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WPX Energy Well Poised on Price Increase & Strong Production
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WPX Energy Inc. benefited owing to strong production from its oil assets and substantial recovery in commodity prices. The company continues to work on its strategy of increasing oil production, which is evident from the rising liquid mix. However, the competitive energy space, capital intensive operations and stringent regulations that are likely to increase the cost of drillings remain woes.
WPX Energy's first-quarter results were better than expected due to strong production from its oil assets. In additions, two acquisitions that were closed during the first quarter will help the company to further enhance its oil production in the near term.
Total production in the first quarter was 90,000 barrels per oil equivalent (boe) per day, up 12% year over year. Total liquids accounted for 64% of total production, reflecting the company’s increasing focus on oil. Realized oil prices in the quarter were $45.31 per barrel, up 76.8% from the year-ago quarter.
WPX Energy expects its 2017 oil production to increase 30% from 2016 levels. The company anticipates total production in 2017 of 103–113 thousand barrels of oil equivalents per day (MBoe/d), including 52–56 thousand barrels per day (Mbbl/d) of oil.
WPX Energy’s management has decided to rationalize its portfolio, improve its existing cost structure and focus more on core areas. The company plans to lower costs through reduced drilling times, efficient use of pad design and completion activities, and negotiating lower costs for vendor goods and services. These initiatives will help the company boost its margins.
Oil and gas operations are capital intensive. A company needs to have a stable cash flow generation capability and secure external funding to sustain exploration activity. WPX Energy’s business could be negatively impacted by adverse economic conditions and disruptions in the global financial markets. This might limit the company’s accessibility to the capital markets. Rising interest rates will increase the capital cost of its future projects.
WPX Energy uses the hydraulic fracturing method to produce commercial quantities of natural gas and oil from many of its existing reservoirs. There has been heightened debate about the usage of hydraulic fracturing and its impact on the environment. If legislations or regulations pertaining to the restricted use of hydraulic fracturing are implemented, it could result in increased costs and lower margins.
Price Movement
In the last one year, WPX Energy has outperformed the Zacks categorized Oil &Gas – Exploration and Production – U.S. . industry. During this period, the company’s shares gained 12.5% against the industry’s loss of 14.2%.
WPX Energy’s strong portfolio of assets, systematic acquisitions, improvement in its existing cost structure, expansion in the oil-rich Delaware Basin and a focus on core areas will drive performance.
Stocks to Consider
WPX Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are W&T Offshore Inc. (WTI - Free Report) , Bonanza Creek Energy, Inc. and Centennial Resource Development, Inc. . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
W&T Offshore reported a positive earnings surprise of 77.78% in the first quarter of 2017. Its 2017 earnings estimate moved to 64 cents from a loss of 39 cents in last 90 days.
Bonanza Creek Energy reported a positive earnings surprise of 100.0% in the first quarter of 2017. Its 2017 earnings estimate moved to 76 cents from a loss of $91.01 in the last 90 days.
Centennial Resource Development reported a positive earnings surprise of 33.3% in the first quarter of 2017. Its 2017 earnings estimate moved 35.7% to 19 cents.
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WPX Energy Well Poised on Price Increase & Strong Production
WPX Energy Inc. benefited owing to strong production from its oil assets and substantial recovery in commodity prices. The company continues to work on its strategy of increasing oil production, which is evident from the rising liquid mix. However, the competitive energy space, capital intensive operations and stringent regulations that are likely to increase the cost of drillings remain woes.
WPX Energy's first-quarter results were better than expected due to strong production from its oil assets. In additions, two acquisitions that were closed during the first quarter will help the company to further enhance its oil production in the near term.
Total production in the first quarter was 90,000 barrels per oil equivalent (boe) per day, up 12% year over year. Total liquids accounted for 64% of total production, reflecting the company’s increasing focus on oil. Realized oil prices in the quarter were $45.31 per barrel, up 76.8% from the year-ago quarter.
WPX Energy expects its 2017 oil production to increase 30% from 2016 levels. The company anticipates total production in 2017 of 103–113 thousand barrels of oil equivalents per day (MBoe/d), including 52–56 thousand barrels per day (Mbbl/d) of oil.
WPX Energy’s management has decided to rationalize its portfolio, improve its existing cost structure and focus more on core areas. The company plans to lower costs through reduced drilling times, efficient use of pad design and completion activities, and negotiating lower costs for vendor goods and services. These initiatives will help the company boost its margins.
Oil and gas operations are capital intensive. A company needs to have a stable cash flow generation capability and secure external funding to sustain exploration activity. WPX Energy’s business could be negatively impacted by adverse economic conditions and disruptions in the global financial markets. This might limit the company’s accessibility to the capital markets. Rising interest rates will increase the capital cost of its future projects.
WPX Energy uses the hydraulic fracturing method to produce commercial quantities of natural gas and oil from many of its existing reservoirs. There has been heightened debate about the usage of hydraulic fracturing and its impact on the environment. If legislations or regulations pertaining to the restricted use of hydraulic fracturing are implemented, it could result in increased costs and lower margins.
Price Movement
In the last one year, WPX Energy has outperformed the Zacks categorized Oil &Gas – Exploration and Production – U.S. . industry. During this period, the company’s shares gained 12.5% against the industry’s loss of 14.2%.
WPX Energy’s strong portfolio of assets, systematic acquisitions, improvement in its existing cost structure, expansion in the oil-rich Delaware Basin and a focus on core areas will drive performance.
Stocks to Consider
WPX Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are W&T Offshore Inc. (WTI - Free Report) , Bonanza Creek Energy, Inc. and Centennial Resource Development, Inc. . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
W&T Offshore reported a positive earnings surprise of 77.78% in the first quarter of 2017. Its 2017 earnings estimate moved to 64 cents from a loss of 39 cents in last 90 days.
Bonanza Creek Energy reported a positive earnings surprise of 100.0% in the first quarter of 2017. Its 2017 earnings estimate moved to 76 cents from a loss of $91.01 in the last 90 days.
Centennial Resource Development reported a positive earnings surprise of 33.3% in the first quarter of 2017. Its 2017 earnings estimate moved 35.7% to 19 cents.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>