WPX Energy Inc : WPX Energy Provides Update on 2012 Capital Spending
02/06/2012| 05:40pm US/Eastern
Domestic Oil Production Expected to Grow 50-60%: NGL Production 10-12%
Natural Gas Production Expected to Remain Flat
WPX Energy (NYSE:WPX) is forecasting up to $1.2 billion in capital
spending for 2012 and full-year EBITDAX of approximately $1.2 billion. A
definition of EBITDAX is included at the end of this news release.
Prior to the decline in natural gas prices in 2012, Williams (NYSE:WMB)
had originally forecasted a capital budget of $1.2 billion to $1.8
billion and double-digit production growth for WPX Energy.
"For 2012, we've lowered our spending in keeping with our philosophy for
capital discipline," CEO Ralph Hill said. "We're primarily focusing on
our Bakken oil and Piceance natural gas liquids properties where we have
the best opportunities to generate the highest revenues and returns."
Approximately 95 percent of the company's 2012 domestic capital budget
is focused on its core areas in the Bakken Shale, Piceance Basin and
Marcellus Shale, with approximately 65 percent of the budget designated
for areas with oil and NGL production.
WPX plans to add a sixth rig in the Bakken Shale at mid-year and deploy
an average of five rigs in the Piceance Basin and three rigs in the
Marcellus Shale in 2012. This represents a reduction of six rigs in the
Piceance and four rigs in the Marcellus vs. previous plans, which
equates to a more than 40 percent decrease in the company's rig count in
"This drilling program allows us to remain in a position of strength
with regard to our balance sheet," Hill said. "At the same time, it
provides us with the flexibility to grow the oil and NGL component of
Capital spending is expected to yield a 50-60 percent increase in
domestic oil production and a 10-12 percent increase in NGL production.
Domestic natural gas production is expected to remain flat compared with
2011. This is based on $400 million in capital spending reductions for
natural gas areas in 2012 vs. the projected 2012 capital budget from
Under WPX's updated capital plan, overall production for all products is
expected to grow at 4 percent in 2012 on an Mcf equivalent basis, with
volumes for oil and NGL converted to natural gas equivalence using a
6-to-1 ratio. In 2011, WPX averaged 1,408 MMcfe per day.
"We believe that our portfolio remains one of the most flexible and
higher returning in the nation. It allows us to be nimble with our
drilling activity depending on commodity prices," Hill added.
WPX is forecasting full-year EBITDAX of approximately $1.2 billion for
2012. This assumes the impact of the company's existing hedges (detailed
below) and a $3 NYMEX natural gas price.
At a $3.50 natural gas price, EBITDAX would be approximately $1.3
billion for 2012. At a $4.00 natural gas price, EBITDAX would be
approximately $1.4 billion. All three EBITDAX scenarios assume a $99 per
barrel oil price. A $1 change in the price of oil equates to a $5
million impact to EBITDAX.
WPX currently has the following hedges in place:
WPX Hedging as of 2/1 for 2012
Natural gas fixed price at the basin Bbtu/d, $ per Mcf
NGL swaps, Bbl/d, $ per Bbl
Crude oil swaps Bbl/d, $ per Bbl
Crude oil collars Bbl/d, $ per Bbl
$85 - $106.30
On an expected net revenue basis, approximately 66 percent of WPX's oil
production is hedged, approximately 17 percent of NGL production is
hedged and approximately 53 percent of natural gas production is hedged
Further details pertaining to WPX's 2012 forecast will be provided on
Feb. 23 when the company is scheduled to report its full-year 2011
Management will discuss the results during a Live Meeting starting at
10:30 a.m. EST on the same day. Participants are encouraged to
participate in the meeting via a link at www.wpxenergy.com.
Audio for the Feb. 23 earnings conference will be available at (888)
334-2993. The passcode is 4022996. International callers should dial
(719) 325-2309 and use the same passcode.
EBITDAX represents earnings before interest expense, income taxes,
depreciation, depletion and amortization, exploration expenses and other
items such as impairments, unrealized derivative gains and losses, or
other non-cash items. It is not a measure of net income or cash flows as
determined by U.S. GAAP.
About WPX Energy, Inc.
WPX Energy is an exploration and production company focused on
developing its significant natural gas, natural gas liquids and oil
reserves, particularly in the Piceance Basin, Bakken Shale and Marcellus
Shale. The company also has domestic operations in the Powder River and
San Juan basins and the Barnett Shale, as well as international
investments in Argentina and Colombia. Go to http://www.wpxenergy.com/investors/subscribe-to-email/
to join our e-mail list.
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; and political or regulatory changes. 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.
Kelly Swan, 918-573-4944
David Sullivan, 918-573-9360
© Business Wire 2012