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WPX Energy (WPX) Reports Wider-than-Expected Loss in Q2
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Independent oil & gas operator WPX Energy Inc. reported a loss of 28 cents per share in the second quarter of 2016, wider than the Zacks Consensus Estimate of a loss of 22 cents. In the year-ago quarter, the company incurred a loss of 11 cents per share.
The deeper loss was due to lower commodity prices. Despite a rebound in oil prices in the second quarter of the year, prices were much below the year-ago quarter.
WPX Energy’s quarterly revenues of $138 million missed the Zacks Consensus Estimate of $268 million by 48.5%. Total revenues were down 10.4% from $154 million in the year-ago quarter.
Highlights of the Release
Total production in the second quarter was 85,200 barrels per oil equivalent (boe) per day, up 34% year over year. Oil volumes accounted for nearly 48% of the total production, with total liquids accounted for 60% of the total production. This is a result of WPX Energy’s increasing focus on oil.
Oil, NGL and natural gas production improved by 32%, 92% and 26%, respectively, year over year.
Total expenses were $437 million, up 341% from $99 million in the year-ago quarter. Excluding the gain in sale of assets, total expenses were up 43.6%.
Interest expenses in the reported quarter were $53 million, increasing 65.6% from $32 million in the year-ago quarter.
Realized oil prices in the quarter were $39.81 per barrel, down 20.0% from the year-ago quarter.
Realized natural gas prices were $1.63 per thousand cubic feet (Mcf), down 26.0% from the prior-year quarter. Realized prices for natural gas liquids were down 11.0% to $15.02 per barrel from the year-ago quarter.
Thanks to the recovery in prices during the second quarter, weighted average gross sales price for oil and NGLs rose sequentially by 49% and 29%, respectively.
For the remainder of 2016, WPX Energy has 30,712 barrels per day of oil hedged at a weighted average price of $60.16 per barrel. For 2017, the company has 25,054 barrels per day of oil hedged at a weighted average price of $50.74 per barrel.
Financial Update
WPX Energy had $1,031 million of cash and cash equivalents as of Jun 30, 2016, compared with $38 million at the end of 2015.
Long-term debt as of Jun 30, 2016, was $2,572 million, down from $3,189 million as of Dec 31, 2015.
Net cash from operating activities in first-half 2016 was $85 million compared with $430 million in the same period a year ago.
Guidance
In June, WPX Energy increased its oil production guidance for 2016 by nearly 5% from its earlier projection. The company now expects oil production to be in the range of 39,000–41,000 barrels of oil per day, up from the earlier expectation of 37,000–39,000 barrels per day.
As a result of the uptick in oil production expectation, the total production guidance has also moved up by 3% to 77–82 thousand barrels of oil equivalent per day (Mboe/d) from 75–80 Mboe/d.
Despite the increase in total production guidance and additional activities to strengthen its existing infrastructure, total drilling and completion budget for 2016 is expected to be in the range of $400 million to $450 million, well within the original guidance range of $350 million to $450 million.
Other Company Releases
Devon Energy Corp. (DVN - Free Report) reported second-quarter 2016 adjusted earnings per share of 6 cents, while the Zacks Consensus Estimate was a loss of 22 cents.
Anadarko Petroleum Corporation reported second-quarter 2016 adjusted loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 77 cents.
Noble Energy, Inc. reported an adjusted loss of 24 cents per share for the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 31 cents.
Our View
WPX Energy’s loss in the second quarter was wider than expected due to still weak commodity prices. This was the fifth quarter in a row in which the company incurred a wider-than-expected loss.
The company continues to work on its strategy to increase oil production and the impact was clearly noticed in its second-quarter production mix. We believe WPX Energy’s exposure in the Delaware, Williston and San Juan basins will help it to achieve its production goal for 2016.
WPX Energy has a Zacks Rank #2 (Buy).
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WPX Energy (WPX) Reports Wider-than-Expected Loss in Q2
Independent oil & gas operator WPX Energy Inc. reported a loss of 28 cents per share in the second quarter of 2016, wider than the Zacks Consensus Estimate of a loss of 22 cents. In the year-ago quarter, the company incurred a loss of 11 cents per share.
The deeper loss was due to lower commodity prices. Despite a rebound in oil prices in the second quarter of the year, prices were much below the year-ago quarter.
Total Revenues
WPX Energy’s quarterly revenues of $138 million missed the Zacks Consensus Estimate of $268 million by 48.5%. Total revenues were down 10.4% from $154 million in the year-ago quarter.
Highlights of the Release
Total production in the second quarter was 85,200 barrels per oil equivalent (boe) per day, up 34% year over year. Oil volumes accounted for nearly 48% of the total production, with total liquids accounted for 60% of the total production. This is a result of WPX Energy’s increasing focus on oil.
Oil, NGL and natural gas production improved by 32%, 92% and 26%, respectively, year over year.
Total expenses were $437 million, up 341% from $99 million in the year-ago quarter. Excluding the gain in sale of assets, total expenses were up 43.6%.
Interest expenses in the reported quarter were $53 million, increasing 65.6% from $32 million in the year-ago quarter.
WPX ENERGY INC Price, Consensus and EPS Surprise
WPX ENERGY INC Price, Consensus and EPS Surprise | WPX ENERGY INC Quote
Realized Prices & Hedges
Realized oil prices in the quarter were $39.81 per barrel, down 20.0% from the year-ago quarter.
Realized natural gas prices were $1.63 per thousand cubic feet (Mcf), down 26.0% from the prior-year quarter. Realized prices for natural gas liquids were down 11.0% to $15.02 per barrel from the year-ago quarter.
Thanks to the recovery in prices during the second quarter, weighted average gross sales price for oil and NGLs rose sequentially by 49% and 29%, respectively.
For the remainder of 2016, WPX Energy has 30,712 barrels per day of oil hedged at a weighted average price of $60.16 per barrel. For 2017, the company has 25,054 barrels per day of oil hedged at a weighted average price of $50.74 per barrel.
Financial Update
WPX Energy had $1,031 million of cash and cash equivalents as of Jun 30, 2016, compared with $38 million at the end of 2015.
Long-term debt as of Jun 30, 2016, was $2,572 million, down from $3,189 million as of Dec 31, 2015.
Net cash from operating activities in first-half 2016 was $85 million compared with $430 million in the same period a year ago.
Guidance
In June, WPX Energy increased its oil production guidance for 2016 by nearly 5% from its earlier projection. The company now expects oil production to be in the range of 39,000–41,000 barrels of oil per day, up from the earlier expectation of 37,000–39,000 barrels per day.
As a result of the uptick in oil production expectation, the total production guidance has also moved up by 3% to 77–82 thousand barrels of oil equivalent per day (Mboe/d) from 75–80 Mboe/d.
Despite the increase in total production guidance and additional activities to strengthen its existing infrastructure, total drilling and completion budget for 2016 is expected to be in the range of $400 million to $450 million, well within the original guidance range of $350 million to $450 million.
Other Company Releases
Devon Energy Corp. (DVN - Free Report) reported second-quarter 2016 adjusted earnings per share of 6 cents, while the Zacks Consensus Estimate was a loss of 22 cents.
Anadarko Petroleum Corporation reported second-quarter 2016 adjusted loss of 60 cents per share, narrower than the Zacks Consensus Estimate of a loss of 77 cents.
Noble Energy, Inc. reported an adjusted loss of 24 cents per share for the second quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 31 cents.
Our View
WPX Energy’s loss in the second quarter was wider than expected due to still weak commodity prices. This was the fifth quarter in a row in which the company incurred a wider-than-expected loss.
The company continues to work on its strategy to increase oil production and the impact was clearly noticed in its second-quarter production mix. We believe WPX Energy’s exposure in the Delaware, Williston and San Juan basins will help it to achieve its production goal for 2016.
WPX Energy has a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>