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Q3 2013 Earnings Call – WPX Energy, Inc.

WPX Energy, Inc. · Nov 7, 2013 · 50 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 2013 Earnings Call – WPX Energy, Inc. – slide 1
    Operational Update Ralph Hill, Chief Executive Officer November 7, 2013
  2. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 2
    Recent Highlights 2nd Niobrara well comes online with strong IP Southern delineation well 2nd well delineates southern acreage IP at 11.8 MMcf/d Producing 8 MMcf/d after being choked back Accelerating step out to the east with…
  3. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 3
    Significant Cost Structure Improvements by End of 2014 2013 run-rate savings of 45MM - 70MM* Willow Creek improved processing fee and tier margin sharing Piceance gathering rate change Van Hook gathering system 2 - 4 bbl savings…
  4. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 4
    Piceance Highlights Production Decline Arrested, Continued Efficiencies Increased drilling plan Currently operating 7 rigs Sequential quarter gas production growth Spud 60 wells in 3Q Additional disposal capacity reducing LOE 6,500…
  5. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 5
    Advancing the Niobrara Program Niobrara discovery well drilled in 2012 Produced 2 Bcf in first 10 months IP 16 MMcf/d 7,300 psi flowing pressure Currently producing 3.5 MMcf/d Niobrara 2013-planned activity 2nd horizontal well…
  6. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 6
    Accelerating Step Out to the East with Vertical Test Focused plan Valley Acreage and 3D Seismic Coverage Proving up acreage Repeatability and improving costs 2013 Spud Delineating well spacing 2013 Spud and density Evaluating…
  7. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 7
    Increased Efficiencies Continue to Drive Strong Production Growth in Williston Basin Continued strong production growth Produced 14,000 bo/d in 3Q (15,600 boe/d) 13% production growth Q/Q Three Forks performance exceeding…
  8. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 8
    Williston Basin Ranked by F&D Cost (including WPX) Assumed Avg. EUR Area F&D Cost1* (Mboe) 1 Southern Antelope 11.96 920 Sanish and Parshall 12.63 634 WPX Energy FBIR 15.09 729 Nesson Anticline 15.35 456 Fort Berthold 15.43…
  9. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 9
    Technical Expertise Drives Leading Basin Results WPX is 1 in cumulative Middle Bakken production for 1st sales since Jan 2011 180- and 365-Day Cumulative Production (Based on productive days) Currently permitting 6 Middle Bakken and 5…
  10. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 10
    San Juan Mancos Gallup Delivers Strong Results 2013 program 9 wells producing 2 wells expected to begin production next week 1 well currently being drilled 2013 expected exit rate to 3,400 boe/d Record drilling time of 14.6 days…
  11. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 11
    San Juan Mancos Gallup Exceeding Expecations Company wells continue to exceed San Juan Mancos Gallup Wells expectations Average of Peak Full Month Reported to State* Current production of 2,343 boe/d Early production indicates 14,000…
  12. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 12
    Financial Results Rod Sailor, Chief Financial Officer
  13. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 13
    3rd Quarter Results 3Q YTD Dollars in millions, except production numbers 2013 2012 2013 2012 Daily Production Gas (MMcf/d) 1,012 1,078 1,013 1,117 Oil (Mbbl/d) 22.4 17.9 21.0 17.5 NGLs (Mbbl/d) 20.1 28.9 21.0 30.2 Equivalent…
  14. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 14
    3Q vs. 2Q Adjusted EPS Key Drivers Lower natural gas realizations partially offset by higher domestic oil volumes and realizations Lower NYMEX pricing Wider natural gas basis; led by wider Dominion basis Record domestic oil volumes…
  15. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 15
    Path to Greater Shareholder Value Maintaining disciplined natural gas development Added two rigs in Piceance, arrested production decline Growing oil production 46% Williston production growth Leaders in Williston completion design…
  16. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 16
    Appendix
  17. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 17
    Premier WPX Portfolio Piceance Basin Bakken Shale Marcellus Shale San Juan Powder River Apco* 3,010 Bcfe Proved 80 MMboe Proved 322 Bcfe Proved 423 Bcfe Proved 236 Bcfe Proved 25 MMboe Proved 12,039 Bcfe 3P 173 MMboe 3P 2,023 Bcfe 3P…
  18. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 18
    Key Statistics by Basin 2013 Proved Current 2012 3P Gross Reserves 3P Reserves Additional Net Acreage Rig Count Production Oil/NGL Drilling (YE2012 (YE2012 Resource (YE2012) (Op) (MMcfe/d) Focused Locations Bcfe) Bcfe) Potential…
  19. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 19
    2012-13 Daily Production 2012 Avg 2013 Avg 1Q 2Q 3Q 4Q Total 1Q 2Q 3Q Total Domestic Production Gas (MMcf/d) 1,114 1,123 1,058 1,051 1,086 1,005 989 993 996 NGLs (Mbbl/d) 30.2 30.5 28.4 24.5 28.4 21.2 20.8 19.7 20.6 Oil (Mbbl/d)…
  20. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 20
    WPX 2012 Domestic Reported Reserves 2012 year-end reserves before price revisions show strong growth year 200% reserve replacement ratio* Proved reserves growth of 10%* 1.74 drilling finding and development cost Liquids increase from…
  21. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 21
    2013 Consolidated Guidance Annual Production Low Base High Capital Expenditures (in millions) Low Base High Gas MMcf/d 1,008 1,028 1,039 Piceance 320 340 380 Oil Mbbl/d 21.7 21.7 21.8 Williston 360 370 415 NGLs Mbbl/d* 20.5 20.8 20.9…
  22. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 22
    Domestic Price Realization for 2013 Gas (/Mcf) NGL (/bbl) Oil (/bbl) 1Q 13 2Q 13 3Q 13 1Q 13 2Q 13 3Q 13 1Q 13 2Q 13 3Q 13 Weighted-Average Sales Price 3.12 3.78 3.16 37.27 37.41 43.10 89.23 88.62 99.43 (1) Revenue Adjustments…
  23. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 23
    2012 Year-End Domestic Reserves 2012 SEC Case Year-End 2012 Before Price Changes* Gas NGL Oil Equivalent Gas NGL Oil Equivalent Bcf Mbbl Mbbl Bcfe Bcf Mbbl Mbbl Bcfe Piceance Basin 2,339 103,094 8,755 3,010 2,773 124,204 11,025…
  24. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 24
    Hedging Overview As of 11/4/2013 4Q 13 2014 2015 Natural Gas Fixed Price Swaps1,4 Volumes (Bbtu/d) 470 40 Price (/MMBtu) 3.59 4.35 Collars Volumes (Bbtu/d) 145 Price (/MMBtu) 4.00 - 4.66 Crude Oil Fixed Price Swaps2,4…
  25. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 25
    Contractual Cost Structure Improvements Effective Financial Run Contract Description Income Statement Start Date Rate Impact (1) Willow Creek Change in fee and margin % 1Q 13 25MM - 40MM Expense (Gathering & Processing) Piceance…
  26. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 26
    Preeminent Piceance Position Superior acreage position WPX vs. Offset Operator Well D&C and Lifting Costs Increased drilling plan Currently operating 7 rigs 2,500 Sequential quarter gas production growth Spud 60 wells in 3Q with 7…
  27. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 27
    Piceance Continuous Improvements Major cost savings made in Ryan Gulch Drilling cycle time improvements Completion design improvements New infrastructure Continued improvement in Valley Ruthless attention to efficiencies…
  28. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 28
    WPX Positioned for Rapid Growth When Natural Gas Prices Recover Weve done it before We are ready to do it again 12% CAGR 1,000 Well Count 450 1,000 424 450 400 900 Avg. Rig Count 400 900 400 370 800 Net Op Bcfe 350 800 350…
  29. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 29
    WPX Has Drilled the Top Niobrara Shale Well IP Flow Operator Well County, State Location/Basin Comp. Date 2,667 boe/d (1) 701-4 HN1 WPX Energy Garfield, Colo. Piceance Dec. 2012 (16 MMcf/d) Williams GM 1,967 boe/d (1) 702-23 HN1…
  30. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 30
    Piceance Composite NGL Barrel and Realized Price (3rd Quarter, 2013) Product NGL Product /Gal Mix Ethane(1) 36% .26 Propane 30% 1.05 Iso-Butane 8% 1.39 Normal Butane 8% 1.37 Natural Gasoline 18% 2.21 *Included in…
  31. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 31
    Piceance Cryo Capacity Willow Creek Modified processing agreement with a revenue sharing component Mont Belvieu-priced products via Overland Pass Pipeline Volume dedication yields advantaged OPPL T&F rates Enterprise Meeker…
  32. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 32
    Piceance Basin Orange: Highlands Yellow: Valley Net acreage: 216,829(1) Average rigs running in 2013: 6.6 Remaining 3P drilling locations: 10,424(1) Composition: 80% gas/20% liquids (1) Acreage and drilling locations are based…
  33. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 33
    Williston Positioned for Continued Growth Efficiencies driving additional spuds in 2013 without increasing rig count 7 additional spuds 10 more wells on 1st sales Oil exit rate increases by 2,000 bo/d to 15,000 bo/d at year-end…
  34. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 34
    Dunn County Middle Bakken Well Performance WPX is one of the top performers in Dunn County with 41.0% of wells in the top quartile 400,000 Well Performance Detail % of Wells in Top Operator Total Wells Top Quartile Wells Quartile…
  35. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 35
    Dunn County Three Forks Well Performance 400,000 Well Performance Detail % of Wells in 350,000 Operator Total Wells Top Quartile Wells Top Quartile WPX ENERGY WILLISTON LLC 1 1 100.0% KODIAK OIL & GAS USA INCORPORATED 7 4 57.1%…
  36. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 36
    Williston Netback Price Analysis Estimated Volume % Sales Outlets (Oct - Dec 2013) Basin-Priced Sales 38% Rail Deals 50% Enbridge Capacity 12% Total Sales Outlets 100% Assumed 4th quarter total netback of WTI less 10 - 15 per…
  37. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 37
    Williston Basin Acreage: 83,756 Net acreage: (1) 84,205 (1) Average rigs running in 2013: 4 Average rigs running in 2013: 4 Remaining 3P drilling locations: 478(1) Remaining drilling Composition: locations: 478 (1) Oil…
  38. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 38
    Leveraging Experienced San Juan Team to Rapidly Develop the Mancos/Gallup WPX has long history in the basin 31 years of continuous operation in the San Juan Basin Drilled and operate 880 wells, hold joint interest in another 2,400…
  39. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 39
    San Juan Basin Green: Oil Yellow: Gas Net Acreage: 159,000 Average rigs running in 2013: 1 Remaining 3P drilling locations: 561(1) Composition: Dry Gas/Oil (1) Acreage and drilling locations are based on YE 2012. WPX…
  40. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 40
    Appalachia Growing Production Volumes Production growth with only 1 rig running Net production increased 40% Y/Y Reduced rig count to 1 rig; mostly drilling vv in our 50% WI area in Westmoreland County v Production pressure…
  41. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 41
    Pennsylvania Net acreage: 114,067(1) Average rigs running in 2013: 1 Remaining 3P drilling locations: 561(1) Composition: Dry Gas (1) Acreage and drilling locations are based on YE 2012. WPX Operational Update Nov. 7, 2013…
  42. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 42
    Apco Recent Highlights Argentina Vaca Muerta Exposure Neuqun Basin activity in progress Neuquen Basin (Vaca Muerta acreage) Two new Vaca Muerta deals announced Entre Lomas 96,000 net acres subsequent to the Chevron/YPF deal…
  43. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 43
    Argentina Asset Map Acambuco: 1.5% WI Noreste Basin Agua Amarga: Entre Lomas: 23% WI, 40.7% Stock Interest 23% WI, 40.7% Stock Interest in Petrolera in Petrolera (Effective Interest 52.8%) (Effective Interest 52.8%)…
  44. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 44
    Colombia Asset Map Valle Medio Del Magdalena Basin Llanos 40 Block 163,000 acres Turpial Block 100,000 acres Llanos Orientales Basin Llanos 32 Block 111,000 acres Block Basin WPX Operational Update Nov. 7,…
  45. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 45
    Two New Vaca Muerta Deals Subsequent to Chevrons Deal Wintershall/ GyP Dow Chemicals/ Deal El YPF Deal 115MM Entre Lomas Orejano 120MM Nuequen Aguada Aguada DelDel Chaar Chaar Bajada del Palo Entre Lomas Rio Negro Chevron/…
  46. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 46
    Non-GAAP
  47. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 47
    Reconciliation Adjusted Income (Loss) from Continuing Operations (Unaudited) Dollars in million, except per share amounts 2012 2013 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q YTD Income (loss) from continuing operations attributable (41) (33) (66)…
  48. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 48
    Consolidated Statements of Operations and EBITDAX Reconciliations (Unaudited) Dollars in million, except per share amounts 2012 2013 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q YTD Revenues: Product revenues: Natural gas sales 357 312 331 364 1,364 267…
  49. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 49
    Domestic Segment (Unaudited) Dollars in million, except per share amounts 2012 2013 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q YTD Revenues: Product revenues: Natural gas sales 353 307 327 359 1,346 263 310 248 821 Oil and condensate sales 80 95 87…
  50. Q3 2013 Earnings Call – WPX Energy, Inc. – slide 50
    International Segment (Unaudited) Dollars in million, except per share amounts 2012 2013 1Q 2Q 3Q 4Q Year 1Q 2Q 3Q YTD Revenues: Product revenues: Natural gas sales 4 5 4 5 18 4 6 4 14 Oil and condensate sales 26 27 31 31 115 28 30…

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