Discipline drives strong quarter
- Hedging strategy provides certainty, stability
- Cutting capital by $50 million; still targeting oil exit rate
of 140,000 bbl/d at Dec. 31
- Now expecting approximately $200 million of free cash flow in
2020
- WPX completion design yields 35% improvement on Felix pad
- 2Q oil volumes were 123,700 bbl/d after curtailments of ~20,000
bbl/d
- Nearly 60,000 bbl/d of oil hedged at over $40 per bbl for
2021
WPX Energy (NYSE:WPX) reported an unaudited second-quarter loss
from continuing operations attributable to common shareholders of
$414 million, or a loss of $0.74 per share on a diluted basis.
The loss was driven by a $275 million net loss on derivatives
primarily from non-cash forward mark-to-market changes in the
company’s hedge book and lower overall commodity prices. As
underlying forward commodity prices began to improve in the
quarter, the value of hedging contracts was reduced from levels
recorded at March 31.
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 second-quarter 2020 of
$69 million, or income of $0.12 per share. A reconciliation
accompanies this press release.
Adjusted EBITDAX (a non-GAAP financial measure) hit a record
$400 million in the quarter, up 15 percent from $347 million a year
ago. A reconciliation accompanies this press release.
Cash flow from operations – inclusive of hedge impact – was $276
million in the second quarter, down 24 percent vs. a year ago due
in part to significant decreases in commodity prices and working
capital changes.
The weighted average gross sales price during second-quarter
2020 – prior to revenue deductions – was $21.85 per barrel for oil
(down 62 percent vs. a year ago), $1.40 per Mcf for natural gas
(down 20 percent) and $7.65 per barrel for NGL (down 44
percent).
Free cash flow from operations (a non-GAAP financial measure) in
the second quarter was $166 million. A reconciliation accompanies
this press release. WPX now expects to generate approximately $200
million of free cash flow in 2020, up from its prior estimate of
$150 million.
OUTLOOK
For the remainder of 2020, WPX has 91,700 bbl/d of oil hedged
with fixed price swaps at a weighted average price of $53.05 per
barrel and 20,000 bbl/d with fixed price collars at a weighted
average floor price of $53.33.
For 2021, WPX now has 59,878 bbl/d of oil hedged with fixed
price swaps at a weighted average price of $40.78 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.
Consistent with a scenario WPX outlined in its first-quarter
slide deck, the company plans to exit the year at 140,000 bbl/d of
oil. Most of the planned completions in the back half of the year
are scheduled to occur in the fourth quarter.
WPX completed 12 wells in the second quarter prior to releasing
all four of its completion crews. In July, the company redeployed
one crew in the Delaware Basin and one in the Williston Basin. WPX
plans to add one more frac crew in the Delaware Basin near the end
of August.
WPX now expects total capital spending of $1,050 to $1,150
million this year, down another $50 million from the most recent
target. Total capital spending in the first half of 2020 was $501
million, including $188 million in the second quarter following a
pullback in activity.
The company could maintain the same level of oil production in
2021 – approximately 140,000 bbl/d – with an estimated maintenance
capital budget of $800 to $850 million next year and generate
approximately $200 million of free cash flow at current commodity
prices.
WPX remains committed to implementing a dividend. Given the
ongoing economic uncertainty related to the pandemic, the company
continues to evaluate the appropriate timing for initiation.
CEO PERSPECTIVE
“Our proactive risk mitigation strategy that included work on
bolstering our balance sheet and building an industry-leading hedge
book gives us flexibility, revenue certainty and stability in our
development program against the unusual backdrop caused by
COVID-19,” said Rick Muncrief, chairman and chief executive
officer.
“This operational continuity benefits us not only in 2020, but
in 2021 and 2022 as we think about the cadence of how to optimize
our resources, manage capital requirements and enhance our free
cash flow capabilities.
“For the quarter, our adjusted EBITDAX and free cash flow
highlight the strength of our assets, our disciplined approach to
risk management, and our thoughtful ability to work through
challenges.
“We also added hedges for our 2021 oil volumes, proactively
reshaped our debt towers, and showed improved performance on our
new Felix assets by adjusting the completion design.
“I’m grateful for our resilient employees and service providers
who quickly and safely ramped down activity and stayed ready to get
back to work. Our teams are a differentiating factor in our
success,” Muncrief added.
DELAWARE BASIN
WPX’s Delaware production in the Permian averaged 143.7 Mboe/d
in the second quarter compared with 117.5 Mboe/d in the most recent
quarter and 96.6 Mboe/d a year ago.
Prior to the release of frac crews, WPX completed eight Delaware
wells during the second quarter including the six-well Huerfano pad
associated with the Felix acquisition.
WPX began applying its own frac design to two of the wells on
the Huerfano pad, making incremental changes to Felix’s design. The
wells completed with the WPX design outperformed the others by 35
percent over 50 days at a lower cost. The WPX design has fewer
stages, longer stage lengths, additional clusters per stage and
tighter spacing between clusters.
The changes were only applied to the frac design. WPX continued
to use Felix’s same progressive choke opening schedule, or slowback
strategy, with regard to flowback. WPX will continue to monitor
results and conduct more tests.
WPX’s average cost for drilling and completing a 2-mile Delaware
well is down 35 percent from an average of $1,229 per foot in 2018
to $800 per foot for the second half of 2020. The current cost
reflects a blend of the company’s legacy Stateline operations and
its new Felix assets.
WILLISTON BASIN
Williston Basin production averaged 63.3 Mboe/d in
second-quarter 2020 compared with 79.5 Mboe/d in the most recent
quarter and 63.0 Mboe/d a year ago.
Prior to the release of frac crews, WPX completed the four-well
Meadowlark pad in the Williston during the second quarter.
The highest 24-hour rate for the Meadowlark wells was 3,466
Boe/d (88 percent oil) on the 6-34 HW well, followed by 3,316 Boe/d
(89 percent oil) on the 6-34 HB well. Thirty-day rates and
cumulative volumes were impacted by decisions to shut in production
during the quarter.
WPX is monitoring the availability of the Dakota Access Pipeline
following a federal judge’s order to idle the line pending an
environmental impact statement. WPX is taking additional mitigation
measures to reduce its exposure to basis differentials for its
Williston oil volumes.
2Q PRODUCTION
Total production volumes of 207.0 Mboe/d in second-quarter 2020
increased 5 percent vs. first-quarter 2020 and were 30 percent
higher than the same period a year ago. Liquids volumes accounted
for 77 percent of second-quarter 2020 production.
Oil volumes of 123,700 bbl/d in second-quarter 2020 were 1
percent higher vs. first-quarter 2020 and 26 percent higher than
the same period a year ago. This reflects the benefit of volumes
from the acquisition of Felix Energy in March despite curtailments
in the quarter.
Average Daily Production
Q2
1Q Sequential
2020
2019
Change
2020
Change
Oil (Mbbl/d)
Delaware Basin
76.6
46.5
65%
60.1
27%
Williston Basin
47.1
51.4
-8%
62.1
-24%
Subtotal (Mbbl/d)
123.7
97.9
26%
122.2
1%
NGLs (Mbbl/d)
Delaware Basin
27.2
21.7
25%
24.9
9%
Williston Basin
8.2
5.7
44%
9.1
-10%
Subtotal (Mbbl/d)
35.4
27.4
29%
34.0
4%
Natural gas (MMcf/d)
Delaware Basin
239.1
170.9
40%
194.7
23%
Williston Basin
47.9
35.0
37%
49.4
-3%
Subtotal (MMcf/d)
287.0
205.9
39%
244.1
18%
Total Production (Mboe/d)
207.0
159.6
30%
196.9
5%
Note: 2020 volumes reflect the benefit of
the March 6 Felix acquisition in the Delaware Basin.
Second-quarter production was impacted by curtailments and
shut-ins as WPX protected the value of its resources in response to
rapid decreases in pricing and demand associated with the pandemic
and other factors.
Approximately 20,000 bbl/d of oil were curtailed in the quarter,
with a peak of roughly 30,000 bbl/d in May. WPX began bringing
production back online in June as market conditions started
improving.
Total capital spending in second-quarter 2020 was $188 million,
predominantly from $173 million in D&C activity for operated
wells and $3 million for midstream infrastructure.
FINANCIAL SUMMARY
Most of WPX’s primary expense categories all declined in
second-quarter 2020 on a per-Boe basis and an actual basis vs. a
year ago due to the pullback in activity, production that was
shut-in and overall efforts to reduce costs.
The lone exception was gathering, processing and transportation
costs, which increased by $5 million over first-quarter 2020. These
costs are more fixed in nature and also included the addition of a
contract associated with the company’s purchase of Felix
Energy.
For the first half of 2020, WPX posted a net loss from
continuing operations attributable to common shareholders of $622
million, including a $594 million gain on derivatives that was more
than offset by a nearly $1 billion impairment to the book value of
WPX’s assets in the Williston Basin.
For the first half of 2020, WPX posted adjusted net income from
continuing operations of $99 million, or income of $0.19 per share,
up from $59 million for the same period in 2019. A reconciliation
accompanies this press release.
Adjusted EBITDAX (a non-GAAP financial measure) for the first
half of 2020 rose 17 percent to $779 million vs. the same period a
year ago. A reconciliation accompanies this press release.
WPX’s total liquidity at the close of business on June 30, 2020,
was approximately $1.9 billion, including cash, cash equivalents
and all of its $1.5 billion available revolver capacity.
During the quarter, WPX issued $500 million in new 5.875 percent
Senior Notes due in 2028. A portion of the proceeds from this
offering were used to retire approximately $369 million of Senior
Notes due in 2022, 2023 and 2024 through a tender offer that
settled after the quarter closed.
WPX’s updated maturity schedule is detailed in the quarterly
investor slide deck at www.wpxenergy.com. The company’s next
significant bond payment does not occur until August 2023 when $242
million matures.
THURSDAY WEBCAST
The company’s next webcast takes place on July 30 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 9577094.
FORM 10-Q
WPX plans to file its second-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.
# # #
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; political or regulatory changes; and disruptions to general
economic conditions, including disruptions attributable to
pandemics such as the COVID-19 pandemic. 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 (GAAP)
(UNAUDITED)
2019
2020
(Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year
1st Qtr 2nd Qtr Year Revenues: Product
revenues: Oil sales
$
449
$
511
$
539
$
551
$
2,050
$
465
$
241
$
706
Natural gas sales
25
16
16
18
75
13
11
24
Natural gas liquid sales
33
31
26
32
122
24
22
46
Total product revenues
507
558
581
601
2,247
502
274
776
Net gain (loss) on derivatives
(207
)
78
175
(199
)
(153
)
869
(275
)
594
Commodity management
59
58
38
39
194
24
32
56
Other
-
1
1
2
4
3
2
5
Total revenues
359
695
795
443
2,292
1,398
33
1,431
Costs and expenses: Depreciation, depletion
and amortization
219
221
241
247
928
259
229
488
Lease and facility operating
86
94
96
98
374
101
94
195
Gathering, processing and transportation
42
40
49
52
183
62
67
129
Taxes other than income
39
43
46
50
178
42
25
67
Exploration
24
24
22
25
95
67
19
86
General and administrative: General and administrative
expenses
39
40
42
51
172
42
33
75
Equity-based compensation
8
8
9
9
34
9
9
18
Total general and administrative
47
48
51
60
206
51
42
93
Commodity management
49
41
36
37
163
34
32
66
Acquisition costs
-
-
-
3
3
27
3
30
Impairment of proved properties
-
-
-
-
-
967
-
967
Other-net
2
3
12
1
18
14
(7
)
7
Total costs and expenses
508
514
553
573
2,148
1,624
504
2,128
Operating income (loss)
(149
)
181
242
(130
)
144
(226
)
(471
)
(697
)
Interest expense
(41
)
(40
)
(38
)
(40
)
(159
)
(48
)
(49
)
(97
)
Gain (loss) on extinguishment of debt
-
-
(47
)
-
(47
)
1
-
1
Gains on equity method investment transactions
126
247
-
7
380
-
2
2
Equity earnings
2
1
3
3
9
3
5
8
Other income
-
-
1
-
1
3
(1
)
2
Income (loss) from continuing operations before
income taxes
$
(62
)
$
389
$
161
$
(160
)
$
328
$
(267
)
$
(514
)
$
(781
)
Provision (benefit) for income taxes
(14
)
84
39
(39
)
70
(61
)
(101
)
(162
)
Income (loss) from continuing operations
$
(48
)
$
305
$
122
$
(121
)
$
258
$
(206
)
$
(413
)
$
(619
)
Income (loss) from discontinued operations
-
-
(1
)
(1
)
(2
)
(180
)
5
(175
)
Net income (loss)
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(386
)
$
(408
)
$
(794
)
Less: Noncontrolling interest
-
-
-
-
-
2
1
3
Net income (loss) attributable to WPX Energy, Inc.
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(388
)
$
(409
)
$
(797
)
Amounts attributable to WPX Energy, Inc.: Income
(loss) from continuing operations
$
(48
)
$
305
$
122
$
(121
)
$
258
$
(208
)
$
(414
)
$
(622
)
Income (loss) from discontinued operations
-
-
(1
)
(1
)
(2
)
(180
)
5
(175
)
Net income (loss)
$
(48
)
$
305
$
121
$
(122
)
$
256
$
(388
)
$
(409
)
$
(797
)
Summary of Production
Volumes (1) Oil (MBbls)
8,648
8,905
9,991
10,279
37,822
11,121
11,259
22,381
Natural gas (MMcf)
18,210
18,736
20,874
20,533
78,354
22,212
26,116
48,328
Natural gas liquids (MBbls)
2,288
2,493
2,486
2,776
10,043
3,097
3,222
6,320
Combined equivalent volumes (MBoe) (2)
13,971
14,520
15,955
16,478
60,924
17,921
18,834
36,755
Per day volumes Oil (MBbls/d)
96.1
97.9
108.6
111.7
103.6
122.2
123.7
123.0
Natural gas (MMcf/d)
202.3
205.9
226.9
223.2
214.7
244.1
287.0
265.5
Natural gas liquids (MBbls/d)
25.4
27.4
27.0
30.2
27.5
34.0
35.4
34.7
Combined equivalent volumes (Mboe/d) (2)
155.2
159.6
173.4
179.1
166.9
196.9
207.0
201.9
(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
$
31.56
Natural gas (per Mcf)
$
1.36
$
0.88
$
0.77
$
0.87
$
0.96
$
0.56
$
0.43
$
0.49
Natural gas liquids (per barrel)
$
14.47
$
12.21
$
10.73
$
11.53
$
12.17
$
7.73
$
6.74
$
7.23
(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
$
13.29
Lease and facility operating
$
6.13
$
6.50
$
6.02
$
5.92
$
6.13
$
5.66
$
4.96
$
5.30
Gathering, processing and transportation
$
2.98
$
2.78
$
3.10
$
3.16
$
3.01
$
3.47
$
3.53
$
3.50
Taxes other than income
$
2.79
$
2.95
$
2.90
$
3.00
$
2.92
$
2.36
$
1.33
$
1.83
General and administrative: General and administrative
expenses
$
2.81
$
2.73
$
2.69
$
3.07
$
2.83
$
2.33
$
1.75
$
2.04
Equity-based compensation
0.56
0.56
0.54
0.60
0.57
0.52
0.49
0.50
Total general and administrative
$
3.37
$
3.29
$
3.23
$
3.67
$
3.40
$
2.85
$
2.24
$
2.54
Interest expense
$
2.95
$
2.76
$
2.37
$
2.45
$
2.61
$
2.66
$
2.59
$
2.63
(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 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
)
$
(622
)
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
$
-
$
-
$
-
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
$
(594
)
Net cash received (paid) related to settlement of derivatives
$
9
$
(10
)
$
4
$
9
$
12
$
117
$
337
$
454
Total pre-tax adjustments
$
90
$
(335
)
$
(110
)
$
217
$
(138
)
$
312
$
608
$
920
Less tax effect for above items
$
(20
)
$
76
$
25
$
(50
)
$
32
$
(72
)
$
(136
)
$
(208
)
Impact of state deferred tax rate changes and state related
adjustments
$
(1
)
$
-
$
-
$
(1
)
$
(2
)
$
(5
)
$
(1
)
$
(6
)
Impact of federal tax valuation allowance
$
1
$
(9
)
$
1
$
(3
)
$
(10
)
$
3
$
12
$
15
Total adjustments, after tax
$
70
$
(268
)
$
(84
)
$
163
$
(118
)
$
238
$
483
$
721
Adjusted income (loss) from continuing operations attributable
to common stockholders
$
22
$
37
$
38
$
42
$
140
$
30
$
69
$
99
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
)
$
(1.22
)
Pretax adjustments (1): Impairments of proved properties and
unproved leasehold cost
$
-
$
-
$
-
$
-
$
-
$
2.21
$
-
$
1.98
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
$
-
$
-
$
-
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
$
(1.16
)
Net cash received (paid) related to settlement of derivatives
$
0.02
$
(0.02
)
$
0.01
$
0.02
$
0.03
$
0.25
$
0.60
$
0.89
Total pretax adjustments
$
0.21
$
(0.79
)
$
(0.26
)
$
0.52
$
(0.33
)
$
0.68
$
1.08
$
1.80
Less tax effect for above items
$
(0.05
)
$
0.18
$
0.06
$
(0.12
)
$
0.08
$
(0.15
)
$
(0.24
)
$
(0.41
)
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
$
0.03
Total adjustments, after-tax
$
0.16
$
(0.63
)
$
(0.20
)
$
0.39
$
(0.28
)
$
0.53
$
0.86
$
1.41
Adjusted diluted income (loss) per common share
$
0.05
$
0.09
$
0.09
$
0.10
$
0.33
$
0.07
$
0.12
$
0.19
Reported diluted weighted-average shares (millions)
421.0
423.5
421.8
417.2
422.0
458.0
559.7
508.8
Effect of dilutive securities due to adjusted income (loss) from
continuing operations attributable to common stockholders
2.6
-
-
1.8
-
2.2
1.9
2.2
Adjusted diluted weighted-average shares (millions)
423.6
423.5
421.8
419.0
422.0
460.2
561.6
511.0
(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
)
$
(794
)
Interest expense
41
40
38
40
159
48
49
97
Provision (benefit) for income taxes
(14
)
84
39
(39
)
70
(61
)
(101
)
(162
)
Depreciation, depletion and amortization
219
221
241
247
928
259
229
488
Exploration expenses
24
24
22
25
95
67
19
86
EBITDAX
222
674
461
151
1,508
(73
)
(212
)
(285
)
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
-
-
-
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
(594
)
Net cash received (paid) related to settlement of derivatives
9
(10
)
4
9
12
117
337
454
Equity-based compensation (2)
8
8
9
9
34
9
9
18
Income (loss) from discontinued operations
-
-
1
1
2
180
(5
)
175
Adjusted EBITDAX (2)
$
320
$
347
$
361
$
375
$
1,403
$
379
$
400
$
779
(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 Year
Reconciliation of free cash flow: Net
cash provided by operating activities (GAAP)
$
272
$
362
$
272
$
351
$
1,257
$
256
$
276
$
532
Exclude: Changes in operating assets and liabilities (1)
1
(60
)
33
(7
)
(33
)
44
76
120
Plus: Distributions from equity method investments in excess of
cumulative earnings
4
3
4
3
14
4
3
7
Less: Incurred capital expenditures (2)
(425
)
(341
)
(264
)
(283
)
(1,313
)
(313
)
(188
)
(501
)
Less: Incurred capital expenditures related to consolidated
partnerships
-
-
-
(8
)
(8
)
(13
)
(7
)
(20
)
Plus: Contributions from noncontrolling interests
-
-
-
-
-
18
6
24
Less: Distributions to noncontrolling interests
-
-
-
-
-
-
-
-
Free cash flow (non-GAAP)
$
(148
)
$
(36
)
$
45
$
56
$
(83
)
$
(4
)
$
166
$
162
(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 ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(Millions, except per-share amounts) Revenues: Product
revenues: Oil sales
$
241
$
511
$
706
$
960
Natural gas sales
11
16
24
41
Natural gas liquid sales
22
31
46
64
Total product revenues
274
558
776
1,065
Net gain (loss) on derivatives
(275
)
78
594
(129
)
Commodity management
32
58
56
117
Other
2
1
5
1
Total revenues
33
695
1,431
1,054
Costs and expenses: Depreciation, depletion and amortization
229
221
488
440
Lease and facility operating
94
94
195
180
Gathering, processing and transportation
67
40
129
82
Taxes other than income
25
43
67
82
Exploration
19
24
86
48
General and administrative (including equity-based compensation of
$9 million, $8 million, $18 million and $16 million for the
respective periods)
42
48
93
95
Commodity management
32
41
66
90
Impairment of proved properties
-
-
967
-
Acquisition costs
3
-
30
-
Other - net
(7
)
3
7
5
Total costs and expenses
504
514
2,128
1,022
Operating income (loss)
(471
)
181
(697
)
32
Interest expense
(49
)
(40
)
(97
)
(81
)
Gains on equity method investment transactions
2
247
2
373
Equity earnings
5
1
8
3
Other income
(1
)
-
3
-
Income (loss) from continuing operations before income taxes
(514
)
389
(781
)
327
Provision (benefit) for income taxes
(101
)
84
(162
)
70
Income (loss) from continuing operations
(413
)
305
(619
)
257
Income (loss) from discontinued operations
5
-
(175
)
-
Net income (loss)
(408
)
305
(794
)
257
Less: Net income attributable to noncontrolling interest
1
-
3
-
Net income (loss) attributable to WPX Energy, Inc.
$
(409
)
$
305
$
(797
)
$
257
Amounts attributable to WPX Energy, Inc. common
stockholders: Income (loss) from continuing operations
$
(414
)
$
305
$
(622
)
$
257
Income (loss) from discontinued operations
5
-
(175
)
-
Net income (loss)
$
(409
)
$
305
$
(797
)
$
257
Basic and Diluted income (loss) per common share:
Income (loss) from continuing operations
$
(0.74
)
$
0.72
$
(1.22
)
$
0.61
Income (loss) from discontinued operations
0.01
-
(0.35
)
-
Net income (loss)
$
(0.73
)
$
0.72
$
(1.57
)
$
0.61
Basic weighted-average shares
559.7
422.5
508.8
421.8
Diluted weighted-average shares
559.7
423.5
508.8
423.6
WPX Energy, Inc. Consolidated Balance Sheets
(Unaudited) June 30,2020 December
31,2019 ASSETS (Millions) Current assets: Cash
and cash equivalents
$
407
$
60
Accounts receivable, net of allowance
424
450
Derivative assets
345
57
Inventories
27
41
Other
42
39
Total current assets
1,245
647
Investments
41
48
Properties and equipment (successful efforts method of accounting)
10,261
11,244
Less- accumulated depreciation, depletion and amortization
(1,840
)
(3,654
)
Properties and equipment, net
8,421
7,590
Derivative assets
34
10
Other noncurrent assets
117
118
Total assets
$
9,858
$
8,413
LIABILITIES AND EQUITY Current liabilities: Accounts
payable
$
412
$
556
Accrued and other current liabilities
239
251
Current portion of long-term debt
369
-
Derivative liabilities
90
91
Total current liabilities
1,110
898
Deferred income taxes
137
290
Long-term debt, net
3,210
2,202
Derivative liabilities
51
-
Other noncurrent liabilities
658
508
Contingent liabilities and commitments Preferred units of
consolidated partnership
11
-
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; 559.5
million shares and 416.8 million shares issued and outstanding at
June 30, 2020 December 31, 2019)
6
4
Additional paid-in-capital
8,653
7,692
Accumulated deficit
(3,978
)
(3,181
)
Total stockholders' equity
4,681
4,515
Total liabilities and equity
$
9,858
$
8,413
WPX Energy, Inc. Consolidated
Statements of Cash Flows (Unaudited)
Six months ended June
30,
2020
2019
(Millions) Operating Activities(a) Net income (loss)
$
(794
)
$
257
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation, depletion and amortization
488
440
Deferred income tax provision (benefit)
(153
)
69
Provision for impairment of properties and equipment (including
certain exploration expenses)
1,050
41
Gains related to equity method investment transactions
(2
)
(373
)
Net (gain) loss on derivatives
(594
)
129
Net settlements related to derivatives
454
(1
)
Amortization of stock-based awards
19
17
Cash provided by (used in) operating assets and liabilities:
Accounts receivable
129
(145
)
Inventories
16
2
Other current assets
3
(1
)
Accounts payable
(172
)
203
Federal income taxes receivable
(19
)
38
Accrued and other current liabilities
(61
)
(17
)
Liabilities related to discontinued operations
149
(15
)
Other, including changes in other noncurrent assets and liabilities
19
(10
)
Net cash provided by operating activities (a)
532
634
Investing Activities(a) Capital expenditures(b)
(598
)
(774
)
Capital expenditures related to consolidated partnerships(c)
(21
)
-
Proceeds from sales of assets and equity method investments
transactions
4
590
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
7
7
Net cash used in investing activities (a)
(1,523
)
(195
)
Financing Activities Proceeds from common stock
1
1
Payments for repurchases of common stock
(44
)
-
Borrowings on credit facility
860
1,002
Payments on credit facility
(860
)
(1,332
)
Proceeds from long-term debt, net of discount
1,383
-
Payments for retirement of long-term debt, including premium
(2
)
-
Taxes paid for shares withheld
(8
)
(15
)
Payments for debt issuance costs
(6
)
-
Contributions from noncontrolling interests in consolidated
partnerships
24
Other
(8
)
14
Net cash provided by (used in) financing activities
1,340
(330
)
Net increase in cash and cash equivalents and restricted
cash
349
109
Cash and cash equivalents and restricted cash at beginning of
period
80
18
Cash and cash equivalents and restricted cash at end of period
$
429
$
127
______________________________ (a) Amounts reflect
continuing and discontinued operations unless otherwise noted. (b)
Incurred capital expenditures were $501 million and $766 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 $20 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/20200729005950/en/
MEDIA CONTACT: Kelly Swan (539) 573-4944
INVESTOR CONTACT: David Sullivan (539) 573-9360
WPX Energy (NYSE:WPX)
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