28   ($ 84   ($ 71

Depreciation, depletion and amortization

   $ 241      $ 243      $ 699      $ 719   

Exploration expenses

   $ 21      $ 22      $ 60      $ 60   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAX

   $ 142      $ 201      $ 550      $ 678   
  

 

 

   

 

 

   

 

 

   

 

 

 

Impairments

   $ 19        —        $ 19      $ 117   

Net (gain) loss on derivatives not designated as hedges

   $ 15      $ 22      $ 31      ($ 63

Realized gain (loss) on derivatives not designated as hedges

   ($ 2   $ 9      ($ 13   $ 35   

(Income) loss from discontinued operations

     —        ($ 2     —        ($ 23
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX

   $ 174      $ 230      $ 587      $ 744   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion and amortization and exploration expenses. Adjusted EBITDAX includes adjustments for impairments, net gain (loss) on derivatives not designated as hedges, realized gain (loss) on derivatives not designated as hedges 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.


PRODUCTION

WPX’s overall domestic and international production in third-quarter 2013 was 1,267 MMcfe/d, marking a return to increased volumes in sequential periods for the first time since second-quarter 2012.

Total natural gas production of 1,012 MMcf/d in third-quarter 2013 decreased 6 percent vs. the prior-year period, but increased vs. the most recent quarter, arresting a production decline after WPX deployed two additional rigs in the Piceance in mid-year.

Oil production in the Williston Basin jumped 46 percent to an average of 13,980 barrels per day in the third-quarter vs. 9,600 barrels per day in the same period a year ago. Additionally, WPX had 990 barrels per day in the 2013 quarter that were in-transit by rail and barge shipments awaiting final delivery. These barrels are not included in third-quarter 2013 production.

The company’s overall third-quarter NGL production was approximately 20,000 barrels per day, down 6 percent vs. the most recent quarter and down 30 percent vs. a year ago. WPX’s ethane recovery rate in third-quarter 2013 was 35 percent vs. 75 percent a year ago.

 

Average Daily Production    3Q            2Q      Sequential  
     2013      2012      Change     2013      Change  

Natural gas (MMcf/d)

             

Piceance Basin

     603         652         -8     592         2

Appalachian Basin

     91         65         40     85         7

Powder River Basin

     173         203         -15     179         -3

San Juan Basin

     117         128         -9     122         -4

International

     19         20         -5     18         6

Other

     9         10         -10     11         -18
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal (MMcf/d)

     1,012         1,078         -6     1,007         0.5

Oil (Mbbl/d)

             

Williston Basin

     14.0         9.6         46     12.3         14

San Juan Basin

     1.1         —           NM        0.5         120

Piceance Basin

     1.7         2.0         -15     2.0         -15

International

     5.3         6.2         -15     6.1         -13

Other

     0.3         0.1         200     0.3         —     
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal (Mbo/d)

     22.4         17.9         25     21.2         6

NGLs (Mbbl/d)

             

Piceance Basin

     18.4         27.5         -33     19.7         -7

International

     0.5         0.5         0     0.5         0

Other

     1.2         0.9         33     1.1         9
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Subtotal (Mbbl/d)

     20.1         28.9         -30     21.3         -6

Total Production (MMcfe/d)

     1,267         1,359         -7     1,262         0.4
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 


EXPENSES

WPX’s domestic expenses were approximately 4 percent higher in third-quarter 2013 than the same period in 2012, primarily driven by a $19 million impairment to costs of acquired unproved reserves due to a decrease in forward gas prices, higher domestic lease and facility operating expenses, higher operating taxes and a $7 million litigation accrual. Partially offsetting these increases was $18 million in lower gathering, processing and transportation expense.

WPX’s domestic lease and facility operating expenses in third-quarter 2013 were $74 million vs. $60 million in third-quarter 2012. The increase is primarily attributable to an increase in production in the Williston Basin and increased water disposal costs.

Domestic gathering, processing and transportation charges were $106 million in third-quarter 2013 vs. $124 million in third-quarter 2012.

One of the drivers behind the 15 percent decrease is the effect of favorable contract terms for gathering and processing services in the Piceance, partially offset by the $6 million impact of costs associated with the transportation of Williston production to locations outside the basin offering higher prices for oil.

Also included in third-quarter 2013 gathering, processing and transportation charges is a $13 million year-to-date downward adjustment in gathering, processing and transportation charges related to the reporting of certain costs in prior quarters. This adjustment is offset in revenues.

Taxes other than income for domestic operations in third-quarter 2013 were $30 million vs. $17 million in third-quarter 2012, driven by higher commodity prices excluding hedges and an increase in Williston Basin production.

CASH AND LIQUIDITY

Net cash provided by operating activities for the first nine months of 2013 was $518 million, including $231 million in the third quarter.

At September 30, 2013, WPX had approximately $58 million in unrestricted domestic cash and cash equivalents and $50 million in international cash.

The company’s domestic liquidity at the end of third-quarter 2013 was approximately $1.3 billion after drawing $270 million from its $1.5 billion revolving credit agreement during the first nine months of the year.


DEVELOPMENT AND INVESTING ACTIVITY

For the first nine months of 2013, WPX made approximately $843 million of capital investments, including $295 million in the third quarter. For full-year 2013, WPX expects its capital spending to come in at its $1.2 billion plan.

For the first nine months of 2013, WPX domestic operations participated in 320 gross (249 net) wells, including 99 gross (71 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 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 Piceance Basin, WPX completed 53 gross (49 net) wells in third-quarter 2013, for a total of 192 gross (183 net) in the first nine months of the year. The company deployed seven rigs on its Piceance acreage during the third quarter.

In the Williston Basin, WPX completed 13 gross (9 net) wells during the third quarter, for a total of 34 gross (25 net) for the first nine months of the year. This marks the largest quarterly number of Williston completions for WPX this year, with eight of the 13 completions located in the Three Forks formation.

During the quarter, WPX began to test a new completion design in the Williston based on infill density project results. The design includes additional stages and slower pump rates to further stimulate the reservoir along the horizontal lateral. Results are expected early next year.

In the Appalachian Basin, WPX completed 7 gross (4 net) wells during the third quarter, and a total of 24 gross (18 net) for the first nine months of 2013. The company has one rig deployed in the Appalachian Basin, located in north Westmoreland County.

FOCUSING THE WPX PORTFOLIO

Subsequent to the close of the third quarter, WPX completed the sale of deep rights on approximately 140,000 net acres in Wyoming’s Powder River Basin for $40.1 million.

Additionally, WPX continues to consider the disposition of its interests in Apco Oil and Gas International, Inc. (NASDAQ:APAGF). WPX holds an approximate 69 percent controlling equity interest in Apco, which owns oil and gas interests in Argentina and Colombia. WPX has retained financial advisors to support this process.


TODAY’S CONFERENCE CALL

WPX management will discuss its third-quarter results today during a webcast starting at 10 a.m. Eastern. Participants are encouraged to access the event and the corresponding slides at www.wpxenergy.com.

A limited number of phone lines also will be available at (877) 280-4953. International callers should dial (857) 244-7310. The conference identification code for both phone numbers is 13852258. 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 Piceance, Williston and Appalachian basins. 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.


WPX Energy, Inc.

Consolidated

(UNAUDITED)

 

    2012     2013  

(Dollars in millions)

  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr     2nd Qtr     3rd Qtr     YTD  

Revenues:

                 

Product revenues:

                 

Natural gas sales

  $ 357      $ 312      $ 331      $ 364      $ 1,364      $ 267      $ 316      $ 252      $ 835   

Oil and condensate sales

    106        122        118        145        491        139        151        183        473   

Natural gas liquid sales

    93        78        65        63        299        54        58        57        169   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total product revenues

    556        512        514        572        2,154        460        525        492        1,477   

Gas management

    337        187        186        239        949        261        205        176        642   

Net gain (loss) on derivatives not designated as hedges

    14        71        (22     15        78        (94     78        (15     (31

Other

    3        5        (1     1        8        4        7        5        16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    910        775        677        827        3,189        631        815        658        2,104   

Costs and expenses:

                 

Lease and facility operating

    67        67        68        81        283        75        73        82        230   

Gathering, processing and transportation

    135        120        124        127        506        107        111        106        324   

Taxes other than income

    30        25        23        33        111        35        36        36        107   

Gas management, including charges for unutilized pipeline capacity

    355        194        200        247        996        243        222        201        666   

Exploration

    19        19        22        23        83        19        20        21        60   

Depreciation, depletion and amortization

    228        248        243        247        966        231        227        241        699   

Impairment of producing properties and costs of acquired unproved reserves

    52        65        —          108        225        —          —          19        19   

General and administrative

    68        71        67        81        287        72        74        68        214   

Other-net

    5        (2     5        4        12        7        1        10        18   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    959        807        752        951        3,469        789        764        784        2,337   

Operating income (loss)

    (49     (32     (75     (124     (280     (158     51        (126     (233

Interest expense

    (26     (26     (25     (25     (102     (26     (28     (28     (82

Interest capitalized

    2        3        2        1        8        1        1        2        4   

Investment income and other

    10        8        7        5        30        7        9        4        20   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

  $ (63   $ (47   $ (91   $ (143   $ (344   $ (176   $ 33      $ (148   $ (291

Provision (benefit) for income taxes

    (25     (18     (28     (40     (111     (63     11        (32     (84
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

  $ (38   $ (29   $ (63   $ (103   $ (233   $ (113   $ 22      $ (116   $ (207

Income (loss) from discontinued operations

    (2     23        2        (1     22        —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (40   $ (6   $ (61   $ (104   $ (211   $ (113   $ 22      $ (116   $ (207

Less: Net income (loss) attributable to noncontrolling interests

    3        4        3        2        12        3        4        (2     5   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to WPX Energy

  $ (43   $ (10   $ (64   $ (106   $ (223   $ (116   $ 18      $ (114   $ (212
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX

                 

Reconciliation to net income (loss):

                 

Net income (loss)

  $ (40   $ (6   $ (61   $ (104   $ (211   $ (113   $ 22      $ (116   $ (207

Interest expense

    26        26        25        25        102        26        28        28        82   

Provision (benefit) for income taxes

    (25     (18     (28     (40     (111     (63     11        (32     (84

Depreciation, depletion and amortization

    228        248        243        247        966        231        227        241        699   

Exploration expenses

    19        19        22        23        83        19        20        21        60   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAX

    208        269        201        151        829        100        308        142        550   

Impairment of producing properties and costs of acquired unproved reserves

    52        65        —          108        225        —          —          19        19   

Net (gain) loss on derivatives not designated as hedges

    (14     (71     22        (15     (78     94        (78     15        31   

Realized gain (loss) on derivatives not designated as hedges

    15        11        9        11        46        9        (20     (2     (13

(Income) loss from discontinued operations

    2        (23     (2     1        (22     —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX

  $ 263      $ 251      $ 230      $ 256      $ 1,000      $ 203      $ 210      $ 174      $ 587   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


WPX Energy, Inc.

Domestic Segment

(UNAUDITED)

 

    2012     2013  

(Dollars in millions)

  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     YTD     1st Qtr     2nd Qtr     3rd Qtr     YTD  

Revenues:

                 

Product revenues:

                 

Natural gas sales

  $ 353      $ 307      $ 327      $ 359      $ 1,346      $ 263      $ 310      $ 248      $ 821   

Oil and condensate sales

    80        95        87        114        376        111        121        154        386   

Natural gas liquid sales

    92        77        65        62        296        53        58        57        168   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total product revenues

    525        479        479        535        2,018        427        489        459        1,375   

Gas management

    337        187        186        239        949        261        205        176        642   

Net gain (loss) on derivatives not designated as hedges

    14        71        (22     15        78        (94     78        (15     (31

Other

    3        4        (1     1        7        1        1        3        5   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    879        741        642        790        3,052        595        773        623        1,991   

Costs and expenses:

                 

Lease and facility operating

    61        60        60        70        251        67        63        74        204   

Gathering, processing and transportation

    135        120        124        125        504        106        110        106        322   

Taxes other than income

    25        18        17        27        87        29        30        30        89   

Gas management, including charges for unutilized pipeline capacity

    355        194        200        247        996        243        222        201        666   

Exploration

    14        16        19        23        72        18        17        21        56   

Depreciation, depletion and amortization

    222        242        236        239        939        224        217        233        674   

Impairment of producing properties and costs of acquired unproved reserves

    52        65        —          108        225        —          —          19        19   

General and administrative

    65        68        64        76        273        69        69        65        203   

Other-net

    5        —          4        3        12        6        5        7        18   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    934        783        724        918        3,359        762        733        756        2,251   

Operating income (loss)

    (55     (42     (82     (128     (307     (167     40        (133     (260

Interest expense

    (26     (26     (25     (25     (102     (26     (28     (28     (82

Interest capitalized

    2        3        2        1        8        1        1        2        4   

Investment income and other

    2        —          1        —          3        2        2        —          4   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

  $ (77   $ (65   $ (104   $ (152   $ (398   $ (190   $ 15      $ (159   $ (334
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Production Volumes

                 

Natural gas (MMcf)

    101,346        102,163        97,310        96,664        397,483        90,411        90,022        91,392        271,825   

Oil (MBbls)

    948        1,123        1,076        1,247        4,394        1,242        1,373        1,575        4,189   

Natural gas liquids (MBbls)

    2,746        2,779        2,613        2,254        10,392        1,907        1,895        1,811        5,613   

Combined equivalent volumes (MMcfe)(1)

    123,511        125,574        119,443        117,670        486,198        109,303        109,628        111,707        330,638   

 

(1) 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

                          

Natural gas (per Mcf)

   $ 3.48       $ 3.01       $ 3.35       $ 3.71       $ 3.38       $ 2.90       $ 3.45       $ 2.72       $ 3.02   

Oil (per barrel)

   $   84.54       $   83.89       $   82.31       $   90.76       $   85.58       $   89.77       $   87.76       $   97.91       $   92.17   

Natural gas liquids (per barrel)

   $ 33.46       $ 27.96       $ 24.43       $ 28.12       $ 28.56       $ 28.21       $ 30.21       $ 31.19       $ 29.85   

Expenses per Mcfe

                          

Lease and facility operating

   $ 0.50       $ 0.47       $ 0.51       $ 0.60       $ 0.52       $ 0.61       $ 0.59       $ 0.65       $ 0.62   

Gathering, processing and transportation

   $ 1.09       $ 0.95       $ 1.04       $ 1.06       $ 1.04       $ 0.98       $ 1.00       $ 0.94       $ 0.97   

Taxes other than income

   $ 0.20       $ 0.15       $ 0.14       $ 0.23       $ 0.18       $ 0.27       $ 0.27       $ 0.27       $ 0.27   

Depreciation, depletion and amortization

   $ 1.80       $ 1.93       $ 1.98       $ 2.02       $ 1.93       $ 2.04       $ 1.98       $ 2.09       $ 2.04   

General and administrative

   $ 0.52       $ 0.54       $ 0.53       $ 0.65       $ 0.56       $ 0.62       $ 0.64       $ 0.58       $ 0.61   

Unutilized pipeline capacity

                          

Total unutilized pipeline capacity in gas management expense

   $ 11       $ 12       $ 12       $ 11       $ 46       $ 13       $ 14       $ 17       $ 44   


WPX Energy, Inc.

International Segment

(UNAUDITED)

 

    2012     2013  

(Dollars in millions)

  1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     YTD     1st Qtr     2nd Qtr     3rd Qtr     YTD  

Revenues:

                 

Product revenues:

                 

Natural gas sales

  $ 4      $ 5      $ 4      $ 5      $ 18      $ 4      $ 6      $ 4      $ 14   

Oil and condensate sales

    26        27        31        31        115        28        30        29        87   

Natural gas liquid sales

    1        1        —          1        3        1        —          —          1   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total product revenues

    31        33        35        37        136        33        36        33        102   

Gas management

    —          —          —          —          —          —          —          —          —     

Net gain (loss) on derivatives not designated as hedges

    —          —          —          —          —          —          —          —          —     

Other

    —          1        —          —          1        3        6        2        11   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    31        34        35        37        137        36        42        35        113   

Costs and expenses:

                 

Lease and facility operating

    6        7        8        11        32        8        10        8        26   

Gathering, processing and transportation

    —          —          —          2        2        1        1        —          2   

Taxes other than income

    5        7        6        6        24        6        6        6        18   

Gas management, including charges for unutilized pipeline capacity

    —          —          —          —          —          —          —          —          —     

Exploration

    5        3        3        —          11        1        3        —          4   

Depreciation, depletion and amortization

    6        6        7        8        27        7        10        8        25   

Impairment of producing properties and costs of acquired unproved reserves

    —          —          —          —          —          —          —          —          —     

General and administrative

    3        3        3        5        14        3        5        3        11   

Other-net

    —          (2     1        1        —          1        (4     3        —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    25        24        28        33        110        27        31        28        86   

Operating income (loss)

    6        10        7        4        27        9        11        7        27   

Interest expense

    —          —          —          —          —          —          —          —          —     

Interest capitalized

    —          —          —          —          —          —          —          —          —     

Investment income and other

    8        8        6        5        27        5        7        4        16   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

  $ 14      $ 18      $ 13      $ 9      $ 54      $ 14      $ 18      $ 11      $ 43   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Net Production Volumes (1)

                 

Natural gas (MMcf)

    1,737        1,726        1,861        1,737        7,061        1,485        1,620        1,707        4,812   

Oil (MBbls)

    507        562        573        536        2,178        506        553        484        1,543   

Natural gas liquids (MBbls)

    45        44        45        47        181        42        44        42        128   

Combined equivalent volumes (MMcfe)(2)

    5,052        5,362        5,569        5,235        21,218        4,775        5,202        4,862        14,839   

 

(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)

 

     2012     2013  

(Dollars in millions, except per share amounts)

   1st Qtr     2nd Qtr     3rd Qtr     4th Qtr     Year     1st Qtr     2nd Qtr     3rd Qtr     YTD  

Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders

   $ (41   $ (33   $ (66   $ (105   $ (245   $ (116   $ 18      $ (114   $ (212
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations - diluted earnings per share

   $ (0.21   $ (0.17   $ (0.33   $ (0.53   $ (1.23   $ (0.58   $ 0.09      $ (0.57   $ (1.06
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pre-tax adjustments:

                  

Impairment of producing properties and costs of acquired unproved reserves

   $ 52      $ 65      $ —        $ 108      $ 225      $ —        $ —        $ 19      $ 19   

Accrual for litigation

   $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ 7      $ 7   

Unrealized MTM (gain) loss

   $ 1      $ (60   $ 31      $ (4   $ (32   $ 103      $ (98   $ 13      $ 18   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total pre-tax adjustments

   $ 53      $ 5      $ 31      $ 104      $ 193      $ 103      $ (98   $ 39      $ 44   

Less tax effect for above items

   $ (19   $ (2   $ (12   $ (38   $ (71   $ (38   $ 36      $ (14   $ (16

Impact of new Argentine capital tax law (1)

   $ —        $ —        $ —        $ —        $ —        $ —        $ —        $ 6      $ 6   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments, after-tax

   $ 34      $ 3      $ 19      $ 66      $ 122      $ 65      $ (62   $ 31      $ 34   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted income (loss) from continuing operations available to common stockholders

   $ (7   $ (30   $ (47   $ (39   $ (123   $ (51   $ (44   $ (83   $ (178
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted diluted earnings (loss) per common share

   $ (0.04   $ (0.15   $ (0.23   $ (0.20   $ (0.62   $ (0.25   $ (0.22   $ (0.41   $ (0.89
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted-average shares (millions)

     198.1        198.9        199.1        199.2        198.8        199.9        203.8        200.7        200.3   

 

(1) This item is presented net of amounts attributable to noncontrolling interests.


WPX Energy, Inc.

Consolidated Statement of Operations

(Unaudited)

 

    Three months ended September 30,     Nine months ended September 30,  
    2013     2012     2013     2012  
    (Millions, except per share amounts)  

Revenues:

       

Product revenues:

       

Natural gas sales

  $ 252      $ 331      $ 835      $ 1,000   

Oil and condensate sales

    183        118        473        346   

Natural gas liquid sales

    57        65        169        236   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total product revenues

    492        514        1,477        1,582   

Gas management

    176        186        642        710   

Net gain (loss) on derivatives not designated as hedges

    (15     (22     (31     63   

Other

    5        (1     16        7   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    658        677        2,104        2,362   

Costs and expenses:

       

Lease and facility operating

    82        68        230        202   

Gathering, processing and transportation

    106        124        324        379   

Taxes other than income

    36        23        107        78   

Gas management, including charges for unutilized pipeline capacity

    201        200        666        749   

Exploration

    21        22        60        60   

Depreciation, depletion and amortization

    241        243        699        719   

Impairment of costs of acquired unproved reserves

    19        —          19        117   

General and administrative

    68        67        214        206   

Other - net

    10        5        18        8   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

    784        752        2,337        2,518   

Operating income (loss)

    (126     (75     (233     (156

Interest expense

    (28     (25     (82     (77

Interest capitalized

    2        2        4        7   

Investment income and other

    4        7        20        25   
 

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

    (148     (91     (291     (201

Provision (benefit) for income taxes

    (32     (28     (84     (71
 

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

    (116     (63     (207     (130

Income (loss) from discontinued operations

    —          2        —          23   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

    (116     (61     (207     (107

Less: Net income (loss) attributable to noncontrolling interests

    (2     3        5        10   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to WPX Energy

  $ (114   $ (64   $ (212   $ (117
 

 

 

   

 

 

   

 

 

   

 

 

 

Amounts attributable to WPX Energy, Inc.:

       

Basic and diluted earnings (loss) per common share:

       

Income (loss) from continuing operations

  $ (0.57   $ (0.33   $ (1.06   $ (0.70

Income (loss) from discontinued operations

    —          0.01        —          0.11   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

  $ (0.57   $ (0.32   $ (1.06   $ (0.59
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares (millions)

    200.7        199.1        200.3        198.7   


WPX Energy, Inc.

Consolidated Balance Sheet

(Unaudited)

 

     September 30,
2013
    December 31,
2012
 
     (Millions)  

ASSETS

  

Current assets:

    

Cash and cash equivalents

   $ 108      $ 153   

Accounts receivable, net of allowance of $8 at September 30, 2013 and $ 11 at December 31, 2012

     390        443   

Deferred income taxes

     33        17   

Derivative assets

     44        58   

Inventories

     74        66   

Other

     45        35   
  

 

 

   

 

 

 

Total current assets

     694        772   

Investments

     161        145   

Properties and equipment (successful efforts method of accounting)

     14,115        13,339   

Less: Accumulated depreciation, depletion and amortization

     (5,580     (4,923
  

 

 

   

 

 

 

Properties and equipment, net

     8,535        8,416   

Derivative assets

     13        2   

Other noncurrent assets

     120        121   
  

 

 

   

 

 

 

Total assets

   $ 9,523      $ 9,456   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Accounts payable

   $ 518      $ 509   

Accrued and other current liabilities

     180        203   

Deferred income taxes

     —          —     

Derivative liabilities

     28        14   
  

 

 

   

 

 

 

Total current liabilities

     726        726   

Deferred income taxes

     1,348        1,401   

Long-term debt

     1,776        1,508   

Derivative liabilities

     7        1   

Asset retirement obligations

     355        316   

Other noncurrent liabilities

     126        133   

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; 200.7 million shares issued at September 30, 2013 and 199.3 million shares issued at December 31, 2012)

     2        2   

Additional paid-in-capital

     5,508        5,487   

Accumulated deficit

     (435     (223

Accumulated other comprehensive income (loss)

     (1     2   
  

 

 

   

 

 

 

Total stockholders’ equity

     5,074        5,268   

Noncontrolling interests in consolidated subsidiaries

     111        103   
  

 

 

   

 

 

 

Total equity

     5,185        5,371   
  

 

 

   

 

 

 

Total liabilities and equity

   $ 9,523      $ 9,456   
  

 

 

   

 

 

 


WPX Energy, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

 

     Nine months ended September 30,  
     2013     2012  
     (Millions)  

Operating Activities

    

Net income (loss)

   $ (207   $ (107

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

    

Depreciation, depletion and amortization

     699        727   

Deferred income tax provision (benefit)

     (67     (90

Provision for impairment of properties and equipment (including certain exploration expenses)

     64        160   

Amortization of stock-based awards

     24        22   

Gain on sale of assets

     (5     (42

Cash provided (used) by operating assets and liabilities:

    

Accounts receivable

     55        128   

Inventories

     (5     2   

Margin deposits and customer margin deposits payable

     (2     (5

Other current assets

     (11     9   

Accounts payable

     (5     (142

Accrued and other current liabilities

     (32     (20

Changes in current and noncurrent derivative assets and liabilities

     18        (28

Other, including changes in other noncurrent assets and liabilities

     (8     (25
  

 

 

   

 

 

 

Net cash provided by operating activities

     518        589   
  

 

 

   

 

 

 

Investing Activities

    

Capital expenditures (a)

     (843     (1,165

Proceeds from sale of assets

     10        310   

Purchases of investments

     (3     (2

Other

     —          3   
  

 

 

   

 

 

 

Net cash used in investing activities

     (836     (854
  

 

 

   

 

 

 

Financing Activities

    

Proceeds from common stock

     4        2   

Proceeds from long-term debt

     —          6   

Borrowings on credit facility

     605        —     

Payments on credit facility

     (335     —     

Other

     (1     (29
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     273        (21
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (45     (286

Cash and cash equivalents at beginning of period

     153        526   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 108      $ 240   
  

 

 

   

 

 

 

 

    

(a)    Increase to properties and equipment

   $ (864   $ (1,073

Changes in related accounts payable

     21        (92
  

 

 

   

 

 

 

Capital expenditures

   $ (843   $ (1,165