WPX Energy Reports 2013 Results

TULSA, Okla.--()--WPX Energy (NYSE:WPX) today announced its unaudited operating and financial results for the fourth quarter and the year ended Dec. 31, 2013.

Operating achievements during the year include a 39 percent increase in Williston Basin oil production, 534 Bcfe of domestic reserves additions, early development of the company’s oil discovery in the San Juan Basin’s Gallup Sandstone and initial delineation drilling of the Niobrara natural gas discovery in the Piceance Basin.

WPX’s 2013 financial results reflect a 14 percent decrease in consolidated gathering, processing and transportation expense and 32 percent growth in oil revenues, offset by the impact of previously disclosed non-cash impairment charges of approximately $1.4 billion that primarily occurred in the fourth quarter.

FULL YEAR 2013 FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $1,185 million for full-year 2013, or a loss of $5.91 per share on a diluted basis, compared with a net loss of $223 million, or a loss of $1.12 per share, in 2012.

A 32 percent increase in consolidated oil revenues, lower gathering, processing and transportation costs, and a $36 million gain on the sale of Powder River deep rights leasehold was more than offset by a 20 percent decline in natural gas revenues, a 23 percent decline in NGL revenues, and the impact of non-cash impairments of approximately $1.4 billion, including a related charge to exploration expense.

The net loss from continuing operations attributable to WPX Energy was $1,185 million in 2013, or a loss of $5.91 per share on a diluted basis, compared with a net loss of $245 million, or a loss of $1.23 per share, in 2012.

The non-cash impairments were primarily recorded in fourth-quarter 2013, reflecting impairments of producing properties, costs of acquired unproved reserves, unproved leasehold costs and an equity method investment. For 2013, these charges totaled $1,392 million, including $317 million recorded in exploration expense and $20 million in investment income. By comparison, WPX recorded $225 million of impairments in 2012.

Significant declines in forward natural gas prices, particularly Northeast index prices, were the primary factors for the 2013 impairments. Appalachia pricing declined 26 percent in the fourth quarter and 34 percent overall during 2013. NYMEX forward pricing also declined 18 percent throughout 2013.

Approximately $1.1 billion of the estimated charges relate to Appalachian properties, with the majority of the remaining balance attributable to Powder River properties. Significant judgment and assumptions in these assessments include estimates of reserve quantities, estimates of future commodity prices, drilling plans, expected capital costs and the company’s estimate of an applicable discount rate commensurate with the risk of the underlying cash flow estimates.

Full-year 2013 results also reflect the absence of $423 million of gains realized in 2012 on natural gas derivatives designated as hedges for accounting purposes and $202 million unfavorable change in derivatives not designated as hedges.

Excluding these charges and unrealized mark-to-market gains (losses), WPX had an adjusted loss from continuing operations of $244 million, or a loss of $1.22 per share on a diluted basis, in 2013 compared with an adjusted loss from continuing operations of $123 million, or a loss of $0.62 per share, in 2012. A reconciliation accompanies this press release.

The domestic net realized average price for natural gas including hedge impact was $2.99 per Mcf in 2013, down 11.5 percent from $3.38 per Mcf a year ago.

The net realized average price for domestic oil was $90.21 per barrel in 2013, an increase of 5 percent from $85.58 per barrel a year ago. The 2012 period is inclusive of hedges.

The domestic net realized average price for NGL was $30.70 per barrel in 2013, up 7.5 percent from $28.56 per barrel a year ago.

FOURTH-QUARTER 2013 FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $973 million for fourth-quarter 2013, or a loss of $4.85 per share on a diluted basis, compared with a net loss of $106 million, or a loss of $0.53 per share, in the same period in 2012.

The net loss from continuing operations attributable to WPX Energy was $973 million in fourth-quarter 2013, or a loss of $4.85 per share on a diluted basis, vs. a loss of $105 million, or a loss of $0.53 per share, for the fourth quarter of 2012.

Fourth-quarter 2013 results were impacted by the previously mentioned non-cash impairment charges, which more than offset a 21 percent increase in oil revenues and the gain on the sale of Powder River deep rights leasehold.

Excluding these charges and unrealized mark-to-market gains (losses), WPX had an adjusted loss from continuing operations of $66 million, or a loss of $0.34 per share on a diluted basis, for fourth-quarter 2013, compared with an adjusted loss from continuing operations of $39 million, or a loss of $0.20 per share, for the same period in 2012. A reconciliation accompanies this press release.

ADJUSTED EBITDAX

WPX’s adjusted EBITDAX (a non-GAAP measure) for full-year 2013 was $779 million, compared with $1 billion for the same measure in 2012. For fourth-quarter 2013, WPX had adjusted EBITDAX of $192 million, compared with $256 million for the same period in 2012.

The difference in year-over-year adjusted EBITDAX is primarily the result of lower product revenues, including hedges.

EBITDAX (non-GAAP)     Full Year     Fourth Quarter
2013   2012 2013   2012
millions millions millions millions
Net income (loss) ($1,191) ($211) ($984) ($104)
Interest expense $108 $102 $26 $25
Provision (benefit) for income taxes ($655) ($111) ($571) ($40)
Depreciation, depletion and amortization $940 $966 $241 $247
Exploration expenses $431 $83 $371 $23
EBITDAX ($367) $829 ($917) $151
 
Impairments of producing properties, costs of acquired unproved reserves and equity investments $1,075 $225 $1,056 $108
(Gain) on sale of Powder River Basin deep rights leasehold ($36) ($36)
Net (gain) loss on derivatives not designated as hedges $124 ($78) $93 ($15)
Net cash received (paid) related to settlement of derivatives not designated as hedges ($17) $46 ($4) $11
(Income) loss from discontinued operations ($22) $1
Adjusted EBITDAX $779 $1,000 $192 $256

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, (gain) on the sale of leasehold, net cash received (paid) on settlement of derivatives not designated as hedges and discontinued operations.

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

CEO PERSPECTIVE

“We are working to increase our cash flows and improve our results,” said Jim Bender, president and chief executive officer.

“This includes efforts on a variety of fronts, such as cost reductions and a continued commitment to pursue new efficiencies in our operating areas. We believe 2014 can be a transformational year as we achieve our objectives and complete our leadership transition.

“WPX has the experience to succeed. We have properties we can grow, led by 285 new Piceance gas wells and 91 new Williston and Gallup oil wells in our capital program. And we recognize that we need to execute crisply on our plans. We are focused on building confidence in WPX,” Bender added.

PRODUCTION

WPX’s overall domestic and international production for full-year 2013 was 1,258 MMcfe/d, down 9 percent from 1,386 MMcfe/d a year ago. The decrease was driven by lower gas volumes and lower NGL volumes, which was the result of lower ethane recovery rates.

Average Daily Production     Full Year       4Q  
2013   2012   Change 2013   2012   Change
Natural gas (MMcf/d)    
Piceance Basin 601 673 -11 % 595 637 -7 %
Appalachian Basin 83 63 32 % 81 71 14 %
Powder River Basin 174 208 -16 % 163 195 -16 %
San Juan Basin 117 132 -11 % 104 138 -25 %
International 18 19 -5 % 19 19 0 %
Other     10   10   0 %     9   10   -10 %
Subtotal (MMcf/d) 1,003 1,105 -9 % 971 1,070 -9 %
 
 
Oil (Mbbl/d)
Williston Basin 13.2 9.5 39 % 15.1 11.4 32 %
San Juan Basin 0.8 0.0 100 % 1.5 0.0 100 %
Piceance Basin 1.9 2.3 -17 % 1.8 2.0 -10 %
International 5.6 6.0 -7 % 5.3 5.8 -9 %
Other     0.3   0.2   50 %     0.5   0.2   150 %
Subtotal (Mbbl/d) 21.8 18.0 21 % 24.2 19.4 25 %
 
NGLs (Mbbl/d)
Piceance 19.1 27.5 -31 % 18.1 23.1 -22 %
International 0.5 0.5 0 % 0.4 0.5 -20 %
Other     1.2   0.9   33 %     1.6   1.4   14 %
Subtotal (Mbbl/d) 20.8 28.9 -28 % 20.1 25.0 -20 %
 
Total Production (MMcfe/d) 1,258   1,386   -9 % 1,237   1,336   -7 %

Total natural gas production of 1,003 MMcf/d in 2013 also decreased 9 percent from 1,105 MMcf/d a year ago. Total NGL production decreased 28 percent from a year ago to an average of 20.8 Mbbl/d in 2013.

Piceance Basin production was 727 MMcfe/d during 2013, down 15 percent from 852 MMcfe/d in 2012. Lower ethane recovery rates from downstream processing plants contributed to the reduction in the equivalent gas rate. Production growth also was stunted early in 2013 by a reduced rig count (five) and late in the year by weather-related impacts and temporary infrastructure outages in the fourth quarter.

Oil production in the Williston Basin increased 39 percent to an average of 13,200 barrels per day for full-year 2013. Fourth-quarter 2013 Williston volumes were 15,100 barrels per day, up 32 percent from 11,400 barrels per day in fourth-quarter 2012. WPX met its year-end exit rate goal of 15,000 barrels per day.

Overall domestic oil production climbed 35 percent for full-year 2013 and 21 percent on a consolidated basis, which includes international volumes. During fourth-quarter 2013, WPX’s overall consolidated oil production climbed to 24,200 barrels per day.

EXPENSES

WPX’s domestic expenses were approximately 3 percent lower for full-year 2013 than 2012 on a basis that includes lease operating expense (LOE), gathering, processing and transportation expense (GP&T), taxes other than income, general and administrative (G&A), and depreciation, depletion and amortization (DD&A).

Total domestic costs and expenses were 30 percent higher in 2013 over the prior year, primarily the result of the non-cash impairment charges including the charge to exploration expense. The non-cash impairments were approximately $1.4 billion.

WPX's domestic lease and facility operating expenses for full-year 2013 were $271 million vs. $251 million in 2012. The increase is primarily attributable to increased water disposal costs and an increase in oil production, primarily in the Williston Basin.

As expected, domestic gathering, processing and transportation charges decreased in 2013, down 15 percent to $430 million vs. $504 million in 2012. The decrease primarily related to new favorable contract terms for gathering and processing services in the Piceance Basin, as well as lower volumes.

Taxes other than income for domestic operations in 2013 were $117 million vs. $87 million in 2012, driven by an increase in natural gas prices (excluding derivatives), increased crude oil volumes and higher crude oil prices.

Domestic depreciation, depletion and amortization expense was $906 million in 2013, compared with $939 in 2012. The $33 million decrease is due to lower production volumes and an increase in the reserve base used in the calculation of the company’s DD&A rate, which was partially driven by an increase in the 12-month historical average commodity price.

Domestic general and administrative expenses were nearly flat year-over-year at $275 million in 2013 vs. $273 million in 2012.

Domestic exploration expense was $424 million in 2013, compared with $72 million in 2012. The higher exploration expense primarily relates to a $317 million impairment to fair value of leasehold in the Appalachian Basin in 2013, as well as higher leasehold amortization expense.

CASH AND LIQUIDITY

Net cash provided by operating activities for full-year 2013 was $636 million, including $118 million in the fourth quarter.

At Dec. 31, 2013, WPX had approximately $48 million in unrestricted domestic cash and cash equivalents and $51 million in international cash.

The company’s total domestic liquidity at the end of 2013 was approximately $1.1 billion after drawing $410 million from its $1.5 billion revolving credit agreement during the year.

DEVELOPMENT ACTIVITY

WPX made approximately $1.15 billion of capital investments during 2013, down 24 percent vs. 2012 and almost 27 percent lower than 2011. Decreased development activity was driven by capital discipline and lower commodity prices, resulting in lower production levels in most basins with the exception of the Williston Basin.

During 2013, WPX participated in 416 gross (330 net) wells in the United States, including 94 gross (78 net) in the fourth quarter. This figure represents the number of wells that were completed and began commercial delivery of production.

Highlights for the company’s operated wells in primary 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 other areas such as the Powder River basin.

In the Piceance Basin, WPX completed 250 gross (237 net) wells in 2013, including 58 gross (54 net) in the fourth quarter. Last year’s drilling program included four Niobrara test wells to begin delineating the original discovery well. Initial drilling thus far has validated the existence of a highly pressured continuous gas accumulation capable of producing pipeline-quality dry gas. Future drilling will focus on driving down drilling costs while optimizing completion techniques.

During the fourth quarter, WPX also initiated 3D seismic acquisition in the Grand Valley field to aid in the company’s Niobrara delineation work. WPX expects to have processed data by the end of the first quarter, providing 70 percent seismic coverage of WPX’s acreage in the Piceance Valley.

In the Williston Basin, WPX completed 49 gross (36 net) wells in 2013, including 15 gross (10 net) in the fourth quarter. This compares with 41 gross (27 net) for full-year 2012. The 2013 drilling success also was achieved while utilizing two less rigs than in 2012, demonstrating the company’s efficiency progress in the basin.

During the fourth quarter, WPX completed another phase of its 50-mile Van Hook gathering system in the Williston, which is comprised of different pipes carrying fresh water, produced water, natural gas and oil. In October, WPX started up the high pressure pipeline that currently takes oil from 44 wells on 13 different pads to a centralized delivery/sales point. Current volumes on the system are approximately 7,500 barrels of oil per day, with plans to reach 14,000 barrels per day. At the current rate, this eliminates the need for approximately 77 trucks per day at a savings of approximately $2.00 per barrel. WPX is working to expand the oil gathering to all of its Van Hook pads.

In the San Juan Basin, WPX completed 13 gross (13 net) oil wells in its new Gallup Sandstone development. WPX’s first 13 Gallup oil wells have flowed – on average – at 388 barrels of oil per day over their first 30 days, or 475 barrels per day on an equivalent basis. The 13 wells had – on average – a peak rate of 727 barrels per day on an equivalent basis.

WPX has since added a second rig in the Gallup, which spud its first well on Feb. 6. The first rig recently finished drilling on a three-well pad, which represents WPX’s first pad drilling in the Gallup development. WPX now has the lease rights to roughly 44,000 net acres in the Gallup Sandstone following acreage acquisitions in late 2013 and early 2014.

In the Appalachian Basin, WPX completed 32 gross (24 net) wells in 2013, including 8 gross (5 net) in the fourth quarter. WPX has since halted its drilling activity in the basin after Appalachia pricing in forward markets declined 26 percent in the fourth quarter.

2013 PROVED RESERVES

Yesterday, WPX announced its domestic proved reserves at Dec. 31, 2013, were 4.76 trillion cubic feet equivalent based on 2013 commodity price averages.

Domestic oil reserves increased 34 percent to 103 million barrels, exceeding the 100-million-barrel mark for the first time. The company added 534 Bcfe of proved domestic reserves in 2013 through drilling. WPX replaced domestic oil production at a rate of 547 percent and all domestic production at a rate of 162 percent.

Year-end 2013 domestic reserves reflect a mixture of 76 percent natural gas, 13 percent crude oil and 11 percent NGL. WPX’s press release about its 2013 proved reserves is available at www.wpxenergy.com.

2014 GUIDANCE

WPX announced a planned 2014 capital program of $1.47 billion (midpoint) on Feb. 10, with approximately 85 percent of spending allocated to Williston, Piceance and San Juan Gallup development.

More than half of WPX’s planned 2014 investments are in domestic oil properties, with funding for the development of 62 Williston Basin wells and 29 San Juan Gallup oil wells. WPX believes its planned oil growth could increase domestic oil revenues by approximately 27 percent from 2013 to 2014 based on $90 per barrel oil.

WPX’s production goal with its 2014 investments is to drive an estimated December exit rate of 1,310 MMcfe/d in total volumes, which is 5 percent higher than its 2013 exit rate. Oil and liquids are expected to account for 25 percent of WPX’s 2014 exit rate.

WPX expects to drill 376 gross operated wells in 2014 by deploying an average of 15 to 16 rigs. Compared with 2013, this represents a two-rig increase in the Piceance for a total of nine rigs, an increase of one rig in the Williston for a total of five, and an increase of one rig in the San Juan Gallup for a total of two.

WPX’s development plan for the Piceance Basin includes approximately $75 million for up to 10 new Niobrara delineation wells.

WPX plans to eliminate the funding gap in its 2014 capital plan through means such as asset sales and the potential formation of an MLP.

TODAY’S CONFERENCE CALL

WPX management will discuss its 2013 results and 2014 outlook during a webcast starting at 10 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 800-299-8538. International callers should dial 617-786-2902. The conference identification code for both phone numbers is 42904814. A replay of the webcast will be available on WPX’s website for one year following the event.

Form 10-K

WPX plans to file its 2013 Form 10-K with the Securities and Exchange Commission today. Once filed, the document will be available on both the SEC and WPX websites.

About WPX Energy, Inc.

WPX Energy is an independent exploration and production company formed during a spinoff two years ago. Overall, WPX has more than 30 years of experience in its sector, with nearly 40 local, state and federal awards for efficiency, innovation and corporate social responsibility. The company is actively developing its domestic oil and gas reserves in North Dakota, Colorado and New Mexico.

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   4th Qtr   YTD
Revenues:                
Product revenues:
Natural gas sales $ 357 $ 312 $ 331 $ 364 $ 1,364 $ 267 $ 316 $ 252 $ 258 $ 1,093
Oil and condensate sales 106 122 118 145 491 139 151 183 176 649
Natural gas liquid sales   93       78       65       63       299     54       58       57       61       230  
Total product revenues 556 512 514 572 2,154 460 525 492 495 1,972
Gas management 337 187 186 239 949 261 205 176 249 891
Net gain (loss) on derivatives not designated as hedges 14 71 (22 ) 15 78 (94 ) 78 (15 ) (93 ) (124 )
Other   3       5       (1 )     1       8     4       7       5       6       22  
Total revenues 910 775 677 827 3,189 631 815 658 657 2,761
 
Costs and expenses:
Lease and facility operating 67 67 68 81 283 75 73 82 78 308
Gathering, processing and transportation 135 120 124 127 506 107 111 106 109 433
Taxes other than income 30 25 23 33 111 35 36 36 34 141
Gas management, including charges for unutilized pipeline capacity 355 194 200 247 996 243 222 201 265 931
Exploration 19 19 22 23 83 19 20 21 371 431
Depreciation, depletion and amortization 228 248 243 247 966 231 227 241 241 940
Impairment of producing properties and costs of acquired unproved reserves 52 65 - 108 225 - - 19 1,036 1,055
Gain on sale of Powder River Basin deep rights leasehold - - - - - - - - (36 ) (36 )
General and administrative 68 71 67 81 287 72 74 68 75 289
Other-net   5       (2 )     5       4       12     7       1       10       (1 )     17  
Total costs and expenses 959 807 752 951 3,469 789 764 784 2,172 4,509
 
Operating income (loss) (49 ) (32 ) (75 ) (124 ) (280 ) (158 ) 51 (126 ) (1,515 ) (1,748 )
 
Interest expense (26 ) (26 ) (25 ) (25 ) (102 ) (26 ) (28 ) (28 ) (26 ) (108 )
Interest capitalized 2 3 2 1 8 1 1 2 1 5
Investment income, impairment of equity method investment and other   10       8       7       5       30     7       9       4       (15 )     5  
 
Income (loss) from continuing operations before income taxes $ (63 ) $ (47 ) $ (91 ) $ (143 ) $ (344 ) $ (176 ) $ 33 $ (148 ) $ (1,555 ) $ (1,846 )
Provision (benefit) for income taxes   (25 )     (18 )     (28 )     (40 )     (111 )   (63 )     11       (32 )     (571 )     (655 )
Income (loss) from continuing operations $ (38 ) $ (29 ) $ (63 ) $ (103 ) $ (233 ) $ (113 ) $ 22 $ (116 ) $ (984 ) $ (1,191 )
Income (loss) from discontinued operations   (2 )     23       2       (1 )     22     -       -       -       -       -  
Net income (loss) $ (40 ) $ (6 ) $ (61 ) $ (104 ) $ (211 ) $ (113 ) $ 22 $ (116 ) $ (984 ) $ (1,191 )
Less: Net income (loss) attributable to noncontrolling interests   3       4       3       2       12     3       4       (2 )     (11 )     (6 )
Net income (loss) attributable to WPX Energy, Inc. $ (43 )   $ (10 )   $ (64 )   $ (106 )   $ (223 ) $ (116 )   $ 18     $ (114 )   $ (973 )   $ (1,185 )
 
                                               
Adjusted EBITDAX
Reconciliation to net income (loss):
Net income (loss) $ (40 ) $ (6 ) $ (61 ) $ (104 ) $ (211 ) $ (113 ) $ 22 $ (116 ) $ (984 ) $ (1,191 )
Interest expense 26 26 25 25 102 26 28 28 26 108
Provision (benefit) for income taxes (25 ) (18 ) (28 ) (40 ) (111 ) (63 ) 11 (32 ) (571 ) (655 )
Depreciation, depletion and amortization 228 248 243 247 966 231 227 241 241 940
Exploration expenses   19       19       22       23       83     19       20       21       371       431  
EBITDAX 208 269 201 151 829 100 308 142 (917 ) (367 )
Impairment of producing properties, costs of acquired unproved reserves and equity investments 52 65 - 108 225 - - 19 1,056 1,075
(Gain) on sale of Powder River Basin deep rights leasehold - - - - - - - - (36 ) (36 )
Net (gain) loss on derivatives not designated as hedges (14 ) (71 ) 22 (15 ) (78 ) 94 (78 ) 15 93 124
Net cash received (paid) related to settlement of derivatives not designated as hedges 15 11 9 11 46 9 (20 ) (2 ) (4 ) (17 )
(Income) loss from discontinued operations   2       (23 )     (2 )     1       (22 )   -       -       -       -       -  
Adjusted EBITDAX $ 263     $ 251     $ 230     $ 256     $ 1,000   $ 203     $ 210     $ 174     $ 192     $ 779  
 
 
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   4th Qtr   YTD
Revenues:                
Product revenues:
Natural gas sales $ 353 $ 307 $ 327 $ 359 $ 1,346 $ 263 $ 310 $ 248 $ 253 $ 1,074
Oil and condensate sales 80 95 87 114 376 111 121 154 148 534
Natural gas liquid sales   92       77       65       62       296     53       58       57       60       228  
Total product revenues 525 479 479 535 2,018 427 489 459 461 1,836
Gas management 337 187 186 239 949 261 205 176 249 891
Net gain (loss) on derivatives not designated as hedges 14 71 (22 ) 15 78 (94 ) 78 (15 ) (93 ) (124 )
Other   3       4       (1 )     1       7     1       1       3       1       6  
Total revenues 879 741 642 790 3,052 595 773 623 618 2,609
 
Costs and expenses:
Lease and facility operating 61 60 60 70 251 67 63 74 67 271
Gathering, processing and transportation 135 120 124 125 504 106 110 106 108 430
Taxes other than income 25 18 17 27 87 29 30 30 28 117
Gas management, including charges for unutilized pipeline capacity 355 194 200 247 996 243 222 201 265 931
Exploration 14 16 19 23 72 18 17 21 368 424
Depreciation, depletion and amortization 222 242 236 239 939 224 217 233 232 906
Impairment of producing properties and costs of acquired unproved reserves 52 65 - 108 225 - - 19 1,033 1,052
Gain on sale of Powder River Basin deep rights leasehold - - - - - - - - (36 ) (36 )
General and administrative 65 68 64 76 273 69 69 65 72 275
Other-net   5       -       4       3       12     6       5       7       (1 )     17  
Total costs and expenses 934 783 724 918 3,359 762 733 756 2,136 4,387
 
Operating income (loss) (55 ) (42 ) (82 ) (128 ) (307 ) (167 ) 40 (133 ) (1,518 ) (1,778 )
 
Interest expense (26 ) (26 ) (25 ) (25 ) (102 ) (26 ) (28 ) (28 ) (26 ) (108 )
Interest capitalized 2 3 2 1 8 1 1 2 1 5
Investment income, impairment of equity method investment and other   2       -       1       -       3     2       2       -       (20 )     (16 )
 
Income (loss) from continuing operations before income taxes $ (77 )   $ (65 )   $ (104 )   $ (152 )   $ (398 ) $ (190 )   $ 15     $ (159 )   $ (1,563 )   $ (1,897 )
                                             
Summary of Production Volumes
Natural gas (MMcf) 101,346 102,163 97,310 96,664 397,483 90,411 90,022 91,392 87,638 359,463
Oil (MBbls) 948 1,123 1,076 1,247 4,394 1,242 1,373 1,575 1,738 5,928
Natural gas liquids (MBbls) 2,746 2,779 2,613 2,254 10,392 1,907 1,895 1,811 1,808 7,421
Combined equivalent volumes (MMcfe)(1) 123,511 125,574 119,443 117,670 486,198 109,303 109,628 111,707 108,916 439,554
 

(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 $ 2.87 $ 2.99
Oil (per barrel) $ 84.54 $ 83.89 $ 82.31 $ 90.76 $ 85.58 $ 89.77 $ 87.76 $ 97.91 $ 85.50 $ 90.21
Natural gas liquids (per barrel) $ 33.46 $ 27.96 $ 24.43 $ 28.12 $ 28.56 $ 28.21 $ 30.21 $ 31.19 $ 33.33 $ 30.70
                                             
Expenses per Mcfe
Lease and facility operating $ 0.50 $ 0.47 $ 0.51 $ 0.60 $ 0.52 $ 0.61 $ 0.59 $ 0.65 $ 0.63 $ 0.62
Gathering, processing and transportation $ 1.09 $ 0.95 $ 1.04 $ 1.06 $ 1.04 $ 0.98 $ 1.00 $ 0.94 $ 1.00 $ 0.98
Taxes other than income $ 0.20 $ 0.15 $ 0.14 $ 0.23 $ 0.18 $ 0.27 $ 0.27 $ 0.27 $ 0.26 $ 0.27
Depreciation, depletion and amortization $ 1.80 $ 1.93 $ 1.98 $ 2.02 $ 1.93 $ 2.04 $ 1.98 $ 2.09 $ 2.13 $ 2.06
General and administrative $ 0.52 $ 0.54 $ 0.53 $ 0.65 $ 0.56 $ 0.62 $ 0.64 $ 0.58 $ 0.66 $ 0.62
                                             
Unutilized pipeline capacity
Total unutilized pipeline capacity in gas management expense $ 11 $ 12 $ 12 $ 11 $ 46 $ 13 $ 14 $ 17 $ 17 $ 61
 
 
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   4th Qtr   YTD
Revenues:                
Product revenues:
Natural gas sales $ 4 $ 5 $ 4 $ 5 $ 18 $ 4 $ 6 $ 4 $ 5 $ 19
Oil and condensate sales 26 27 31 31 115 28 30 29 28 115
Natural gas liquid sales   1     1       -     1     3   1     -       -     1     2
Total product revenues 31 33 35 37 136 33 36 33 34 136
Gas management - - - - - - - - - -
Net gain (loss) on derivatives not designated as hedges - - - - - - - - - -
Other   -     1       -     -     1   3     6       2     5     16
Total revenues 31 34 35 37 137 36 42 35 39 152
 
Costs and expenses:
Lease and facility operating 6 7 8 11 32 8 10 8 11 37
Gathering, processing and transportation - - - 2 2 1 1 - 1 3
Taxes other than income 5 7 6 6 24 6 6 6 6 24
Gas management, including charges for unutilized pipeline capacity - - - - - - - - - -
Exploration 5 3 3 - 11 1 3 - 3 7
Depreciation, depletion and amortization 6 6 7 8 27 7 10 8 9 34
Impairment of producing properties - - - - - - - - 3 3
Gain on sale of Powder River Basin deep rights - - - - - - - - - -
General and administrative 3 3 3 5 14 3 5 3 3 14
Other-net   -     (2 )     1     1     -   1     (4 )     3     -     -
Total costs and expenses 25 24 28 33 110 27 31 28 36 122
 
Operating income (loss) 6 10 7 4 27 9 11 7 3 30
 
Interest expense - - - - - - - - - -
Interest capitalized - - - - - - - - - -
Investment income and other   8     8       6     5     27   5     7       4     5     21
 
Income (loss) from continuing operations before income taxes $ 14   $ 18     $ 13   $ 9   $ 54 $ 14   $ 18     $ 11   $ 8   $ 51
                                             
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 1,723 6,534
Oil (MBbls) 507 562 573 536 2,178 506 553 484 489 2,032
Natural gas liquids (MBbls) 45 44 45 47 181 42 44 42 40 167
Combined equivalent volumes (MMcfe)(2) 5,052 5,362 5,569 5,235 21,218 4,775 5,202 4,862 4,894 19,733

(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   4th Qtr   YTD
Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders $ (41 )   $ (33 )   $ (66 )   $ (105 )   $ (245 ) $ (116 )   $ 18     $ (114 )   $ (973 )   $ (1,185 )
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 )   $ (4.85 )   $ (5.91 )
Pre-tax adjustments:                
Impairment of producing properties, costs of acquired unproved reserves, leasehold and equity method investment (1) $ 52 $ 65 $ - $ 108 $ 225 $ - $ - $ 19 $ 1,361 $ 1,380
Gain on sale of Powder River Basin deep rights leasehold $ - $ - $ - $ - $ - $ - $ - $ - $ (36 ) $ (36 )
Accrual for litigation $ - $ - $ - $ - $ - $ - $ - $ 7 $ 1 $ 8
Costs related to chief executive officer separation $ - $ - $ - $ - $ - $ - $ - $ - $ 4 $ 4
Buyout of transportation agreement $ - $ - $ - $ - $ - $ - $ - $ - $ 9 $ 9
Unrealized MTM (gain) loss $ 1     $ (60 )   $ 31     $ (4 )   $ (32 ) $ 103     $ (98 )   $ 13     $ 89     $ 107  
Total pre-tax adjustments $ 53 $ 5 $ 31 $ 104 $ 193 $ 103 $ (98 ) $ 39 $ 1,428 $ 1,472
Less tax effect for above items $ (19 ) $ (2 ) $ (12 ) $ (38 ) $ (71 ) $ (38 ) $ 36 $ (14 ) $ (521 ) $ (537 )
Impact of new Argentine capital tax law (1) $ -     $ -     $ -     $ -     $ -   $ -     $ -     $ 6     $ -     $ 6  
Total adjustments, after-tax $ 34     $ 3     $ 19     $ 66     $ 122   $ 65     $ (62 )   $ 31     $ 907     $ 941  
Adjusted income (loss) from continuing operations available to common stockholders $ (7 )   $ (30 )   $ (47 )   $ (39 )   $ (123 ) $ (51 )   $ (44 )   $ (83 )   $ (66 )   $ (244 )
Adjusted diluted earnings (loss) per common share $ (0.04 )   $ (0.15 )   $ (0.23 )   $ (0.20 )   $ (0.62 ) $ (0.25 )   $ (0.22 )   $ (0.41 )   $ (0.34 )   $ (1.22 )
Diluted weighted-average shares (millions) 198.1 198.9 199.1 199.2 198.8 199.9 203.8 200.7 200.9 200.4
 
(1) These items are presented net of amounts attributable to noncontrolling interests.
 
 
WPX Energy, Inc.
Consolidated Statement of Operations
(Unaudited)
       
Years ended December 30,
  2013       2012       2011  
(Millions, except per share amounts)
Revenues:
Product revenues:
Natural gas sales $ 1,093 $ 1,364 $ 1,694
Oil and condensate sales 649 491 312
Natural gas liquid sales   230     299     408  
Total product revenues 1,972 2,154 2,414
Gas management 891 949 1,428
Net gain (loss) on derivatives not designated as hedges (124 ) 78 29
Other   22     8     11  
Total revenues 2,761 3,189 3,882
Costs and expenses:
Lease and facility operating 308 283 262
Gathering, processing and transportation 433 506 487
Taxes other than income 141 111 134
Gas management, including charges for unutilized pipeline capacity 931 996 1,471
Exploration 431 83 126
Depreciation, depletion and amortization 940 966 902
Impairment of producing properties and costs of acquired unproved reserves 1,055 225 367
Gain on sale of Powder River Basin deep rights leasehold (36 ) - -
General and administrative 289 287 275
Other - net   17     12     -  
Total costs and expenses 4,509 3,469 4,024
 
Operating income (loss) (1,748 ) (280 ) (142 )
Interest expense (108 ) (102 ) (117 )
Interest capitalized 5 8 9
Investment income, impairment of equity method investment and other   5     30     26  
Income (loss) from continuing operations before income taxes (1,846 ) (344 ) (224 )
Provision (benefit) for income taxes   (655 )   (111 )   (74 )
Income (loss) from continuing operations (1,191 ) (233 ) (150 )
Income (loss) from discontinued operations   -     22     (142 )
Net income (loss) (1,191 ) (211 ) (292 )
Less: Net income (loss) attributable to noncontrolling interests   (6 )   12     10  
Net income (loss) attributable to WPX Energy, Inc. $ (1,185 ) $ (223 ) $ (302 )
 
Amounts attributable to WPX Energy, Inc.:
Basic and diluted earnings (loss) per common share:
Income (loss) from continuing operations $ (5.91 ) $ (1.23 ) $ (0.81 )
Income (loss) from discontinued operations   -     0.11     (0.73 )
Net income (loss) $ (5.91 ) $ (1.12 ) $ (1.54 )
 
Weighted-average shares (millions) 200.5 198.8 197.1
 
 
WPX Energy, Inc.
Consolidated Balance Sheet
(Unaudited)
       
December 31, 2013 December 31, 2012
ASSETS (Millions)
Current assets:
Cash and cash equivalents $ 99 $ 153
Accounts receivable, net of allowance of $7 and $11 as of December 31, 2013 and 2012, respectively 536 443
Deferred income taxes 49 17
Derivative assets 50 58
Inventories 72 66
Margin deposits 71 -
Other   45     35  
Total current assets 922 772
Investments 145 145
Properties and equipment, net (successful efforts method of accounting) 7,241 8,416
Derivative assets 7 2
Other noncurrent assets   114     121  
Total assets $ 8,429   $ 9,456  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 652 $ 509
Accrued and other current liabilities 190 201
Customer margin deposits payable 55 2
Derivative liabilities   110     14  
Total current liabilities 1,007 726
Deferred income taxes 788 1,401
Long-term debt 1,916 1,508
Derivative liabilities 12 1
Asset retirement obligations 358 316
Other noncurrent liabilities 138 133
 
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; 201 million shares issued at December 31, 2013 and 199.3 million shares issued at December 31, 2012) 2 2
Additional paid-in-capital 5,516 5,487
Accumulated deficit (1,408 ) (223 )
Accumulated other comprehensive income (loss)   (1 )   2  
Total stockholders' equity 4,109 5,268
Noncontrolling interests in consolidated subsidiaries   101     103  
Total equity   4,210     5,371  
Total liabilities and equity $ 8,429   $ 9,456  
 
 
WPX Energy, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
           
Years ended December 31,
  2013         2012         2011  
(Millions)
Operating Activities
Net income (loss) $ (1,191 ) $ (211 ) $ (292 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 940 973 951
Deferred income tax provision (benefit) (645 ) (160 ) (176 )
Provision for impairment of properties and equipment (including certain exploration expenses) and investments 1,483 288 694
Amortization of stock-based awards 32 28 5

Gain on sales of assets (a)

(41 ) (42 ) (1 )
Cash provided (used) by operating assets and liabilities:
Accounts receivable (43 ) 68 (100 )
Inventories (5 ) 7 3
Margin deposits and customer margin deposits payable (18 ) (5 ) (18 )
Other current assets (7 ) 7 (11 )
Accounts payable 41 (128 ) 131
Accrued and other current liabilities (21 ) 12 10
Changes in current and noncurrent derivative assets and liabilities 106 (32 ) 8
Other, including changes in other noncurrent assets and liabilities   5     (9 )   3  
Net cash provided by operating activities   636     796     1,207  
 
Investing Activities
Capital expenditures (b) (1,154 ) (1,521 ) (1,572 )
Proceeds from sales of assets 49 310 15
Purchases of investments (3 ) (2 ) (12 )
Other   (3 )   9     13  
Net cash used in investing activities   (1,111 )   (1,204 )   (1,556 )
 
Financing Activities
Proceeds from common stock 6 3 -
Proceeds from long-term debt - 6 1,502
Borrowings on credit facility 970 50 -
Payments on credit facility (560 ) (50 )
Contribution from noncontrolling interest 4 10 -
Excess tax benefit of stock based awards - 13 -
Payments for debt issuance costs - - (30 )
Net increase in notes payable to Williams - - 159
Net changes in Williams' net investment - - (777 )
Other   6     5     (15 )
Net cash provided by (used in) financing activities   426     37     839  
 
Net increase (decrease) in cash and cash equivalents (49 ) (371 ) 490
Effect of exchange rate changes on cash and cash equivalents (5 ) (2 ) (1 )
Cash and cash equivalents at beginning of period   153     526     37  
Cash and cash equivalents at end of period $ 99   $ 153   $ 526  

________

(a) 2013 includes a $36 million gain on sale of Powder River Basin deep rights leasehold and 2012 includes the gain on the sale of Barnett Shale and Arkoma Basin.
(b) Increase to properties and equipment $ (1,207 ) $ (1,449 ) $ (1,641 )
Changes in related accounts payable and accounts receivable   53     (72 )   69  
Capital expenditures $ (1,154 ) $ (1,521 ) $ (1,572 )

Contacts

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

Release Summary

WPX Energy reported a 4Q and YE 2013 loss driven by non-cash impairments. GP&T expenses decreased 14%, oil revenues grew 32%, offset by $1.4 billion in impairments.

Sharing

Contacts

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