Despite first quarter losses of $8 million or 11 cents a share, WPX Energy in Tulsa had adjusted net income of $22 million or income of 5 cents a share.
In its earnings report this week, the company explained the first-quarter 2019 losses included a $207 million in derivative losses due to an increase in forward oil prices.
The company saw first-quarter oil volumes increase by 96,100 barrels a day. They would have been more but multiple storm-related power outages in the Delaware Basin reduced first-quarter volumes by nearly 1,400 bbl/d.
Leadership said it expects 5 to 10 percent oil growth from the fourth-quarter 2018 to the fourth-quarter of 2019 due to planned increases in 2019 production.
“Our first-quarter results are straight down the fairway. I’m very pleased with our strong, consistent performance and our continued success on the transaction front where we’ve generated substantial returns,” says Rick Muncrief, WPX chairman and chief executive officer.
“WPX’s 2019 plan is right on track for delivering capital discipline, production increases and more than $100 million of free cash flow,” Muncrief added.
As previously announced, WPX signed transactions for three divestitures in early 2019 totaling more than $550 million in net proceeds.
WPX already closed the sale of its 20 percent equity interest in WhiteWater Midstream’s Agua Blanca natural gas pipeline system and the sale of a peripheral non-core position (Nine Mile Draw) in the Delaware Basin. The absence of Nine Mile Draw reduced first-quarter oil volumes by approximately 500 bbl/d.
The third transaction – the sale of WPX’s equity interest in the Oryx II pipeline project – is on track to close this quarter. Proceeds will be used to pay off WPX’s revolver balance.
Capital spending for drilling and completions activity on operated wells in first-quarter 2019 was $279.7 million, including the utilization of two rigs in the Delaware which were released in mid-January and late March. WPX’s Delaware rig count is now at five, which will drive a lower run rate for the remainder of the year. WPX’s 2019 D&C budget for operated wells remains at $1.0-$1.1 billion.
During the first quarter, WPX also invested $101.9 million in land acquisitions, predominantly from the $100 million purchase of approximately 14,000 surface acres within its Stateline operations area. This was funded through proceeds from recent divestitures.
Clay Gaspar, WPX president and chief operating officer, said, “Our capital plan for 2019 is unchanged, as is our confidence in our execution. We’re seeing significant cost savings in the Delaware Basin, including a 17 percent decrease in our average two-mile well cost.”
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