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2nd Quarter 2012 Operational Update – WPX Energy, Inc.

WPX Energy, Inc. · Aug 2, 2012 · 49 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. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 1
    2nd Quarter 2012 Operational Update Ralph Hill Chief Executive Officer August 2, 2012
  2. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 2
    WPX 2nd Quarter Highlights Total YTD oil and NGL production up 24% from a year ago Averaged 50,000 barrels per day in 2Q Total YTD natural gas production up 8% from a year ago Strong Piceance NGL uplift despite weak 2Q pricing of 0.66…
  3. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 3
    Middle Bakken/Three Forks WPX 2nd Quarter Operational Update - Aug. 2, 2012
  4. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 4
    2012 Operational Highlights 20% Q1 to Q2 production growth 337% Production growth since acquisition 337% Production Growth 4Q10 to 2Q12 Early time reserves forecast beating initial estimates 12,000 New wells and additional…
  5. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 5
    2Q Bakken Results 11 wells spud 8 Middle Bakken (light green) 3 Three Forks (Orange) 6 wells put on 1st sales 5 Middle Bakken (blue) 1 Three Forks (light orange) Drilling 1st multi-well pad (infill density project) 4 Middle…
  6. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 6
    Performance Leader on Reservation Middle Bakken, Long Laterals Strong early production performance generates superior well results. 180-Day Rate EUR Comparison 120 113 110 700 643 106 614 100 600 91 525 84 507 500 471 80…
  7. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 7
    Bakken Netback Price Analysis Jul - Dec 2012 Gross Wellhead Sales Price vs. WTI Volume % Volume Bbl/d Discount to WTI* Basin-Priced Sales 61% 10,000 (11.00) Manifest Rail Deals 24% 4,000 (10.00) Enbridge Capacity 15% 2,500 (13.00)…
  8. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 8
    Piceance WPX 2nd Quarter Operational Update - Aug. 2, 2012
  9. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 9
    Piceance Situated for Strong Growth Spud 53 wells 2Q 2012, 123 YTD through 2Q Record gross operated production of 947 MMcf/d Higher volumes and strong NGL uplift of 0.66 per Mcf in 2Q despite weak ethane pricing Mancos/Niobrara…
  10. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 10
    Repeatable Performance Improvements 30 Drilling Performance Spud to Release (Days) Drilling Efficiencies Continue 25 Setting multiple records in 2012 2009 2010 54% reduction in Ryan Gulch over 3 years 20 2011 More wells with fewer…
  11. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 11
    Piceance Composite NGL Barrel and Realized Price (2nd Quarter, 2012) NGL Product /Gal Product Mix Ethane 57% .40 Propane 20% .97 Iso-Butane 6% 1.75 Normal 5% 1.61 Butane Natural 12% 2.05 Gasoline *Included…
  12. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 12
    WPX Positioned for Rapid Growth when Natural Gas Recovers We did it before We can do it again Infrastructure built for growth Current 200+ permit inventory 2006 milestone year Highly experienced team in place First delivery of…
  13. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 13
    Marcellus Greater Efficiencies Leading to Lower Costs Transitioning to new rigs built specifically for Pennsylvania and on the track to average 3 rigs for the year Completion costs in Susquehanna dropped 30% from 4Q 2011 to 2Q 2012…
  14. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 14
    Improvement in Operational Efficiencies Continues 45 40 Spud to Release Days Spud to rig release times in Spud to Release Days and 35 Number of wells Susquehanna County have Number of Wells 30 continued to drop to the 16-…
  15. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 15
    Apco WPX 2nd Quarter Operational Update - Aug. 2, 2012
  16. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 16
    Apco 2nd Quarter Operational Update Argentina Argentina Development drilling results meeting expectations Neuquen Basin (Vaca Muerta Acreage) Entre Lomas 96,000 net acres Actively investigating Vaca Muerta formation in the Bajada…
  17. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 17
    Future Opportunities WPX 2nd Quarter Operational Update - Aug. 2, 2012
  18. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 18
    Significant New Piceance Gas Resource Potential in Mancos/Niobrara WPX owns 250,000 gross acres Initial vertical test on one lower 149,000 net acres Niobrara zone IP at 1.5 MMcf/d 20-30 Tcfe unbooked resource potential 5 - 7 additional…
  19. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 19
    San Juan Basin Mancos Shale Potential Completed, monitored and evaluated more than 60 vertical Mancos completions from 2008 to present Extensive reservoir and geologic assessments done in 16 vertical wells Successfully drilled the…
  20. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 20
    WPX Entering Promising New Oil Plays WPX strategy of increased exploratory focus paying off in earlier entries in new plays Multiple oil-focused horizontal plays being pursued Begin testing some areas this year Initial well results…
  21. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 21
    2nd Quarter Financial Results and 2012 Guidance Rod Sailor Chief Financial Officer August 2, 2012 WPX 2nd Quarter Operational Update - Aug. 2, 2012
  22. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 22
    2nd Quarter Results 2Q YTD Dollars in millions, except production numbers 2012 2011 2012 2011 Daily Production Gas (MMcf/d) 1,142 1,068 1,137 1,058 Oil (Mbbl/d) 18.5 13.5 17.3 11.5 NGLs (Mbbl/d) 31.0 28.3 30.8 27.9 Equivalent…
  23. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 23
    2012 Guidance Dollars in millions, except production numbers 2012 Plan Daily Production Gas (MMcf/d) 1,090 (1) Oil (Mbbl/d) 18 NGLs (Mbbl/d) 30 Equivalents (MMcfe/d) 1,380 Adjusted EBITDAX 1,175 (1),(2) Capital Expenditures…
  24. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 24
    WPX 2nd Quarter Liquidity Completed Barnett and Arkoma Liquidity (millions) asset sale Cash and cash equivalents 6/30/12 427 Received total of 301 million Less: (270 million in second quarter) Apco Oil and Gas (33) Targeting…
  25. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 25
    Remaining 2012 Priorities for Value Creation Grow total domestic oil production by 50 - 60% in 2012 Uniquely situated to ramp-up gas production at the right price Maintain top-tier balance sheet in a depressed natural gas price…
  26. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 26
    APPENDIX WPX 2nd Quarter Operational Update - Aug. 2, 2012
  27. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 27
    Type Wells, Gas Price Sensitivities 60% Piceance Valley (1.2 EUR, 1.4 D&C) 50% Marcellus Susquehanna (7.0 EUR, 6.0 D&C) Ryan Gulch (1.8 EUR, 2.8 D&C) 40% B-tax IRR 30% 20% 10% 0% 2.00 2.50 3.00 3.50 4.00 4.50 5.00…
  28. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 28
    Bakken Type Well, Oil Price and Capital Sensitivities 70% 70% Bakken (805 EUR, Bakken (805 EUR) 60% 10.5MM D&C) 60% Bakken (710 EUR) Bakken (710 EUR, 50% 10.5MM D&C) 50% B-tax IRR B-tax IRR 40% 40% 30% 30% 20% 20%…
  29. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 29
    Premier WPX Portfolio 18.5 Tcfe 3P reserves, 2012 production 20% oil/NGLs with 80% gas, 46% 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…
  30. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 30
    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…
  31. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 31
    Bakken YE 2011 Undeveloped Location Summary 574 undeveloped locations 68% WI 574 Undeveloped Locations 460 operated 84% WI 114 non-op 18% WI 274 (48%) Middle Bakken wells 3 - 4 laterals per 1,280/640 acre drilling unit 0 114…
  32. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 32
    Industry Transition to Ceramic Completions Annual increase in ceramic use in Completion Progression North Dakota North Dakota completions 2008: 19% of new wells Ceramic YTD 2012: 47% of new wells Natural Resin Continuous annual…
  33. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 33
    Van Hook Gathering System Reduces Cost and Creates Value Van Hook Gathering System Construction under way; 3Q 12 completion 34 MM total cost Pipe oil, gas and water; deliver fresh water Produce gas; minimizes flaring Removes…
  34. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 34
    Infrastructure Constraints in Susquehanna County Continue Issue: Production is Compression constrained as pressures remained high on Williams Laser system through 2Q 2012, averaging 700 psi Interim Solution: WPX Wellhead Compression…
  35. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 35
    2012 Economic Hedges and Hedging Strategy Use of a As of 6/29/2012 Jul Dec 2012 combination NG Fixed Price at the Basin of hedging Volume (Bbtu/d) 507 instruments: Weighted Average price (/MMBtu) 5.05 Fixed price NGL Swaps swaps…
  36. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 36
    2012 Tax Guidance 2012 2012 2012 Tax Rates 1st Qtr 2nd Qtr Year-to-Date Provision (benefit) at statutory rate (22) 35% (17) 35% (39) 35% (Increases) decreases in tax benefit resulting from: State income taxes (net of federal…
  37. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 37
    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 Price Point 2.51 2.35 43.61 36.29 103.05 93.36 Revenue Deduct (0.11) (0.61) (10.15) (8.33) (15.98)…
  38. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 38
    2011-12 Daily Production 2011 Avg 2012 Avg Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Domestic Production Oil (Mbbl/d) 4.3 7.9 8.0 8.9 7.3 10.4 12.3 11.4 NGLs (Mbbl/d) 26.9 27.8 27.9 27.6 27.6 30.2 30.5 30.4 Gas (MMcf/d) 1,027 1,046 1,115…
  39. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 39
    Northeast Pennsylvania Susquehanna WPX acreage WPX 2nd Quarter Operational Update - Aug. 2, 2012 42
  40. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 40
    Williston Basin WPX acreage WPX 2nd Quarter Operational Update - Aug. 2, 2012 43
  41. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 41
    Piceance Basin WPX acreage WPX 2nd Quarter Operational Update - Aug. 2, 2012 44
  42. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 42
    Argentina Asset Map Entre Lomas 23% WI Acambuco 1.5% WI 40.7% Stock Interest 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%…
  43. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 43
    Non-GAAP WPX 2nd Quarter Operational Update - Aug. 2, 2012
  44. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 44
    2012 Adjusted EBITDAX Reconciliation Pro Forma Year Dollars in millions Ended Dec. 31, 2012 Adjusted EBITDAX Reconciliation to Net Income (Loss): Net Income (Loss) 93 Interest Expense 92 Provision (Benefit) for Income Taxes…
  45. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 45
    Net Debt Reconciliation Net Debt Calculation Long Term Debt 6/30/12 1,509 Less: Cash and Cash Equivalents 427 Net Debt 6/30/2012 1,082 WPX 2nd Quarter Operational Update - Aug. 2, 2012 49
  46. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 46
    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 YTD Income (loss) from continuing operations…
  47. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 47
    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 Year Revenues: Product revenues: Natural gas sales 408 423 440 423 1,694…
  48. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 48
    Domestic Statement of Operations (Unaudited) 2011 2012 Dollars in millions 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr Year Revenues: Product revenues: Natural gas sales 404 419 436 419 1,678 353 307 660 Natural gas liquid…
  49. 2nd Quarter 2012 Operational Update – WPX Energy, Inc. – slide 49
    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 Revenues: Product revenues: Natural gas sales 4 4 4 4 16 4 5 9 Natural gas liquid sales 1 1…

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