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Q3 2012 Earnings Call – WPX Energy, Inc.

WPX Energy, Inc. · Nov 1, 2012 · 40 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 1
    3rd Quarter 2012 Operational Update Ralph Hill Chief Executive Officer November 1, 2012
  2. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 2
    3rd Quarter Highlights Resilient portfolio despite 10-year low natural gas and the fall-off in NGL prices YTD adjusted EBITDAX of 744MM Full year adjusted EBITDAX range of 1.0B - 1.05B Reaffirm 2012 production guidance of 1,380…
  3. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 3
    Piceance Basin Continues to Deliver Efficiencies and Lower Costs Drilling Efficiencies = more wells with fewer rigs Spud 43 wells in 3Q with 5 rigs Record well in Valley: 3.8 days, Ryan Gulch 8.5 days Average Valley drilling time…
  4. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 4
    WPX Positioned for Rapid Growth when Natural Gas Prices Recover We did it before We are ready to do it again Infrastructure built for growth Current 200+ permit inventory 2006 milestone year Highly experienced team in place First…
  5. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 5
    Emerging Mancos/Niobrara Resource Play Piceance Basin Basin-wide Niobrara activity WPX has 20 - 30 Tcf de-risking play Resource Potential 35 Mancos/Niobrara horizontals drilled Multiple horizontal pay zones EURs range from 6 to 8…
  6. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 6
    Bakken 3rd Quarter Highlights Transition to pad development Four new Nabors Fit-for-Purpose rigs employed Spud 14 wells during 3Q; 34 spuds YTD Current 5 Rigs; 3 rigs on Multi-Well Pads All acreage HBP in 1Q 13 5 remaining 4Q…
  7. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 7
    Successful In-Fill Density Project Validating Resource Purpose GEORGE EVANS 11-2HD GEORGE EVANS 11-2HC GEORGE EVANS 11-2HZ Understand the potential to increase the number of drilling locations and reserves Optimize infill…
  8. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 8
    Bakken/Three Forks Positioned for Strong 4Q Growth 14 completions expected in 4Q12 versus 22 YTD Clear example of efficiencies beginning Quarterly Average Net Production (Boepd) 14,000 12,500 12,000 10,513 10,246 10,000 8,101…
  9. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 9
    WPX Believes Bakken Costs Have Peaked 2013 drivers to achieving lower cost Multi-well pad drilling savings 1.0MM - 1.5MM Improved completion methods 0.4MM - 0.5MM Fewer drilling days 0.3MM - 0.5MM Lower completion costs; additional…
  10. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 10
    Marcellus Greater Efficiencies Leading to Lower Costs WPX efficiency model taking shape Transitioning to 3 new fit-for-purpose rigs Move times have been cut by as much as 30% 35% drop in completion costs from 4Q11 WPX acreage to…
  11. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 11
    First Susquehanna Compression Pilot Doubles Volumes on the Pad 12,000 1,200 11,000 1,100 10,000 1,000 Total Wellhead Production - MSCFD 9,000 900 Tubing Pressure in PSIG 8,000 800 7,000 700 6,000 600 5,000 500…
  12. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 12
    Improvement in Operational Efficiencies Continues Drilling Costs MM Drilling Cost 4.5 Spud to Release 45 Spud to rig release times 4.0 Number of wells 40 Spud to Release - Days & and drilling costs in 3.5 35 Number of Wells…
  13. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 13
    Apco 3rd Quarter Operational Update Argentina Argentina Traditional drilling meeting expectations Neuquen Basin (Vaca Muerta Acreage) Established productivity from VM shale Entre Lomas 96,000 net acres with two fracd vertically…
  14. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 14
    3rd Quarter 2012 Financial Results Rod Sailor Chief Financial Officer November 1, 2012
  15. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 15
    3rd Quarter Results 3Q YTD Dollars in millions, except production numbers 2012 2011 2012 2011 Daily Production Gas (MMcf/d) 1,078 1,134 1,117 1,083 Oil (Mbbl/d) 17.9 13.8 17.5 12.3 NGLs (Mbbl/d) 28.9 28.5 30.2 28.1 Equivalent…
  16. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 16
    WPX 3rd Quarter Liquidity Liquidity (millions) At 9/30/12, 259 million letters Cash and cash equivalents 9/30/12 240 of credit outstanding under Less: bilateral agreements Apco Oil and Gas (31) Anticipate no revolver borrowings…
  17. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 17
    2012 and 2013 Summary of Hedges Balance of 2012: As of 10/5/2012 Balance 2012 2013 Natural Gas production is 59% hedged NG Fixed Price at the Basin Weighted average fixed price of 5.06 Volume (Bbtu/d) 503 55 Weighted Average price…
  18. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 18
    Why Invest in WPX Top Ten domestic natural gas producer Average daily gas production of 1.1 Bcf/d We believe low-cost, liquids-rich Piceance will grow first and fastest when natural gas recovers Mancos gas exposure in the Piceance and…
  19. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 19
    APPENDIX WPX 3rd Quarter Operational Update - Nov. 1, 2012
  20. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 20
    Piceance Valley Type Well 60% 50% IRR (B-tax) 40% IRR at 3yr avg. strip price 30% 20% 10% 0% 3.00 4.00 5.00 6.00 NYMEX Flat Gas Price, NGL Price 35.86/bbl NYMEX Gas Price IRR (B-tax) IP rate 1,230 Mcfe/d EUR 1.2…
  21. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 21
    Bakken Type Well Middle Bakken, Long Lateral 60% IRR at 3yr avg. strip price 50% IRR (B-tax) 40% 30% 805 EUR, 10.5 MM D&C 20% 710 EUR, 10.5 MM D&C 10% 805 EUR, 11.5 MM D&C 710 EUR, 11.5 MM D&C 0% 80.00 85.00 90.00 95.00…
  22. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 22
    Marcellus Susquehanna Type Well 90% 80% 70% IRR (B-tax) IRR at 3yr avg. 60% strip price 50% 40% 30% 20% 9.0 EUR, 6.0 D&C 10% 7.0 EUR, 6.0 D&C 0% 3.00 4.00 5.00 6.00 NYMEX Flat Gas Price IP rate 7.0 MMcf/d to 10.5…
  23. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 23
    Piceance Highlands Ryan Gulch Type Well 60% 50% IRR (B-tax) 40% IRR at 3yr avg. strip price 30% 20% 10% 0% 3.00 4.00 5.00 6.00 NYMEX Flat Gas Price, NGL Price 35.86/bbl NYMEX Gas Price IRR (B-tax) IP rate 2,510…
  24. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 24
    Premier WPX Portfolio 18.5 Tcfe 3P reserves, 2012 production 21% oil/NGLs with 79% gas, 45% revenues oil/liquids Bakken 47.8 MMboe Proved Piceance Basin Piceance 180.8 MMboe 3P 86,113 Net Acres Large-scale position, 1 gas producer…
  25. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 25
    Piceance Cryo Capacity Willow Creek (65% of NGL volume) Long-term fee based contract Mont Belvieu priced products via Overland Pass Pipeline Volume dedication yields advantaged OPPL T&F rates Enterprise - Meeker (35% of NGL…
  26. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 26
    Bakken Netback Price Analysis Oct - Dec 2012 Gross Wellhead Sales Price vs. WTI Volume % Volume Bbl/d Discount to WTI* Basin-Priced Sales 56% 10,000 (2.00) Manifest Rail Deals 25% 4,500 (5.00) Enbridge Capacity 19% 3,500 (8.00)…
  27. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 27
    Piceance Composite NGL Barrel and Realized Price (3rd Quarter, 2012) NGL Product /Gal Product Mix Ethane 55% .34 Propane 21% .89 Iso-Butane 6% 1.62 Normal 5% 1.43 Butane Natural 13% 2.01 Gasoline *Included in…
  28. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 28
    Domestic Price Realization Gas (/Mcf) NGL (/Bbl) Oil (/Bbl) Q1 12 Q2 12 Q3 12 Q1 12 Q2 12 Q3 12 Q1 12 Q2 12 Q3 12 Weighted Average Sales Price 2.60 1.93 2.46 42.92 36.79 33.73 86.25 81.18 81.38 Revenue Adjustments(1) (0.20) (0.19)…
  29. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 29
    2011-12 Daily Production 2011 Avg 2012 Avg Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Total Domestic Production Oil (Mbbl/d) 4.3 7.9 8.0 8.9 7.3 10.4 12.3 11.7 11.5 NGLs (Mbbl/d) 26.9 27.8 27.9 27.6 27.6 30.2 30.5 28.4 29.7 Gas (MMcf/d) 1,027…
  30. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 30
    Piceance Basin Pink: Highlands Yellow: Valley Acreage: 212,968 (1) Average rigs running in 2012: 5 Remaining drilling locations: 10,855 (1) Composition: 80% Gas/20% Liquids Notes: (1) Acreage and drilling locations are based on…
  31. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 31
    Williston Basin Acreage: 86,113 (1) Average rigs running in 2012: 5 Remaining drilling locations: 574 (1) Composition: Oil focused Notes: (1) Acreage and drilling locations are based on YE 2011 WPX 3rd Quarter Operational…
  32. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 32
    Northeast Pennsylvania Susquehanna Acreage: 106,976 (1) (2) Average rigs running in 2012: 3 Remaining drilling locations: 574 (1) Composition: Dry gas Notes: (1) Acreage and drilling locations are based on YE 2011 (2) Includes…
  33. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 33
    Argentina Asset Map Entre Lomas 23% WI 40.7% Stock Interest Acambuco 1.5% WI in Petrolera (Effective Interest 52.8%) Bajada del Palo 23% WI 40.7% Stock Interest in Petrolera (Effective Interest 52.8%) Sur Rio Deseado 88%…
  34. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 34
    Colombia Asset Map Middle Magdalena Llanos Basin Basin TURPIAL LLA-40 111M Acres 163M Acres LLA-32 100M Acres Oilfields Pipelines WPX 3rd Quarter Operational Update - Nov. 1, 2012 36
  35. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 35
    Non-GAAP WPX 3rd Quarter Operational Update - Nov. 1, 2012
  36. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 36
    Net Debt Reconciliation Net Debt Calculation Long Term Debt 9/30/12 1,509 Less: Cash and Cash Equivalents 240 Net Debt 9/30/2012 1,269 WPX 3rd Quarter Operational Update - Nov. 1, 2012 39
  37. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 37
    Reconciliation Adjusted Income (Loss) from Continuing Operations (Unaudited) 2011 2012 Dollars in million, except per share amounts 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr YTD Income (loss) from continuing…
  38. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 38
    Consolidated Statement of Operations and EBITDAX Reconciliation (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…
  39. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 39
    Domestic Statement of Operations (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…
  40. Q3 2012 Earnings Call – WPX Energy, Inc. – slide 40
    International Statement of Operations (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…

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