Tulsa’s WPX Energy reported increased oil production as well as second quarter income for 2019. Total production revenues for the quarter came to $558 million and were seven percent higher than the second quarter of 2018.
Total product revenues of $1,065 million during the first half of 2019 were 15 percent higher than $927 million in the first half of 2018.
The company reported unaudited second-quarter income available to common stockholders of $305 million, or income of $0.72 per share on a diluted basis. This includes a $247 million recorded gain related to WPX’s equity interest in the sale of the Oryx II pipeline project.
Excluding the Oryx gain and other items such as derivatives, WPX posted adjusted net income of $0.09 per share. A reconciliation accompanies this press release.
For the first half of 2019, WPX posted net income from continuing operations attributable to common shareholders of $257 million, including $373 million of gains on equity method investment transactions, a $129 million net loss on derivatives from its hedge book, and a favorable margin on commodity management.
Total production in the second quarter averaged 159.6 MBoe/d, which was 28 percent higher vs. a year ago. Oil and natural gas liquids volumes comprised 79 percent of total volumes. Oil sales of $511 million from 97.9 Mbbl/d accounted for 92 percent of second-quarter product revenues.
Cash flow from operations, inclusive of hedge impact, in the first half of 2019 was $634 million, including $362 million in the second quarter. Cash flow for the first half of 2019 was 48 percent higher than the same period a year ago.
WPX’s board of directors has authorized a plan for the company to repurchase up to $400 million of shares over the next 24 months.
“This accelerates our original plan to return capital to shareholders in 2021,” said Rick Muncrief, WPX chairman and chief executive officer.
“The current market sentiment has created favorable circumstances for an action like this, and if the market remains irrational, we will be opportunistic. Doing so will not impact our expected development cadence in 2020 or our ability to continue to grow production. We expect to generate $100 million to $150 million in free cash flow in the back half of this year, which will help support our repurchase program,” Muncrief added.
WPX now expects full-year total production of 160-165 Mboe/d in 2019, up from prior estimates of 149-161 Mboe/d.
WPX now expects to produce 101-103 Mbbl/d of oil for full-year 2019, up from prior estimates of 96-100 Mbbl/d. Third-quarter oil volumes are driving the upward revision.
WPX expects to average 108-111 Mbbl/d of oil in the third quarter. WPX expects fourth-quarter oil production to moderate following the third-quarter surge.
Total capital spending in the second quarter was $341 million, predominantly from $287 million in D&C activity for operated wells, $7.5 million in non-op D&C activity and $40.6 million for midstream infrastructure.
Capital spending in the first half of the year, excluding land, represents 55 percent of WPX’s 2019 budget, which is consistent with the company’s plan and development cadence. WPX’s $100 million land purchase in the first quarter was funded through proceeds from divestitures.
Second-quarter capital activity reflects a $42 million increase in the company’s in-process development activities, primarily driven by the timing of 24 wells that went to first sales in July and the pace of midstream development which was weighted toward the first half of the year.
WPX’s 2019 total capital development plan remains unchanged at $1,100-$1,275 million, including $1,000-$1,100 million for operated D&C activity; $50-$75 million for non-op D&C activity; and $50-$100 million for midstream opportunities.
WPX’s Delaware production averaged 96.6 Mboe/d in second-quarter 2019, which was 30 percent higher than 74.4 Mboe/d in the same period a year ago.
Oil production of 46.4 Mbbl/d comprised 48 percent of second-quarter total Delaware production. Oil volumes were up 19 percent vs. 39.1 Mbbl/d in the second quarter a year ago.
WPX’s average realized oil price in the Delaware was WTI plus $0.23 for the quarter, including Midland basis swaps. The basis swaps increased the average realized price by $0.64 per barrel.
WPX’s average realized natural gas price in the Delaware was NYMEX less $0.59 for the quarter, including basis swaps which increased the average realized price by $0.79 per Mcf. WPX also realized $15 million in net commodity management margins, or $0.94 per Mcf, related to further risk management activities around Delaware natural gas pricing exposure.
WPX completed 16 Delaware wells during the second quarter, including seven in the Wolfcamp A interval and five wells in the Third Bone Spring formation. Ten of the completions featured lateral lengths exceeding 10,000 feet.
Four of the second-quarter Wolfcamp A wells were on the CBR 18-19 pad. The four wells have combined 60-day cumulative production in excess of 268,000 barrels of oil. Sixty-day cumulative Boe for the four wells was 558,000. The highest 24-hour rate for the CBR 18-19 pad occurred on the 7H well, which was 3,822 Boe/d on restricted flowback.
The five wells in the Third Bone Spring formation came online late in the quarter on two pads – the CBR 22-27 and the CBR 11-2. All five wells averaged at least 50 percent oil during initial production, topped by the CBR 11-2D-56-1-334H well at 70 percent. The five wells posted 24-hour initial highs averaging 4,068 Boe/d, led by the CBR 11-2C-56-1-333H at 4,602 Boe/d.
WILLISTON BASIN: 2Q WELL HITS HIGH OF 5,862 BOE/D (81% OIL)
Williston Basin production averaged 63.0 Mboe/d in second-quarter 2019, which was 25 percent higher than 50.6 Mboe/d in the same period a year ago.
WPX completed 12 Williston wells during the second quarter, including seven wells in the Three Forks formation and five wells in the Bakken formation. The wells were predominantly two-mile laterals.
The highest 24-hour rate for the second-quarter Williston completions was 5,862 Boe/d (81% oil) on the Minot Grady 26-35HD well. The seven-well pad averaged nearly 4,300 Boe/d (81% oil) during initial production.
Initial peak rates on the three-well Delores Sand pad also averaged nearly 4,300 Boe/d (81% oil). The highest 24-hour rate on the pad was 5,344 Boe/d on the 29-32 HD well.