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WPX Energy (WPX) Q4 Loss Narrower Than Expected, Revenues Up

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Independent oil & gas operator, WPX Energy Inc. (WPX - Free Report) incurred a loss of 2 cents per share in the fourth quarter of 2017, narrower than the Zacks Consensus Estimate of a loss of 8 cents. The quarterly loss was also narrower than the year-ago quarter’s loss of 67 cents.

WPX Energy, Inc. Price, Consensus and EPS Surprise

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

Total Revenues
WPX Energy’s quarterly revenues of $439 million surpassed the Zacks Consensus Estimate of $411 million by 6.7%. Further, total revenues improved 90% from $231 million in the year-ago quarter.  

Highlights of the Release
Total production in the fourth quarter was 130,600 barrels oil equivalent per day, up 47.0% year over year. Total liquids accounted for nearly 70% of the total production, reflecting the company’s increasing focus on oil.

Oil production in the quarter was 75,000 barrels per day, nearly 68% higher than the year-ago quarter level of 44,700 barrels per day.

Total expenses were $367 million, up 18.7% from $309 million in the year-ago quarter.

Interest expenses in the reported quarter were $47 million, down 2.1% from $48 million in the prior-year quarter.

WPX Energy’s proved reserves as of Dec 31, 2017 were 436.2 million barrels of oil equivalent (MMBoe). The company’s 60% of the proved reserves were oil, up from 50% in 2016.

Realized Prices & Hedges
Realized oil prices in the quarter were $51.50 per barrel, up 22.1% from the year-ago quarter.
Realized natural gas prices were $1.91 per thousand cubic feet (Mcf), down 10.3%. Realized prices for natural gas liquids were up 48.3% to $27.49 per barrel.

For 2018, WPX Energy has 56,979 barrels per day of oil hedged at a weighted average price of $52.72 per barrel. The company also has 131,616 MMBtu per day of natural gas hedged at a weighted average price of $2.99 per MMBtu.

Financial Update
WPX Energy generated $189 million of cash and cash equivalents as of Dec 31, 2017 compared with $496 million at the end of 2016.
Long-term debt as of Dec 31, 2017 was $2,575 million, unchanged from 2016-end levels.
Net cash from operating activities in 2017 was $507 million compared with $268 million in 2016. For the same period, capital expenditure was $1,161 million compared with $578 million in the year-ago period.

WPX Energy expects total production in 2018 to be within 117-126 thousand barrels of oil-equivalent per day (MBoe/d), within which oil production amounts 75-80 thousand barrels per day (Mbbl/d).

WPX Energy’s capital budget for continuing operations and midstream equity investment in 2018 is expected to be in the range of $1,160-$1,310 million.

Our View
WPX Energy's performance in fourth quarter was better than expected owing to production from its oil assets and recovery in commodity prices compared with the year-ago level.

The company continues to work on its strategy of increasing oil production, which is evident from the rising liquid mix in total production. Production from the Delaware Basin increased substantially during the fourth quarter with the help of assets acquired by the company during the first quarter.

We believe, post divestiture of its holding in San Juan Basin, WPX Energy's exposure in the Delaware and Williston basins will enable it to achieve its new goal of higher oil generation in 2018.

The company carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

Anadarko Petroleum Corp. reported fourth-quarter 2017 earnings of 18 cents per share, beating the Zacks Consensus Estimate of 3 cents by a whopping 500%.

Devon Energy Corp. (DVN - Free Report) reported fourth-quarter 2017 adjusted earnings per share of 38 cents, lagging the Zacks Consensus Estimate of 60 cents by 36.7%.

Noble Energy, Inc. (NBL - Free Report) incurred adjusted earnings of 32 cents per share for the fourth quarter of 2017, beating the Zacks Consensus Estimate of 4 cents by a whopping 700%.

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