WPX Energy Announces Third-Quarter 2012 Results

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

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

FINANCIAL RESULTS

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

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

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

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

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

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

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

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

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

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

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

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

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

MANAGEMENT PERSPECTIVE

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

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

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

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

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

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

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

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

PRODUCTION

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

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

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

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

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

           
Average Daily Production 3Q YTD
2012       2011   Change 2012
Natural gas (MMcf/d)      
Piceance Basin 652 704 -7% 685
Marcellus Shale 65 15 333% 60
Powder River Basin 203 233 -13% 213
San Juan Basin 128 153 -16% 130
Other   30       29   3% 29
Subtotal (MMcf/d) 1,078 1,134 -5% 1,117
 
NGLs (Mbbl/d)
Piceance 27.5 27.2 1% 29.0
Other   1.4       1.3   8% 1.2
Subtotal (Mbbl/d) 28.9 28.5 1% 30.2
 
Oil (Mbbl/d)
Bakken Shale 9.6 5.8

66%

8.9
Piceance 2.0 2.1 -5% 2.5
International 6.2 5.8 7% 6.0
Other   0.1       0.1   NM 0.1
Subtotal (Mbbl/d) 17.9 13.8 30% 17.5
 
Total Production (MMcfe/d) 1,359       1,388   -2% 1,403
 
Figures exclude volumes for discontinued operations in the Barnett Shale and Arkoma Basin.
 

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

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

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

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

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

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

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

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

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

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

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

CASH AND LIQUIDITY

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

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

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

GUIDANCE FOR PRODUCTION, ADJUSTED EBITDAX AND CAPITAL SPENDING

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

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

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

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

DEVELOPMENT ACTIVITY

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

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

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

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

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

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

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

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

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

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

TODAY’S CONFERENCE CALL

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

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

Form 10-Q

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

About WPX Energy, Inc.

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

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by WPX Energy on its website or otherwise. WPX Energy does not undertake and expressly disclaims any obligation to update the forward-looking statements as a result of new information, future events or otherwise. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla., 74102, or from the SEC’s website at www.sec.gov.

Additionally, the SEC requires oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and governmental regulations. The SEC permits the optional disclosure of probable and possible reserves. From time to time, we elect to use “probable” reserves and “possible” reserves, excluding their valuation. The SEC defines “probable” reserves as “those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC defines“possible” reserves as “those additional reserves that are less certain to be recovered than probable reserves.” The Company has applied these definitions in estimating probable and possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC‘s reserves reporting guidelines. Investors are urged to consider closely the disclosure in our SEC filings that may be accessed through the SEC’s website at www.sec.gov.

The SEC’s rules prohibit us from filing resource estimates. Our resource estimations include estimates of hydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or even possible reserves, (ii) other areas to take into account the low level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Resource estimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon. Resource estimates might never be recovered and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.

                         
WPX Energy, Inc.
Consolidated
(UNAUDITED)
         
2011 2012
(Dollars in millions)       1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year     1st Qtr   2nd Qtr   3rd Qtr   YTD
                                                     
Revenues:
Product revenues:
Natural gas sales $ 408 $ 423 $ 440 $ 423 $ 1,694 $ 357 $ 312 $ 331 $ 1,000
Natural gas liquid sales 85 107 110 106 408 93 78 65 236
Oil and condensate sales   52       83       84       93       312     106       122       118       346  
Total product revenues 545 613 634 622 2,414 556 512 514 1,582
Gas management 408 337 347 336 1,428 337 187 186 710
Net gain (loss) on derivatives not designated as hedges 2 6 12 9 29 14 71 (22 ) 63
Other   3       3       2       3       11     3       5       (1 )     7  
Total revenues 958 959 995 970 3,882 910 775 677 2,362
 
Costs and expenses:
Lease and facility operating 63 61 70 68 262 67 67 68 202
Gathering, processing and transportation 112 121 130 124 487 135 120 124 379
Taxes other than income 30 43 32 29 134 30 25 23 78
Gas management, including charges for unutilized pipeline capacity 417 344 359 351 1,471 355 194 200 749
Exploration 12 14 74 26 126 19 19 22 60
Depreciation, depletion and amortization 207 224 239 232 902 228 248 243 719
Impairment of producing properties and costs of acquired unproved reserves - - - 367 367 52 65 - 117
General and administrative 67 63 70 75 275 68 71 67 206
Other-net   1       4       (1 )     (4 )     -     5       (2 )     5       8  
Total costs and expenses 909 874 973 1,268 4,024 959 807 752 2,518
 
Operating income (loss) 49 85 22 (298 ) (142 ) (49 ) (32 ) (75 ) (156 )
 
Interest expense (49 ) (48 ) - (20 ) (117 ) (26 ) (26 ) (25 ) (77 )
Interest capitalized 4 4 - 1 9 2 3 2 7
Investment income and other   6       6       7       7       26     10       8       7       25  
 
Income (loss) from continuing operations before income taxes $ 10 $ 47 $ 29 $ (310 ) $ (224 ) $ (63 ) $ (47 ) $ (91 ) $ (201 )
Provision (benefit) for income taxes   3       17       10       (104 )     (74 )   (25 )     (18 )     (28 )     (71 )
Income (loss) from continuing operations $ 7 $ 30 $ 19 $ (206 ) $ (150 ) $ (38 ) $ (29 ) $ (63 ) $ (130 )
Income (loss) from discontinued operations   (8 )     (2 )     (3 )     (129 )     (142 )   (2 )     23       2       23  
Net income (loss) $ (1 ) $ 28 $ 16 $ (335 ) $ (292 ) $ (40 ) $ (6 ) $ (61 ) $ (107 )
Less: Net income attributable to noncontrolling interests   2       3       2       3       10     3       4       3       10  
Net income (loss) attributable to WPX Energy $ (3 )   $ 25     $ 14     $ (338 )   $ (302 ) $ (43 )   $ (10 )   $ (64 )   $ (117 )
                                                   
Adjusted EBITDAX
Reconciliation to net income (loss):
Net income (loss) $ (1 ) $ 28 $ 16 $ (335 ) $ (292 ) $ (40 ) $ (6 ) $ (61 ) $ (107 )
Interest expense 49 48 - 20 117 26 26 25 77
Provision (benefit) for income taxes 3 17 10 (104 ) (74 ) (25 ) (18 ) (28 ) (71 )
Depreciation, depletion and amortization 207 224 239 232 902 228 248 243 719
Exploration expenses   12       14       74       26       126     19       19       22       60  
EBITDAX 270 331 339 (161 ) 779 208 269 201 678
Impairment of producing properties and costs of acquired unproved reserves - - - 367 367 52 65 - 117
Unrealized MTM (gains) losses 18 (3 ) (5 ) 1 11 1 (60 ) 31 (28 )
(Income) loss from discontinued operations   8       2       3       129       142     2       (23 )     (2 )     (23 )
Adjusted EBITDAX $ 296     $ 330     $ 337     $ 336     $ 1,299   $ 263     $ 251     $ 230     $ 744  
 
                             
WPX Energy, Inc.
Domestic Segment
(UNAUDITED)
         
2011 2012
(Dollars in millions)         1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year       1st Qtr   2nd Qtr   3rd Qtr   YTD
                                                           
Revenues:
Product revenues:
Natural gas sales $ 404 $ 419 $ 436 $ 419 $ 1,678 $ 353 $ 307 $ 327 $ 987
Natural gas liquid sales 84 106 109 105 404 92 77 65 234
Oil and condensate sales   34       63       62       67       226     80       95       87       262  
Total product revenues 522 588 607 591 2,308 525 479 479 1,483
Gas management 408 337 347 336 1,428 337 187 186 710
Net gain (loss) on derivatives not designated as hedges 2 6 12 9 29 14 71 (22 ) 63
Other   2       2       1       2       7     3       4       (1 )     6  
Total revenues 934 933 967 938 3,772 879 741 642 2,262
 
Costs and expenses:
Lease and facility operating 58 55 63 59 235 61 60 60 181
Gathering, processing and transportation 112 121 130 124 487 135 120 124 379
Taxes other than income 27 37 26 23 113 25 18 17 60
Gas management, including charges for unutilized pipeline capacity 417 344 359 351 1,471 355 194 200 749
Exploration 11 13 74 25 123 14 16 19 49
Depreciation, depletion and amortization 202 219 233 226 880 222 242 236 700
Impairment of producing properties and costs of acquired unproved reserves - - - 367 367 52 65 - 117
General and administrative 64 61 67 71 263 65 68 64 197
Other-net   -       4       (2 )     (5 )     (3 )   5       -       4       9  
Total costs and expenses 891 854 950 1,241 3,936 934 783 724 2,441
 
Operating income (loss) 43 79 17 (303 ) (164 ) (55 ) (42 ) (82 ) (179 )
 
Interest expense (49 ) (48 ) - (20 ) (117 ) (26 ) (26 ) (25 ) (77 )
Interest capitalized 4 4 - 1 9 2 3 2 7
Investment income and other   1       2       2       1       6     2       -       1       3  
 
Income (loss) from continuing operations before income taxes $ (1 )   $ 37     $ 19     $ (321 )   $ (266 ) $ (77 )   $ (65 )   $ (104 )   $ (246 )
                                                           
                                                           
Summary of Production Volumes(1)
Natural gas (MMcf) 92,473 95,207 102,615 98,485 388,780 101,346 102,163 97,310 300,819
Natural gas liquids (MBbls) 2,425 2,527 2,567 2,539 10,057 2,746 2,779 2,613 8,138
Oil (MBbls) 384 714 736 816 2,651 948 1,123 1,076 3,147
Combined equivalent volumes (MMcfe)(2) 109,331 114,655 122,430 118,614 465,030 123,511 125,574 119,443 368,528
 
(1) Excludes production from our Arkoma Basin and Barnett Shale operations which were classified as discontinued operations and comprised less than 6 percent of our total production.
(2) Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.
                                                           
                                                           
Realized average price per unit, including the impact of hedges (1)
Natural gas (per Mcf) $ 4.37 $ 4.41 $ 4.25 $ 4.25 $ 4.32 $ 3.48 $ 3.01 $ 3.35 $ 3.28
Natural gas liquids (per barrel) $ 34.84 $ 41.90 $ 42.54 $ 41.14 $ 40.17 $ 33.46 $ 27.96 $ 24.43 $ 28.68
Oil (per barrel) $ 87.13 $ 87.51 $ 84.75 $ 83.10 $ 85.30 $ 84.54 $ 83.89 $ 82.31 $ 83.54
 
(1) Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
                                                           
Expenses per Mcfe (1)
Lease and facility operating $ 0.52 $ 0.48 $ 0.51 $ 0.51 $ 0.51 $ 0.50 $ 0.47 $ 0.51 $ 0.49
Gathering, processing and transportation $ 1.02 $ 1.06 $ 1.06 $ 1.04 $ 1.05 $ 1.09 $ 0.95 $ 1.04 $ 1.03
Taxes other than income $ 0.24 $ 0.33 $ 0.22 $ 0.19 $ 0.24 $ 0.20 $ 0.15 $ 0.14 $ 0.16
Depreciation, depletion and amortization $ 1.84 $ 1.92 $ 1.90 $ 1.91 $ 1.89 $ 1.80 $ 1.93 $ 1.98 $ 1.90
General and administrative $ 0.58 $ 0.53 $ 0.55 $ 0.60 $ 0.57 $ 0.52 $ 0.54 $ 0.53 $ 0.53
 
(1) Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
 
                           
WPX Energy, Inc.
International Segment
(UNAUDITED)
           
2011 2012
(Dollars in millions)       1st Qtr   2nd Qtr   3rd Qtr   4th Qtr   Year       1st Qtr   2nd Qtr   3rd Qtr   YTD
                                                         
Revenues:
Product revenues:
Natural gas sales $ 4 $ 4 $ 4 $ 4 $ 16 $ 4 $ 5 $ 4 $ 13
Natural gas liquid sales 1 1 1 1 4 1 1 - 2
Oil and condensate sales   18     20     22     26     86   26     27       31     84  
Total product revenues 23 25 27 31 106 31 33 35 99
Gas management - - - - - - - - -
Net gain (loss) on derivatives not designated as hedges - - - - - - - - -
Other   1     1     1     1     4   -     1       -     1  
Total revenues 24 26 28 32 110 31 34 35 100
 
Costs and expenses:
Lease and facility operating 5 6 7 9 27 6 7 8 21
Gathering, processing and transportation - - - - - - - - -
Taxes other than income 3 6 6 6 21 5 7 6 18
Gas management, including charges for unutilized pipeline capacity - - - - - - - - -
Exploration 1 1 - 1 3 5 3 3 11
Depreciation, depletion and amortization 5 5 6 6 22 6 6 7 19
Impairment of producing properties and costs of acquired unproved reserves - - - - - - - - -
General and administrative 3 2 3 4 12 3 3 3 9
Other-net   1     -     1     1     3   -     (2 )     1     (1 )
Total costs and expenses 18 20 23 27 88 25 24 28 77
 
Operating income (loss) 6 6 5 5 22 6 10 7 23
 
Interest expense - - - - - - - - -
Interest capitalized - - - - - - - - -
Investment income and other   5     4     5     6     20   8     8       6     22  
 
Income (loss) from continuing operations before income taxes $ 11   $ 10   $ 10   $ 11   $ 42 $ 14   $ 18     $ 13   $ 45  
                                                         
                                                         
Summary of Net Production Volumes (1)
Natural gas (MMcf) 1,826 1,940 1,726 1,896 7,389 1,737 1,726 1,861 5,324
Natural gas liquids (MBbls) 44 47 55 37 183 45 44 45 134
Oil (MBbls) 473 509 529 542 2,054 507 562 573 1,643
Combined equivalent volumes (MMcfe)(2) 4,926 5,280 5,231 5,373 20,810 5,052 5,362 5,569 15,983
 

(1)

 

Reflects approximately 69 percent of Apco's production (which corresponds to our ownership interest in Apco) and other minor directly held interests.

(2)

 

Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.
 
                           
WPX Energy, Inc.
Reconciliation- Adjusted Income (Loss) from Continuing Operations
(UNAUDITED)
           
2011 2012
(Dollars in millions, except 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 $ 5     $ 27     $ 17     $ (209 )   $ (160 ) $ (41 )   $ (33 )   $ (66 )   $ (140 )
Income (loss) from continuing operations - diluted earnings per share $ 0.03     $ 0.13     $ 0.09     $ (1.06 )   $ (0.81 ) $ (0.21 )   $ (0.17 )   $ (0.33 )   $ (0.70 )
Adjustments:
Impairment of producing properties and costs of acquired unproved reserves $ - $ - $ - $ 367 $ 367 $ 52 $ 65 $ - $ 117
Unrealized MTM (gains) losses $ 18     $ (3 )   $ (5 )   $ 1     $ 11   $ 1     $ (60 )   $ 31     $ (28 )
Total adjustments $ 18 $ (3 ) $ (5 ) $ 368 $ 378 $ 53 $ 5 $ 31 $ 89
Less tax effect for above items $ (7 )   $ 1     $ 2     $ (135 )   $ (138 ) $ (19 )   $ (2 )   $ (12 )   $ (33 )
Adjusted income (loss) from continuing operations available to common stockholders $ 16     $ 25     $ 14     $ 24     $ 80   $ (7 )   $ (30 )   $ (47 )   $ (84 )
Adjusted diluted earnings (loss) per common share $ 0.08     $ 0.13     $ 0.07     $ 0.12     $ 0.40   $ (0.04 )   $ (0.15 )   $ (0.23 )   $ (0.42 )
Weighted-average shares -diluted - millions (1) 197.1 197.1 197.1 197.1 197.1 198.1 198.9 199.1 198.7

 

(1) For comparative purposes and to provide a more meaningful calculation for weighted average shares, we have assumed the amount of common stock issued at December 31, 2011 to be outstanding for all 2011 periods presented.

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

(0.02

)

  0.11     (0.07 )
Net income (loss) $ (0.32 ) $ 0.07   $ (0.59 ) $ 0.18  
 
Weighted-average shares 199.1 197.1 198.7 197.1
 
 
WPX Energy, Inc.
Consolidated Balance Sheet
(Unaudited)
             
September 30, 2012     December 31, 2011

ASSETS

(Dollars in millions, except per share amounts)

Current assets:
Cash and cash equivalents $ 240 $ 526
Accounts receivable, net of allowance of $10 at September 30, 2012 and $ 13 at December 31, 2011 385 509
Derivative assets 159 506
Inventories 71 73
Other   32     60  
Total current assets 887 1,674
Investments 143 125
Properties and equipment (successful efforts method of accounting) 13,170 12,199
Less: Accumulated depreciation, depletion and amortization   (4,757 )   (3,977 )
Properties and equipment, net 8,413 8,222
Derivative assets 9 10
Other noncurrent assets   131     401  
Total assets $ 9,583   $ 10,432  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 441 $ 702
Accrued and other current liabilities 170 186
Deferred income taxes 28 116
Derivative liabilities   42     152  
Total current liabilities 681 1,156
Deferred income taxes 1,459 1,556
Long-term debt 1,509 1,503
Derivative liabilities 1 7
Asset retirement obligations 311 283
Other noncurrent liabilities 126 168
 
Equity:
Stockholders' equity:
Preferred Stock (100 million shares authorized at $0.01 par value; no shares issued) - -

Common Stock (2 billion shares authorized at $0.01 par value; 199.1 million shares issued at
September 30, 2012 and 197.1 million shares issued at December 31, 2011)

2 2
Additional paid-in-capital 5,465 5,457
Accumulated deficit (117 ) -
Accumulated other comprehensive income   55     219  
Total stockholders' equity 5,405 5,678
Noncontrolling interests in consolidated subsidiaries   91     81  
Total equity   5,496    

5,759

 
Total liabilities and equity $ 9,583   $ 10,432  
 
 
WPX Energy, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
             
Nine months ended September 30,
2012       2011
(Millions)
Operating Activities
Net income (loss) $ (107 ) $ 43
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 727 704
Deferred income tax benefit (90 ) (6 )
Provision for impairment of properties and equipment (including certain exploration expenses) 160 120
Amortization of stock-based awards 22 -
(Gain) loss on sale of assets (42 ) -
Cash provided (used) by operating assets and liabilities:
Accounts receivable 128 (39 )
Inventories 2 (5 )
Margin deposits and customer margin deposits payable (5 ) (25 )
Other current assets 9 (10 )
Accounts payable (142 ) 78
Accrued and other current liabilities (20 ) 31
Changes in current and noncurrent derivative assets and liabilities (28 ) 7
Other, including changes in other noncurrent assets and liabilities   (25 )   (10 )
Net cash provided by operating activities   589     888  
 
Investing Activities
Capital expenditures (a) (1,165 ) (1,088 )
Proceeds from sale of assets 310 17
Purchases of investments (2 ) (8 )
Other   3     23  
Net cash used in investing activities   (854 )   (1,056 )
 
Financing Activities
Proceeds from common stock 2 -
Proceeds from long-term debt 6 -
Net increase in notes payable to Willliams - 159
Net changes in Williams' net investment - 33
Revolving debt facility costs - (8 )
Other   (29 )   (3 )
Net cash provided by (used in) financing activities   (21 )   181  
 
Net increase (decrease) in cash and cash equivalents (286 ) 13
Cash and cash equivalents at beginning of period   526     37  
Cash and cash equivalents at end of period $ 240   $ 50  
 
   
(a) Increase to properties and equipment $ (1,073 ) $ (1,095 )
Changes in related accounts payable   (92 )   7  
Capital expenditures $ (1,165 ) $ (1,088 )

Contacts

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

Release Summary

WPX Energy reported its latest oil and gas volumes from the Piceance Basin, Bakken Shale and Marcellus Shale. The company's liquidity remains strong at $1.7 billion at the end of the 3Q.

Sharing

Contacts

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