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Q4 2012 Earnings Call – WPX Energy, Inc.

WPX Energy, Inc. · Feb 28, 2013 · 45 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. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 1
    Operational Update Ralph Hill, Chief Executive Officer February 28, 2013
  2. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 2
    2013 Path to Greater Shareholder Value Grow oil production Maintain disciplined natural gas development, poised for growth when prices recover Continue cost improvements Pursue new opportunities, including Niobrara discovery…
  3. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 3
    2013 Strategy Driving Shareholder Value Transition to multi-well pads driving Bakken production growth and lower well costs Strong annual production growth of approximately 25 - 30% Recent long lateral wells result in 10 - 20% lower…
  4. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 4
    2013 Strategy Driving Shareholder Value (continued) First horizontal Niobrara Shale well in Piceance Basin is a major discovery 20 - 30 Tcfe of resource potential Additional resource that will provide significant ability to rapidly…
  5. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 5
    Preeminent Piceance Position Superior acreage position WPX vs. Offset Operator Well D&C and Lifting Costs WPX contrast to offset operators 38% less D&C capital costs (1) Offset Operator WPX Energy 53% less operating lifting costs (2)…
  6. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 6
    Bakken Creating Value Improving Well Performance, Lowering Cost and Strong Reserve Growth 28 of 31 wells put on first sales in 2012 were at, or surpassed, our well performance expectations Top 10 performers: 4 - Middle Bakken, 6 - Three…
  7. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 7
    Appalachia Strong Production & Reserves Growth, Increasing EURs, Lower Well Cost Strong reserves growth demonstrated by proved reserves Proved Reserves Over 1,000% reserve growth since 2010 350 322 300 Proved Reserves, Bcf…
  8. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 8
    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…
  9. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 9
    Earnings Results and Guidance Rod Sailor, Chief Financial Officer
  10. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 10
    4th Quarter Results 4Q YTD Dollars in millions, except production numbers 2012 2011 2012 2011 Daily Production Gas (MMcf/d) 1,070 1,091 1,105 1,085 Oil (Mbbl/d) 19.4 14.8 18.0 12.9 NGLs (Mbbl/d) 25.0 28.0 28.9 28.1 Equivalent…
  11. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 11
    2013 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 Bakken 360 370 380 *NGLs - Mbbl/d 20.5 20.8 20.9 Marcellus…
  12. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 12
    Summary of Hedges 2013: Natural gas is approximately 50% hedged Natural gas average hedge price of 3.62 Crude oil is 59% hedged Weighted-average price of 100.52 As of 2/25/2013 Natural Gas Volume Weighted Avg. Price Fixed…
  13. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 13
    Impact of Ethane Rejection on 2013 Production Guidance 2013 planned volumes impacted by approximately 3% due to assumed ethane recovery level Maximum Ethane 2013 Plan Ethane Minimum Ethane Recovery Recovery Recovery Natural Gas -…
  14. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 14
    Our Strengths: Developer of Large-Scale Resource Plays Capture Operational Efficiencies Contiguous acreage positions Drilled 4,000 net wells and constructed fully-established infrastructure in core play Working with our communities to…
  15. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 15
    Appendix
  16. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 16
    Premier WPX Portfolio Piceance Basin Bakken Shale Marcellus Shale San Juan Powder River Apco* 3,010 Bcfe Proved 80.0 MMboe Proved 322 Bcfe Proved 423 Bcfe Proved 236 Bcfe Proved 25 MMboe Proved 12,039 Bcfe 3P 173.4 MMboe 3P 2,023 Bcfe 3P…
  17. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 17
    Key Statistics by Basin 2012 Average Rig 2012 3P Gross Proved Additional Net Acreage Count Production Oil/NGL Drilling Reserves 3P Reserves Resource (YE2012) (Operated) (MMcfe/d) Focused Locations (YE2012 Bcfe) (YE2012 Bcfe)…
  18. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 18
    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…
  19. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 19
    Piceance Basin Continues to Deliver Efficiencies and Lower Costs Prolific resource with 3P Reserves of 12.2 Tcfe with 10,000 locations Drilling Performance Spud to Rig Release (Days) Drilling efficiencies = More wells with fewer rigs…
  20. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 20
    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 Net Op Bcfe 800 350 800 350…
  21. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 21
    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 High-grading…
  22. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 22
    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…
  23. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 23
    Piceance Composite NGL Barrel and Realized Price (4th Quarter, 2012) Product NGL Product /Gal Mix Ethane(1) 50% .29 Propane 23% .88 Iso-Butane 7% 1.82 Normal Butane 6% 1.64 Natural Gasoline 14% 2.15 *Included in…
  24. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 24
    Emerging Niobrara Resource Play Piceance Basin Basin-wide Niobrara activity de-risking play 40 Niobrara horizontals drilled WPX has 20 - 30 Tcf Multiple horizontal pay zones Resource Potential Horizontal EURs 6+ Bcf WPX Energy…
  25. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 25
    Piceance Basin Green: Highlands Yellow: Valley Net Acreage: 216,829(1) Average rigs running in 2013: 5 Remaining 3P drilling locations: 10,424(1) Composition: 80% Gas/20% Liquids (1) Acreage and drilling locations are based on…
  26. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 26
    4Q 2012 Bakken Drilling Results Drilling performance improved significantly over prior periods: Spud 11 wells w/5 rigs 8 Middle Bakken (Green) 3 Three Forks (Dark Green) Finalizing One & Gone drilling 7 wells drilled 4 long laterals…
  27. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 27
    4Q 2012 Bakken Completion Results 14 wells put on 1st sales 10 Middle Bakken (Blue) 4 Three Forks (Dark Blue) 10 long laterals 4 short laterals Finalizing One & Gone completions 4 completions in 4Q 12 4 long laterals 6 completions…
  28. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 28
    Bakken Netback Price Analysis Volume % Gross Wellhead Sales Price vs. WTI (Jan - Mar) Discount to WTI Basin-Priced Sales 58% (2.00) Rail Deals 38% (2.00) Enbridge Capacity 4% (10.50) Total Gross Sales Volume* 100% (2.30) *Total…
  29. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 29
    Williston Basin Net Acreage: 84,205(1) Average rigs running in 2013: 4 Remaining 3P drilling locations: 478(1) Composition: Oil focused (1) Acreage and drilling locations are based on YE 2012 WPX Operational Update - Feb.…
  30. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 30
    Marcellus Greater Efficiencies Leading to Lower Costs New Orion rigs are adding to efficiencies, in 4Q we drilled a new record Susquehanna well in just under 11 days Plan to run 1 rig in Appalachia for 2013, splitting time vv between…
  31. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 31
    Marcellus 2012 Completion Cost 8,000 Avg. completion costs have declined 7,000 every quarter throughout 2012 6,000 5,000 - Thousands 4,000 3,000 2,000 1,000 0 WPX Operational Update - Feb. 28, 2013 33
  32. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 32
    First Susquehanna Compression Pilot Doubles Volumes on the Pad 10,000 1,000 9,000 900 Total Wellhead Production - MSCFD 8,000 800 Tubing Pressure in PSIG 7,000 700 6,000 600 5,000 500 4,000 400 3,000 300…
  33. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 33
    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 - Feb. 28,…
  34. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 34
    Apco 4th Quarter Operational Update 10th Consecutive Year of Production Growth Argentina Neuquen Basin (Vaca Muerta Acreage) 2012 Neuquen basin development drilling completed Entre Lomas 96,000 net acres on schedule with results in line…
  35. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 35
    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%…
  36. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 36
    Colombia Asset Map Middle Magdalena Basin Llanos Basin TURPIAL LLA-40 111M Acres 163M Acres LLA-32 100M Acres Oilfields Pipelines WPX Operational Update - Feb. 28, 2013 38
  37. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 37
    2011-12 Daily Production 2011 Avg 2012 Avg Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Domestic Production Gas (MMcf/d) 1,028 1,046 1,115 1,071 1,065 1,114 1,123 1,058 1,051 1,086 NGLs (Mbbl/d) 26.9 27.8 27.9 27.6 27.6 30.2 30.5 28.4…
  38. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 38
    Domestic Price Realization Gas (/Mcf) NGL (/Bbl) Oil (/Bbl) Q1 12 Q2 12 Q3 12 Q4 12 Q1 12 Q2 12 Q3 12 Q4 12 Q1 12 Q2 12 Q3 12 Q4 12 Weighted Average Sales Price 2.60 1.93 2.46 3.03 42.92 36.79 33.73 35.89 86.25 81.18 81.38 85.51…
  39. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 39
    WPX 4th Quarter Liquidity At 12/31/12, 312 million letters Liquidity (millions) of credit outstanding under Cash and cash equivalents 12/31/12 153 bilateral agreements Less: No revolver borrowings Apco Oil and Gas (35) at year-end 2012…
  40. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 40
    WPX Leader in Finding and Development Cost 2011E Excluding Leasehold Proved Developed F&D /Mcfe 1.48 WPX J.P. Morgan North American Equity Research, May 11, 2012 WPX Operational Update - Feb. 28, 2013 42
  41. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 41
    Non-GAAP
  42. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 42
    Reconciliation Adjusted Income (Loss) from Continuing Operations (Unaudited) Dollars in millions, except per share amounts 2011 2012 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Income (loss) from…
  43. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 43
    Consolidated Statements of Operations and EBITDAX Reconciliations (Unaudited) Dollars in millions, except per share amounts 2011 2012 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Revenues: Product revenues:…
  44. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 44
    Domestic Statements of Operations (Unaudited) Dollars in millions, except per share amounts 2011 2012 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Revenues: Product revenues: Natural gas sales 404 419 436…
  45. Q4 2012 Earnings Call – WPX Energy, Inc. – slide 45
    International Statements of Operations (Unaudited) Dollars in millions, except per share amounts 2011 2012 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Revenues: Product revenues: Natural gas sales 4 4 4 4…

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