Outlook Points to 2021 Momentum
- Current oil rate of approx. 140,000 bbl/d already at the
year-end target
- Increasing 4Q oil target to 137,000-143,000 bbl/d
- Reducing 2020 full-year CAPEX by another $50 million
- Raising 2020 free cash flow projection by 50% to more than $300
million
- Reducing LOE to $5.10-$5.40 per BOE for full-year 2020, a 14%
improvement
- Attractive Bone Spring results in the Delaware Basin
- Transformational merger with Devon on track, creating a leading
U.S. energy company
WPX Energy (NYSE:WPX) reported third-quarter oil volumes of
122,300 barrels per day, in line with second-quarter results as
expected stemming from the effects of prior curtailments and
reduced development activity.
WPX released all four of its completion crews during the second
quarter in response to the COVID-19 impact on oil demand and
commodity prices. WPX now has two crews deployed in the Delaware
Basin and one in the Williston Basin after starting to resume
completions in July.
Current oil volumes are approximately 140,000 bbl/d due to
strong well results in both of WPX’s basins. WPX now plans to
average 137,000-143,000 bbl/d in the fourth quarter while reducing
capital spending by another $50 million to a new estimate of
$1.0-$1.1 billion for full-year 2020.
WPX reported an unaudited third-quarter loss from continuing
operations attributable to common shareholders of $148 million, or
a loss of $0.26 per share on a diluted basis.
The loss primarily was driven by a $110 million net loss on
derivatives resulting from non-cash forward mark-to-market changes
in the company’s hedge book, and a loss on the extinguishment of
debt.
As underlying forward commodity prices improved in the quarter,
the value of hedging contracts was reduced from levels recorded at
June 30.
Excluding the forward mark-to-market changes in derivatives and
other items, WPX posted adjusted net income from continuing
operations (a non-GAAP financial measure) in third-quarter 2020 of
$60 million, or income of $0.11 per share. A reconciliation
accompanies this press release.
Adjusted EBITDAX (a non-GAAP financial measure) hit $389 million
in the quarter, up 8 percent from $361 million a year ago. A
reconciliation accompanies this press release.
Free cash flow from operations (a non-GAAP financial measure)
was $79 million in third-quarter 2020 and $241 million for the
first three quarters of the year. A reconciliation accompanies this
press release.
WPX now expects to generate more than $300 million of free cash
flow in 2020, up 50 percent from its most recent estimate of $200
million.
MERGER UPDATE
As previously announced on Sept. 28, WPX and Devon Energy
(NYSE:DVN) have entered into an agreement to combine in an
all-stock merger of equals, making the combined entity the fifth
largest independent oil producer in the country.
The merger offers unique benefits to WPX shareholders, including
enhanced free cash flow growth potential, the opportunity for
multiple expansion given pro forma metrics, large synergies as a
percentage of market cap, significant ownership in the pro forma
company and the acceleration of WPX’s five-year vision targets.
Integration plans are underway, led by a transition team
comprised of senior leaders from each company. Additionally, the
team is tasked with capitalizing on the synergies and operational
efficiencies that contribute to the significant upside of the
combined company.
The combination of WPX and Devon will benefit from a premier
multi-basin portfolio, headlined by a premium acreage position in
the economic core of the Delaware Basin.
Under the terms of the agreement, WPX shareholders will receive
a fixed exchange ratio of 0.5165 shares of Devon common stock for
each share of WPX common stock owned. Devon shareholders will own
approximately 57 percent of the combined company and WPX
shareholders will own approximately 43 percent of the combined
company on a fully diluted basis.
The transaction is expected to close in the first quarter of
2021 and has been unanimously approved by the boards of directors
of both companies. The closing of the transaction is subject to
customary closing conditions, including approvals by Devon and WPX
shareholders.
CEO PERSPECTIVE
“Our proposed merger is on track and is proving to be a
transformational event not only for our two companies, but for our
industry as a whole based on events that have unfolded since our
announcement,” said Rick Muncrief, WPX’s chairman and chief
executive officer.
“Consolidation is a strategic step that reduces costs, improves
margins and accelerates the return of capital to shareholders in
very meaningful ways.
“WPX has been a leader in our peer group, and the combined
company will provide us with even more strength and capacity to
deliver value through disciplined management and an unwavering
focus on profitable, per-share growth,” Muncrief said.
“Our teams are committed to closing the transaction as quickly
as possible in order to begin executing on the performance
improvement opportunities we know already exist today.”
“I want to commend WPX employees for their continued
professionalism and commitment to a smooth integration despite the
personal impacts that will undoubtedly occur at all levels of our
organization as we act boldly on behalf of shareholders,” Muncrief
added.
DELAWARE BASIN
WPX’s Delaware production in the Permian averaged 139.1 Mboe/d
in the third quarter compared with 143.7 Mboe/d in the most recent
quarter and 96.7 Mboe/d a year ago. The year-over-year increase is
driven by WPX’s acquisition of Felix Energy.
WPX completed 13 Delaware wells during the third quarter,
including promising results from delineation work in various Bone
Spring benches.
Four wells in the 3rd Bone Spring Lime hit respective 24-hour
highs of 4,255 Boe/d, 3,804 Boe/d, 3,697 Boe/d and 3,602 Boe/d
ranging from 53 to 65 percent oil. After 30 days of production, the
four wells had a combined average of 3,004 Boe/d per well.
Third-quarter Delaware completions also include a 2nd Bone
Spring Sand well – the CBR 9-4H-56-1-321H well – that hit a 24-hour
high of 4,159 Boe/d (62 percent oil) during initial production and
averaged 3,742 Boe/d over its first 30 days.
A third-quarter Wolfcamp A well – the CBR 9-4I-56-1-428H well –
hit a 24-hour high of 3,877 Boe/d (45 percent oil) during initial
production and averaged 3,043 Boe/d over its first 30 days.
Delaware D&C costs continue to improve. The average cost for
recent 2-mile laterals on the CBR 9-4 and 10-3 pads in the
Stateline area that included the Bone Spring wells was $5.9 million
per well.
WILLISTON BASIN
Williston Basin production averaged 68.7 Mboe/d in third-quarter
2020 compared with 63.3 Mboe/d in the most recent quarter and 76.8
Mboe/d a year ago.
WPX completed 16 Williston wells during the third quarter,
including nine wells in the Three Forks formation and seven wells
in the Bakken formation.
The highest 24-hour rate for the third-quarter Williston
completions was 8,686 Boe/d (84 percent oil) on the Omaha Woman
24-13-12 HD well, which is a three-mile lateral.
All four wells on the Omaha Woman drilling pad are three-mile
laterals, which had a combined average of nearly 5,700 Boe/d per
well during initial production.
WPX’s third-quarter Williston completions also include the
four-well Wolverine pad, which had a combined average exceeding
3,800 Boe/d per well during initial production. The top well on the
pad – the Wolverine 21-22HD well – hit a 24-hour high of 4,922
Boe/d (84 percent oil). All four wells are two-mile laterals.
3Q PRODUCTION
Total production volumes of 207.7 Mboe/d in third-quarter 2020
were comparable with second-quarter 2020 and were 20 percent higher
than the same period a year ago. Liquids volumes accounted for 78
percent of third-quarter 2020 production.
Oil volumes of 122,300 bbl/d in third-quarter 2020 were
comparable with second-quarter 2020 despite service outages
affecting rates for portions of the quarter in both of its basins.
Third-quarter 2020 volumes were up 13 percent vs. the same period a
year ago.
Average Daily Production
Q3
2Q Sequential
2020
2019
Change
2020
Change
Oil (Mbbl/d)
Delaware Basin
71.1
47.2
51%
76.6
-7%
Williston Basin
51.2
61.4
-17%
47.1
9%
Subtotal (Mbbl/d)
122.3
108.6
13%
123.7
-1%
NGLs (Mbbl/d)
Delaware Basin
31.5
19.3
63%
27.2
15%
Williston Basin
8.9
7.7
16%
8.2
9%
Subtotal (Mbbl/d)
40.4
27.0
50%
35.4
14%
Natural gas (MMcf/d)
Delaware Basin
219.0
180.9
21%
239.1
-8%
Williston Basin
51.4
46.0
12%
47.9
7%
Subtotal (MMcf/d)
270.4
226.9
19%
287.0
-6%
Total Production (Mboe/d)
207.7
173.4
20%
207.0
0%
Note: 2020 volumes reflect the benefit of
the March 6 Felix acquisition in the Delaware Basin.
Total capital spending in third-quarter 2020 was $256 million,
predominantly from $236 million in D&C activity for operated
wells and $6 million for midstream infrastructure.
For the remainder of 2020, WPX has 91,800 bbl/d of oil hedged
with fixed price swaps at a weighted average price of $53.06 per
barrel and 20,000 bbl/d with fixed price collars at a weighted
average floor price of $53.33.
For 2021, WPX has 64,878 bbl/d of oil hedged with fixed price
swaps at a weighted average price of $41.35 per barrel and 240,000
MMBtu/d of natural gas hedged with fixed price swaps at a weighted
average price of $2.62 per MMBtu.
FINANCIAL SUMMARY
Total product revenues of $491 million in third-quarter 2020
were 15 percent lower than the same period a year ago stemming from
lower commodity prices.
Total product revenues of $1,267 million during the first three
quarters of 2020 were 23 percent lower than the same period a year
ago stemming from lower commodity prices.
For the first three quarters of the year, WPX posted a net loss
from continuing operations attributable to common shareholders of
$770 million, or a loss of $1.46 per share on a diluted basis.
Adjusted net income from continuing operations for the first
three quarters of 2020 was $159 million, or income of $0.30 per
share. A reconciliation accompanies this press release.
During the third quarter, DD&A, lease operating expenses,
taxes and G&A expense all declined on a per-Boe basis vs. a
year ago. Notably, LOE declined 20 percent, from $6.02 per Boe a
year ago to $4.81. WPX is now projecting LOE of $5.10-$5.40 per BOE
for full-year 2020, an improvement of 14 percent vs. the company’s
original midpoint estimate for the year.
For the first three quarters of 2020, adjusted EBITDAX (a
non-GAAP financial measure) was $1,168 million, or 14 percent
higher than $1,028 million for the same period in 2019.
Reconciliations for non-GAAP financial measures are available in
the tables that accompany this press release.
The weighted average gross sales price during third-quarter 2020
– prior to revenue deductions – was $38.97 per barrel for oil (down
28 percent vs. a year ago), $1.66 per Mcf for natural gas (down 8
percent) and $12.43 per barrel for NGL (up 4 percent).
WPX’s total liquidity at the close of business on Sept. 30,
2020, was approximately $1.7 billion, including cash, cash
equivalents and all of its $1.5 billion available revolver
capacity.
TUESDAY WEBCAST
The company’s next webcast takes place on Nov. 3 beginning at 10
a.m. Eastern. Investors 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 (833)
832-5123. International callers should dial (469) 565-9820. The
conference code is 1245245.
FORM 10-Q
WPX plans to file its third-quarter 2020 Form 10-Q with the
Securities and Exchange Commission this week. Once filed, the
document will be available on the SEC and WPX websites.
ABOUT WPX ENERGY
WPX is an independent energy producer with core positions in the
Permian and Williston basins. WPX’s production is approximately 80
percent oil/liquids and 20 percent natural gas. The company also
has an infrastructure portfolio in the Permian Basin. Visit
www.wpxenergy.com for more information.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger (the “Proposed
Transaction”) of Devon Energy Corporation (“Devon”) and WPX Energy,
Inc. (“WPX”), Devon will file with the Securities and Exchange
Commission (the “SEC”) a registration statement on Form S-4 to
register the shares of Devon’s common stock to be issued in
connection with the Proposed Transaction. The registration
statement will include a document that serves as a prospectus of
Devon and a proxy statement of each of Devon and WPX (the “joint
proxy statement/prospectus”), and each party will file other
documents regarding the Proposed Transaction with the SEC.
INVESTORS AND SECURITY HOLDERS OF DEVON AND WPX ARE ADVISED TO READ
THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS,
INCLUDING ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, AND ANY
OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT DEVON, WPX, THE PROPOSED
TRANSACTION AND RELATED MATTERS. A definitive joint proxy
statement/prospectus will be sent to the stockholders of each of
Devon and WPX when it becomes available. Investors and security
holders will be able to obtain copies of the registration statement
and the joint proxy statement/prospectus and other documents
containing important information about Devon and WPX free of charge
from the SEC’s website when it becomes available. The documents
filed by Devon with the SEC may be obtained free of charge at
Devon’s website at www.devonenergy.com or at the SEC’s website at
www.sec.gov. These documents may also be obtained free of charge
from Devon by requesting them by mail at Devon, Attn: Investor
Relations, 333 West Sheridan Ave, Oklahoma City, OK 73102. The
documents filed by WPX with the SEC may be obtained free of charge
at WPX’s website at www.wpxenergy.com or at the SEC’s website at
www.sec.gov. These documents may also be obtained free of charge
from WPX by requesting them by mail at WPX, Attn: Investor
Relations, P.O. Box 21810, Tulsa, OK 74102.
PARTICIPANTS IN THE SOLICITATION
Devon, WPX and certain of their respective directors, executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from
Devon’s and WPX’s stockholders with respect to the Proposed
Transaction. Information about Devon’s directors and executive
officers is available in Devon’s Annual Report on Form 10-K for the
2019 fiscal year filed with the SEC on February 19, 2020, and its
definitive proxy statement for the 2020 annual meeting of
shareholders filed with the SEC on April 22, 2020. Information
about WPX’s directors and executive officers is available in WPX’s
Annual Report on Form 10-K for the 2019 fiscal year filed with the
SEC on February 28, 2020 and its definitive proxy statement for the
2020 annual meeting of shareholders filed with the SEC on March 31,
2020. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the registration statement, the joint proxy statement/prospectus
and other relevant materials to be filed with the SEC regarding the
Proposed Transaction when they become available. Stockholders,
potential investors and other readers should read the joint proxy
statement/prospectus carefully when it becomes available before
making any voting or investment decisions.
NO OFFER OR SOLICITATION
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
FORWARD LOOKING STATEMENTS
This communication includes “forward-looking statements” as
defined by the SEC. Such statements include those concerning
strategic plans, Devon’s and WPX’s expectations and objectives for
future operations, as well as other future events or conditions,
and are often identified by use of the words and phrases such as
“expects,” “believes,” “will,” “would,” “could,” “continue,” “may,”
“aims,” “likely to be,” “intends,” “forecasts,” “projections,”
“estimates,” “plans,” “expectations,” “targets,” “opportunities,”
“potential,” “anticipates,” “outlook” and other similar
terminology. All statements, other than statements of historical
facts, included in this communication that address activities,
events or developments that Devon or WPX 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 Devon’s and WPX’s
control. Consequently, actual future results could differ
materially from Devon’s and WPX’s expectations due to a number of
factors, including, but not limited to: the risk that Devon’s and
WPX’s businesses will not be integrated successfully; the risk that
the cost savings, synergies and growth from the Proposed
Transaction may not be fully realized or may take longer to realize
than expected; the diversion of management time on
transaction-related issues; the effect of future regulatory or
legislative actions on the companies or the industries in which
they operate, including the risk of new restrictions with respect
to hydraulic fracturing or other development activities on Devon’s
or WPX’s federal acreage or their other assets; the risk that the
credit ratings of the combined company or its subsidiaries may be
different from what the companies expect; the risk that Devon or
WPX may be unable to obtain governmental and regulatory approvals
required for the Proposed Transaction, or that required
governmental and regulatory approvals may delay the Proposed
Transaction or result in the imposition of conditions that could
reduce the anticipated benefits from the Proposed Transaction or
cause the parties to abandon the Proposed Transaction; the risk
that a condition to closing of the Proposed Transaction may not be
satisfied; the length of time necessary to consummate the Proposed
Transaction, which may be longer than anticipated for various
reasons; potential liability resulting from pending or future
litigation; changes in the general economic environment, or social
or political conditions, that could affect the businesses; the
potential impact of the announcement or consummation of the
Proposed Transaction on relationships with customers, suppliers,
competitors, management and other employees; the ability to hire
and retain key personnel; reliance on and integration of
information technology systems; the risks associated with
assumptions the parties make in connection with the parties’
critical accounting estimates and legal proceedings; the volatility
of oil, gas and natural gas liquids (NGL) prices; uncertainties
inherent in estimating oil, gas and NGL reserves; the impact of
reduced demand for our products and products made from them due to
governmental and societal actions taken in response to the COVID-19
pandemic; the uncertainties, costs and risks involved in Devon’s
and WPX’s operations, including as a result of employee misconduct;
natural disasters, pandemics, epidemics (including COVID-19 and any
escalation or worsening thereof) or other public health conditions;
counterparty credit risks; risks relating to Devon’s and WPX’s
indebtedness; risks related to Devon’s and WPX’s hedging
activities; competition for assets, materials, people and capital;
regulatory restrictions, compliance costs and other risks relating
to governmental regulation, including with respect to environmental
matters; cyberattack risks; Devon’s and WPX’s limited control over
third parties who operate some of their respective oil and gas
properties; midstream capacity constraints and potential
interruptions in production; the extent to which insurance covers
any losses Devon or WPX may experience; risks related to investors
attempting to effect change; general domestic and international
economic and political conditions, including the impact of
COVID-19; and changes in tax, environmental and other laws,
including court rulings, applicable to Devon’s and WPX’s
business.
In addition to the foregoing, the COVID-19 pandemic and its
related repercussions have created significant volatility,
uncertainty and turmoil in the global economy and Devon’s and WPX’s
industry. This turmoil has included an unprecedented
supply-and-demand imbalance for oil and other commodities,
resulting in a swift and material decline in commodity prices in
early 2020. Devon’s and WPX’s future actual results could differ
materially from the forward-looking statements in this
communication due to the COVID-19 pandemic and related impacts,
including, by, among other things: contributing to a sustained or
further deterioration in commodity prices; causing takeaway
capacity constraints for production, resulting in further
production shut-ins and additional downward pressure on impacted
regional pricing differentials; limiting Devon’s and WPX’s ability
to access sources of capital due to disruptions in financial
markets; increasing the risk of a downgrade from credit rating
agencies; exacerbating counterparty credit risks and the risk of
supply chain interruptions; and increasing the risk of operational
disruptions due to social distancing measures and other changes to
business practices. Additional information concerning other risk
factors is also contained in Devon’s and WPX’s most recently filed
Annual Reports on Form 10-K, subsequent Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and other SEC filings.
Many of these risks, uncertainties and assumptions are beyond
Devon’s or WPX’s ability to control or predict. Because of these
risks, uncertainties and assumptions, you should not place undue
reliance on these forward-looking statements. Nothing in this
communication is intended, or is to be construed, as a profit
forecast or to be interpreted to mean that earnings per share of
Devon or WPX for the current or any future financial years or those
of the combined company will necessarily match or exceed the
historical published earnings per share of Devon or WPX, as
applicable. Neither Devon nor WPX gives any assurance (1) that
either Devon or WPX will achieve their expectations, or (2)
concerning any result or the timing thereof, in each case, with
respect to the Proposed Transaction or any regulatory action,
administrative proceedings, government investigations, litigation,
warning letters, consent decree, cost reductions, business
strategies, earnings or revenue trends or future financial
results.
All subsequent written and oral forward-looking statements
concerning Devon, WPX, the Proposed Transaction, the combined
company or other matters and attributable to Devon or WPX or any
person acting on their behalf are expressly qualified in their
entirety by the cautionary statements above. Devon and WPX assume
no duty to update or revise their respective forward-looking
statements based on new information, future events or
otherwise.
WPX Energy, Inc. Consolidated (GAAP)
(UNAUDITED)
2019
2020
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
2nd Qtr 3rd Qtr Year Revenues: Product revenues: Oil sales
$
449
$
511
$
539
$
551
$
2,050
$
465
$
241
$
436
$
1,142
Natural gas sales
25
16
16
18
75
13
11
14
38
Natural gas liquid sales
33
31
26
32
122
24
22
41
87
Total product revenues
507
558
581
601
2,247
502
274
491
1,267
Net gain (loss) on derivatives
(207
)
78
175
(199
)
(153
)
869
(275
)
(110
)
484
Commodity management
59
58
38
39
194
24
32
88
144
Other
-
1
1
2
4
3
2
4
9
Total revenues
359
695
795
443
2,292
1,398
33
473
1,904
Costs and expenses: Depreciation, depletion and amortization
219
221
241
247
928
259
229
238
726
Lease and facility operating
86
94
96
98
374
101
94
92
287
Gathering, processing and transportation
42
40
49
52
183
62
67
65
194
Taxes other than income
39
43
46
50
178
42
25
30
97
Exploration
24
24
22
25
95
67
19
15
101
General and administrative: General and administrative expenses
39
40
42
51
172
42
33
41
116
Equity-based compensation
8
8
9
9
34
9
9
10
28
Total general and administrative
47
48
51
60
206
51
42
51
144
Commodity management
49
41
36
37
163
34
32
95
161
Acquisition costs
-
-
-
3
3
27
3
-
30
Impairment of proved properties
-
-
-
-
-
967
-
-
967
Other-net
2
3
12
1
18
14
(7
)
1
8
Total costs and expenses
508
514
553
573
2,148
1,624
504
587
2,715
Operating income (loss)
(149
)
181
242
(130
)
144
(226
)
(471
)
(114
)
(811
)
Interest expense
(41
)
(40
)
(38
)
(40
)
(159
)
(48
)
(49
)
(48
)
(145
)
Gain (loss) on extinguishment of debt
-
-
(47
)
-
(47
)
1
-
(24
)
(23
)
Gains on equity method investment transactions
126
247
-
7
380
-
2
-
2
Equity earnings
2
1
3
3
9
3
5
6
14
Other income
-
-
1
-
1
3
(1
)
-
2
Income (loss) from continuing operations before income taxes
$
(62
)
$
389
$
161
$
(160
)
$
328
$
(267
)
$
(514
)
$
(180
)
$
(961
)
Provision (benefit) for income taxes
(14
)
84
39
(39
)
70
(61
)
(101
)
(32
)
(194
)
Income (loss) from continuing operations
$
(48
)
$
305
$
122
$
(121
)
$
258
$
(206
)
$
(413
)
$
(148
)
$
(767
)
Income (loss) from discontinued operations
-
-
(1
)
(1
)
(2
)
(180
)
5
(7
)
(182
)
Net income (loss)
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(386
)
$
(408
)
$
(155
)
$
(949
)
Less: Noncontrolling interest
-
-
-
-
-
2
1
-
3
Net income (loss) attributable to WPX Energy, Inc.
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(388
)
$
(409
)
$
(155
)
$
(952
)
Amounts attributable to WPX Energy, Inc.: Income (loss) from
continuing operations
$
(48
)
$
305
$
122
$
(121
)
$
258
$
(208
)
$
(414
)
$
(148
)
$
(770
)
Income (loss) from discontinued operations
-
-
(1
)
(1
)
(2
)
(180
)
5
(7
)
(182
)
Net income (loss)
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(388
)
$
(409
)
$
(155
)
$
(952
)
Summary of Production Volumes (1) Oil
(MBbls)
8,648
8,905
9,991
10,279
37,822
11,121
11,259
11,251
33,631
Natural gas (MMcf)
18,210
18,736
20,874
20,533
78,354
22,212
26,116
24,881
73,209
Natural gas liquids (MBbls)
2,288
2,493
2,486
2,776
10,043
3,097
3,222
3,715
10,034
Combined equivalent volumes (Mboe) (2)
13,971
14,520
15,955
16,478
60,924
17,921
18,834
19,112
55,867
Per day volumes Oil (MBbls/d)
96.1
97.9
108.6
111.7
103.6
122.2
123.7
122.3
122.7
Natural gas (MMcf/d)
202.3
205.9
226.9
223.2
214.7
244.1
287.0
270.4
267.2
Natural gas liquids (MBbls/d)
25.4
27.4
27.0
30.2
27.5
34.0
35.4
40.4
36.6
Combined equivalent volumes (Mboe/d) (2)
155.2
159.6
173.4
179.1
166.9
196.9
207.0
207.7
203.9
(1) Excludes activity
classified as discontinued operations.
(2) Mboe are calculated
using the ratio of six Mcf to one barrel of oil.
Realized average price per unit (1) Oil (per
barrel)
$
51.92
$
57.42
$
53.92
$
53.59
$
54.20
$
41.83
$
21.42
$
38.72
$
33.96
Natural gas (per Mcf)
$
1.36
$
0.88
$
0.77
$
0.87
$
0.96
$
0.56
$
0.43
$
0.57
$
0.51
Natural gas liquids (per barrel)
$
14.47
$
12.21
$
10.73
$
11.53
$
12.17
$
7.73
$
6.74
$
11.22
$
8.71
(1) Excludes activity
classified as discontinued operations.
Expenses per Boe (1) Depreciation, depletion and
amortization
$
15.68
$
15.24
$
15.11
$
14.95
$
15.23
$
14.48
$
12.15
$
12.46
$
13.00
Lease and facility operating
$
6.13
$
6.50
$
6.02
$
5.92
$
6.13
$
5.66
$
4.96
$
4.81
$
5.13
Gathering, processing and transportation
$
2.98
$
2.78
$
3.10
$
3.16
$
3.01
$
3.47
$
3.53
$
3.41
$
3.47
Taxes other than income
$
2.79
$
2.95
$
2.90
$
3.00
$
2.92
$
2.36
$
1.33
$
1.55
$
1.74
General and administrative: General and administrative expenses
$
2.81
$
2.73
$
2.69
$
3.07
$
2.83
$
2.33
$
1.75
$
2.16
$
2.08
Equity-based compensation
0.56
0.56
0.54
0.60
0.57
0.52
0.49
0.48
0.49
Total general and administrative
$
3.37
$
3.29
$
3.23
$
3.67
$
3.40
$
2.85
$
2.24
$
2.64
$
2.57
Interest expense
$
2.95
$
2.76
$
2.37
$
2.45
$
2.61
$
2.66
$
2.59
$
2.55
$
2.60
(1) Excludes activity
classified as discontinued operations.
WPX Energy, Inc. Reconciliation of NON-GAAP
Measures (UNAUDITED)
2019
2020
(Dollars in millions, except per share amounts)
1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
Year
1st Qtr
2nd Qtr
3rd Qtr
Year
Reconciliation of adjusted income (loss) from continuing
operations attributable to common stockholders: Income
(loss) from continuing operations attributable to WPX Energy, Inc.
common stockholders - reported
$
(48
)
$
305
$
122
$
(121
)
$
258
$
(208
)
$
(414
)
$
(148
)
$
(770
)
Pre-tax adjustments: Impairments of proved properties and
unproved leasehold cost
$
-
$
-
$
-
$
-
$
-
$
1,016
$
-
$
-
$
1,016
Inventory and line-fill lower-of-cost or market adjustments
$
-
$
-
$
-
$
-
$
-
$
21
$
-
$
-
$
21
Gains on equity method investment transactions
$
(126
)
$
(247
)
$
-
$
(7
)
$
(380
)
$
-
$
(2
)
$
-
$
(2
)
Loss on extinguishment of debt
$
-
$
-
$
47
$
-
$
47
$
-
$
-
$
24
$
24
Impact of pending settlement offers and settlements
$
-
$
-
$
11
$
5
$
16
$
-
$
-
$
-
$
-
Voluntary exit program
$
-
$
-
$
3
$
5
$
8
$
-
$
-
$
-
$
-
Acquisition related costs
$
-
$
-
$
-
$
6
$
6
$
27
$
3
$
-
$
30
Net gain on exchange of leasehold
$
-
$
-
$
-
$
-
$
-
$
-
$
(5
)
$
-
$
(5
)
Net (gain) loss on derivatives
$
207
$
(78
)
$
(175
)
$
199
$
153
$
(869
)
$
275
$
110
$
(484
)
Net cash received (paid) related to settlement of derivatives
$
9
$
(10
)
$
4
$
9
$
12
$
117
$
337
$
124
$
578
Total pre-tax adjustments
$
90
$
(335
)
$
(110
)
$
217
$
(138
)
$
312
$
608
$
258
$
1,178
Less tax effect for above items
$
(20
)
$
76
$
25
$
(50
)
$
32
$
(72
)
$
(136
)
$
(59
)
$
(267
)
Impact of state deferred tax rate changes and state related
adjustments
$
(1
)
$
-
$
-
$
(1
)
$
(2
)
$
(5
)
$
(1
)
$
1
$
(5
)
Impact of federal tax valuation allowance
$
1
$
(9
)
$
1
$
(3
)
$
(10
)
$
3
$
12
$
8
$
23
Total adjustments, after tax
$
70
$
(268
)
$
(84
)
$
163
$
(118
)
$
238
$
483
$
208
$
929
Adjusted income (loss) from continuing operations attributable
to common stockholders
$
22
$
37
$
38
$
42
$
140
$
30
$
69
$
60
$
159
Reconciliation of adjusted diluted income
(loss) per common share: Income (loss) from continuing
operations - diluted earnings per share - reported
$
(0.11
)
$
0.72
$
0.29
$
(0.29
)
$
0.61
$
(0.46
)
$
(0.74
)
$
(0.26
)
$
(1.46
)
Pretax adjustments (1): Impairments of proved properties and
unproved leasehold cost
$
-
$
-
$
-
$
-
$
-
$
2.21
$
-
$
-
$
1.92
Inventory and line-fill lower-of-cost or market adjustments
$
-
$
-
$
-
$
-
$
-
$
0.05
$
-
$
-
$
0.04
Gains on equity method investment transactions
$
(0.30
)
$
(0.58
)
$
-
$
(0.02
)
$
(0.90
)
$
-
$
-
$
-
$
-
Loss on extinguishment of debt
$
-
$
-
$
0.11
$
-
$
0.11
$
-
$
-
$
0.04
$
0.05
Impact of pending settlement offers and settlements
$
-
$
-
$
0.03
$
0.01
$
0.04
$
-
$
-
$
-
$
-
Voluntary exit program
$
-
$
-
$
-
$
0.01
$
0.02
$
-
$
-
$
-
$
-
Acquisition related costs
$
-
$
-
$
-
$
0.01
$
0.01
$
0.06
$
-
$
-
$
0.06
Net gain on exchange of leasehold
$
-
$
-
$
-
$
-
$
-
$
-
$
(0.01
)
$
-
$
(0.01
)
Net (gain) loss on derivatives
$
0.49
$
(0.19
)
$
(0.41
)
$
0.49
$
0.36
$
(1.89
)
$
0.49
$
0.20
$
(0.92
)
Net cash received (paid) related to settlement of derivatives
$
0.02
$
(0.02
)
$
0.01
$
0.02
$
0.03
$
0.25
$
0.60
$
0.22
$
1.09
Total pretax adjustments
$
0.21
$
(0.79
)
$
(0.26
)
$
0.52
$
(0.33
)
$
0.68
$
1.08
$
0.46
$
2.23
Less tax effect for above items
$
(0.05
)
$
0.18
$
0.06
$
(0.12
)
$
0.08
$
(0.15
)
$
(0.24
)
$
(0.10
)
$
(0.50
)
Impact of state deferred tax rate changes and state related
adjustments
$
-
$
-
$
-
$
-
$
(0.01
)
$
(0.01
)
$
-
$
-
$
(0.01
)
Impact of federal tax valuation allowance
$
-
$
(0.02
)
$
-
$
(0.01
)
$
(0.02
)
$
0.01
$
0.02
$
0.01
$
0.04
Total adjustments, after-tax
$
0.16
$
(0.63
)
$
(0.20
)
$
0.39
$
(0.28
)
$
0.53
$
0.86
$
0.37
$
1.76
Adjusted diluted income (loss) per common share
$
0.05
$
0.09
$
0.09
$
0.10
$
0.33
$
0.07
$
0.12
$
0.11
$
0.30
Reported diluted weighted-average shares (millions)
421.0
423.5
421.8
417.2
422.0
458.0
559.7
561.0
526.4
Effect of dilutive securities due to adjusted income (loss) from
continuing operations attributable to common stockholders
2.6
-
-
1.8
-
2.2
1.9
1.0
1.1
Adjusted diluted weighted-average shares (millions)
423.6
423.5
421.8
419.0
422.0
460.2
561.6
562.0
527.5
(1) Per share impact is based on adjusted diluted
weighted-average shares.
Reconciliation of
Adjusted EBITDAX Net income (loss) - reported
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(386
)
$
(408
)
$
(155
)
$
(949
)
Interest expense
41
40
38
40
159
48
49
48
145
Provision (benefit) for income taxes
(14
)
84
39
(39
)
70
(61
)
(101
)
(32
)
(194
)
Depreciation, depletion and amortization
219
221
241
247
928
259
229
238
726
Exploration expenses
24
24
22
25
95
67
19
15
101
EBITDAX
222
674
461
151
1,508
(73
)
(212
)
114
(171
)
Impairment of proved properties
-
-
-
-
-
967
-
-
967
Inventory and line-fill lower-of-cost or market adjustments
-
-
-
-
-
21
-
-
21
Gains on equity method investment transactions
(126
)
(247
)
-
(7
)
(380
)
-
(2
)
-
(2
)
Loss on extinguishment of debt
-
-
47
-
47
-
-
24
24
Impact of pending settlement offers and settlements
-
-
11
5
16
-
-
-
-
Voluntary exit program
-
-
3
5
8
-
-
-
-
Acquisition costs
-
-
-
3
3
27
3
-
30
Net gain on exchange of leasehold
-
-
-
-
-
-
(5
)
(5
)
Net (gain) loss on derivatives
207
(78
)
(175
)
199
153
(869
)
275
110
(484
)
Net cash received (paid) related to settlement of derivatives
9
(10
)
4
9
12
117
337
124
578
Equity-based compensation (2)
8
8
9
9
34
9
9
10
28
Income (loss) from discontinued operations
-
-
1
1
2
180
(5
)
7
182
Adjusted EBITDAX (2)
$
320
$
347
$
361
$
375
$
1,403
$
379
$
400
$
389
$
1,168
(2) Prior periods have been modified to include equity-based
compensation in the calculation of Adjusted EBITDAX.
WPX
Energy, Inc. Reconciliation of Free Cash Flow
(UNAUDITED)
2019
2020
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr
2nd Qtr 3rd Qtr Year
Reconciliation of free cash
flow: Net cash provided by operating activities (GAAP)
$
272
$
362
$
272
$
351
$
1,257
$
256
$
276
$
390
$
922
Exclude: Changes in operating assets and liabilities (1)
1
(60
)
33
(7
)
(33
)
44
76
(54
)
66
Plus: Distributions from equity method investments in excess of
cumulative earnings
4
3
4
3
14
4
3
3
10
Less: Incurred capital expenditures (2)
(425
)
(341
)
(264
)
(283
)
(1,313
)
(313
)
(188
)
(256
)
(757
)
Less: Incurred capital expenditures related to consolidated
partnerships
-
-
-
(8
)
(8
)
(13
)
(7
)
(4
)
(24
)
Plus: Contributions from noncontrolling interests
-
-
-
-
-
18
6
2
26
Less: Distributions to noncontrolling interests
-
-
-
-
-
-
-
(2
)
(2
)
Free cash flow (non-GAAP)
$
(148
)
$
(36
)
$
45
$
56
$
(83
)
$
(4
)
$
166
$
79
$
241
(1) Q1 2020 excludes a $184 million accrual for a
performance guarantee included in gathering contracts assumed by
the purchaser of our San Juan Basin assets. (2) Q1 2019
includes a $100 million purchase of surface acreage in the Delaware
Basin that was funded in part by the sale of non-core properties in
the Delaware Basin.
WPX Energy, Inc. Consolidated
Statements of Operations (Unaudited) Three
months endedSeptember 30, Nine months endedSeptember 30,
2020
2019
2020
2019
(Millions, except per-share amounts) Revenues: Product
revenues: Oil sales
$
436
$
539
$
1,142
$
1,499
Natural gas sales
14
16
38
57
Natural gas liquid sales
41
26
87
90
Total product revenues
491
581
1,267
1,646
Net gain (loss) on derivatives
(110
)
175
484
46
Commodity management
88
38
144
155
Other
4
1
9
2
Total revenues
473
795
1,904
1,849
Costs and expenses: Depreciation, depletion and amortization
238
241
726
681
Lease and facility operating
92
96
287
276
Gathering, processing and transportation
65
49
194
131
Taxes other than income
30
46
97
128
Exploration
15
22
101
70
General and administrative (including equity-based compensation of
$10 million, $9 million, $28 million and $25 million for the
respective periods)
51
51
144
146
Commodity management
95
36
161
126
Impairment of proved properties
-
-
967
-
Acquisition costs
-
-
30
-
Other - net
1
12
8
17
Total costs and expenses
587
553
2,715
1,575
Operating income (loss)
(114
)
242
(811
)
274
Interest expense
(48
)
(38
)
(145
)
(119
)
Loss on extinguishment of debt
(24
)
(47
)
(23
)
(47
)
Gains on equity method investment transactions
-
-
2
373
Equity earnings
6
3
14
6
Other income
-
1
2
1
Income (loss) from continuing operations before income taxes
(180
)
161
(961
)
488
Provision (benefit) for income taxes
(32
)
39
(194
)
109
Income (loss) from continuing operations
(148
)
122
(767
)
379
Loss from discontinued operations
(7
)
(1
)
(182
)
(1
)
Net income (loss)
(155
)
121
(949
)
378
Less: Net income attributable to noncontrolling interest
-
-
3
-
Net income (loss) attributable to WPX Energy, Inc.
$
(155
)
$
121
$
(952
)
$
378
Amounts attributable to WPX Energy, Inc. common
stockholders: Income (loss) from continuing operations
$
(148
)
$
122
$
(770
)
$
379
Loss from discontinued operations
(7
)
(1
)
(182
)
(1
)
Net income (loss)
$
(155
)
$
121
$
(952
)
$
378
Basic income (loss) per common share: Income (loss)
from continuing operations
$
(0.26
)
$
0.29
$
(1.46
)
$
0.90
Loss from discontinued operations
(0.02
)
-
(0.35
)
-
Net income (loss)
$
(0.28
)
$
0.29
$
(1.81
)
$
0.90
Basic weighted-average shares
561.0
420.8
526.4
421.4
Diluted earnings (loss) per common share: Income from
continuing operations
$
(0.26
)
$
0.29
$
(1.46
)
$
0.89
Loss from discontinued operations
(0.02
)
-
(0.35
)
-
Net income (loss)
$
(0.28
)
$
0.29
$
(1.81
)
$
0.89
Diluted weighted-average shares
561.0
421.8
526.4
423.0
WPX Energy, Inc. Consolidated Balance Sheets
(Unaudited) September 30,2020
December 31,2019 ASSETS (Millions) Current
assets: Cash and cash equivalents
$
195
$
60
Accounts receivable, net of allowance
446
450
Derivative assets
188
57
Inventories
23
41
Other
39
39
Total current assets
891
647
Investments
38
48
Properties and equipment (successful efforts method of accounting)
10,533
11,244
Less- accumulated depreciation, depletion and amortization
(2,095
)
(3,654
)
Properties and equipment, net
8,438
7,590
Derivative assets
16
10
Other noncurrent assets
118
118
Total assets
$
9,501
$
8,413
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
529
$
556
Accrued and other current liabilities
234
251
Derivative liabilities
124
91
Total current liabilities
887
898
Deferred income taxes
109
290
Long-term debt, net
3,213
2,202
Derivative liabilities
75
-
Other noncurrent liabilities
669
508
Contingent liabilities and commitments Preferred units of
consolidated partnership
12
-
Stockholders' equity: Preferred stock (100 million shares
authorized at $0.01 par value; no shares outstanding)
-
-
Common stock (2 billion shares authorized at $0.01 par value; 561.0
million shares and 416.8 million shares issued and outstanding at
September 30, 2020 December 31, 2019)
6
4
Additional paid-in-capital
8,663
7,692
Accumulated deficit
(4,133
)
(3,181
)
Total stockholders' equity
4,536
4,515
Total liabilities and equity
$
9,501
$
8,413
WPX Energy, Inc. Consolidated
Statements of Cash Flows (Unaudited) Nine
months ended September 30,
2020
2019
(Millions) Operating Activities(a) Net income (loss)
$
(949
)
$
378
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation, depletion and amortization
726
681
Deferred income tax provision (benefit)
(181
)
106
Provision for impairment of properties and equipment (including
certain exploration expenses)
1,065
62
Gains related to equity method investment transactions
(2
)
(373
)
Net gain on derivatives
(484
)
(46
)
Net settlements related to derivatives
578
3
Amortization of stock-based awards
28
26
Loss on extinguishment of debt
23
47
Cash provided by (used in) operating assets and liabilities:
Accounts receivable
106
(193
)
Inventories
21
1
Other current assets
6
(2
)
Accounts payable
(101
)
225
Federal income taxes receivable
(19
)
38
Accrued and other current liabilities
(80
)
(40
)
Liabilities related to discontinued operations
143
(22
)
Other, including changes in other noncurrent assets and liabilities
42
15
Net cash provided by operating activities (a)
922
906
Investing Activities(a) Capital expenditures(b)
(811
)
(1,090
)
Capital expenditures related to consolidated partnerships(c)
(23
)
-
Proceeds from sales of assets and equity method investments
transactions
4
589
Purchase of a business, net of cash acquired
(915
)
-
Contributions to equity method investments
-
(18
)
Distributions from equity method investments in excess of
cumulative earnings
10
11
Other
-
1
Net cash used in investing activities (a)
(1,735
)
(507
)
Financing Activities Proceeds from common stock
1
1
Payments for repurchases of common stock
(44
)
(43
)
Borrowings on credit facility
942
1,281
Payments on credit facility
(942
)
(1,611
)
Proceeds from long-term debt, net of discount
1,383
593
Payments for retirement of long-term debt, including premium
(392
)
(594
)
Taxes paid for shares withheld
(8
)
(16
)
Payments for debt issuance costs
(6
)
(2
)
Contributions from noncontrolling interests in consolidated
partnerships
26
-
Distributions to noncontrolling interests in consolidated
partnerships
(2
)
-
Other
(7
)
6
Net cash provided by (used in) financing activities
951
(385
)
Net increase in cash and cash equivalents and restricted cash
138
14
Cash and cash equivalents and restricted cash at beginning of
period
80
18
Cash and cash equivalents and restricted cash at end of period
$
218
$
32
____________________ (a) Amounts reflect continuing and
discontinued operations unless otherwise noted. (b) Incurred
capital expenditures were $757 million and $1,030 million for the
respective periods. The difference between incurred and cash
capital expenditures is due to changes in related accounts payable
and accounts receivable. (c) Incurred capital expenditures were $24
million for 2020. The difference between incurred and cash capital
expenditures is due to changes in related accounts payable and
accounts receivable.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201102005913/en/
MEDIA CONTACT: Kelly Swan (539) 573-4944
INVESTOR CONTACT: David Sullivan (539) 573-9360
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