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WPX Energy (WPX) Down 4.7% Since Earnings Report: Can It Continue?

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It has been more than a month since the last earnings report for WPX Energy, Inc. (WPX - Free Report) . Shares have lost about 4.7% in that time frame.

Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

WPX Energy Q2 Loss Narrower than Expected, '17 View Up

Independent oil & gas operator, WPX Energy reported a loss of 14 cents per share in the second quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 16 cents. The quarterly figure was also narrower than the year-ago quarter’s loss of 28 cents.

Total Revenue
 
WPX Energy’s quarterly revenues of $413 million surpassed the Zacks Consensus Estimate of $300 million by 37.7%. Further, total revenue jumped 199.3% from $138 million in the year-ago quarter.  

The year-over-year increase in total revenue was due to higher realized average prices and production volumes.

Oil and NGL sales of $249 million accounted for 86% of the company’s second-quarter total product revenues of $289 million.

Highlights of the Release
 

Total production in the second quarter was 106,200 barrels per oil equivalent (boe) per day, up 25% year over year. Total liquids accounted for 68% of the total production, reflecting the company’s increasing focus on oil.

Oil production was 58,600 barrels per day, nearly 43.0% higher than the year-ago quarter level of 40,900 barrels per day.

Total expenses were $344 million, down 21.3% from $437 million in the year-ago quarter.

Interest expenses in the reported quarter were $46 million, down 13.2% from $53 million in the prior-year quarter.

Realized Prices & Hedges
 
Realized oil prices in the quarter were $42.46 per barrel, up 10.6% from the year-ago quarter.
 
Realized natural gas prices were $2.13 per thousand cubic feet (Mcf), up 73.2%. Realized prices for natural gas liquids were up 63.1% to $18.28 per barrel.

For the rest of 2017, the company has 50,750 barrels per day of oil hedged at a weighted average price of $50.26 per barrel. Further, WPX Energy has 170,000 million British thermal unit (MMBtu) per day of natural gas hedged at a weighted average price of $3.02 per MMBtu.

For 2018, WPX Energy has 55,500 barrels per day of oil hedged at a weighted average price of $52.69 per barrel. The company also has 185,000 MMBtu per day of natural gas hedged at a weighted average price of $2.98 per MMBtu.

Financial Update
 

WPX Energy had $8 million of cash and cash equivalents as of Jun 30, 2017 compared with $496 million at the end of 2016.
 
Long-term debt as of Jun 30, 2017 was $2,601 million, up marginally from 2016 end levels of $2,575 million.
 
Net cash from operating activities in the first half of 2017 was $142 million compared with $89 million in the same period a year ago. Capital expenditure in the first half was $542 million compared with $291 million in the year-ago period.
 
Guidance

WPX Energy has raised its capital budget of 2017 to $990–$1070 million from $905–$985 million. More than half of the capital is targeted for development in the Delaware Basin.

The company raised its 2017 total production to 105–116 thousand barrel of oil equivalents per day (MBoe/d) from 103–113 MBoe/d.  Moreover, it raised its 2017 oil production to 57–60 thousand barrels per day (Mbbl/d) from 52–56 Mbbl/d. The company raised its 2017 oil volumes growth expectation to 40% from 30% from 2016 levels.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

WPX Energy, Inc. Price and Consensus

 

WPX Energy, Inc. Price and Consensus | WPX Energy, Inc. Quote

VGM Scores

At this time, the stock has a nice Growth Score of B, while it's Momentum is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been trending upward for the stock and the magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.




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