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WPX Energy Outlines Multi-Year Strategy


Plan Emphasizes Capital Efficiency, Oil Growth, Scalability and Culture Change

TULSA, Okla.--(BUSINESS WIRE)-- WPX Energy (NYSE:WPX) announced today a strategy to simplify its geographic focus and expand returns, margins and cash flow over the next five years.

Key to the company’s strategy are three core resource plays in North Dakota, New Mexico and Colorado where WPX has an estimated 16,000 remaining drillable locations on a gross basis, more than 14 trillion cubic feet of proved, probable and possible (3P) reserves at year-end 2013 and approximately 480,000 net acres.

“We’re confident we have the right building blocks in the Williston, San Juan and Piceance basins. We have upside in all three. Our strategy accelerates our oil development and capitalizes on what we can gain from technical excellence, new technology and greater economies of scale,” said President and Chief Executive Officer Rick Muncrief.

WPX already is executing on its strategy by completing its first two 7,500-foot laterals in the San Juan’s Gallup oil play and implementing 6 million pound completions in the Williston. Early results from doubling the stimulation size showed a 14 percent production increase from three Bakken Shale wells and a 13 percent increase from three wells in the Three Forks formation.

Ultimately, WPX believes that its strategy gives it the opportunity to increase oil production five-fold and triple its operating margins and company value by the year 2020 compared to its results last year.


During its spinoff more than two years ago, WPX’s portfolio consisted of assets in eight areas – seven domestic plays along with South American interests through ownership in Apco Oil and Gas International.

After divesting its properties in Texas and Oklahoma, WPX moved forward with assets in six areas. Now, WPX is narrowing its investment strategy to half of its properties – the Williston, San Juan and Piceance basins.

The balance of properties is either in the process of sale or targeted for divestiture. WPX previously announced the sale of its coalbed methane assets in Wyoming and its international interests in Apco.

Within its three core resource plays, WPX will prioritize capital based on the highest long-term returns. This includes advancing the company’s oil development and shifting capital within basins from historical areas of emphasis to new ones with greater opportunity. For example:

  • Earlier this year, WPX accelerated the development of its Gallup oil discovery in the San Juan Basin, increasing the expected 2014 well count from 29 to 40. Following a previously disclosed purchase in the basin, WPX now expects to spud 48 Gallup wells by year end.
  • WPX previously concentrated capital in the Piceance Basin to its properties in the Piceance Valley. WPX will start shifting more capital in the basin to opportunities in the Ryan Gulch field where it has more than 4,000 remaining drillable locations at 10-acre spacing.

WPX’s goal for its annual capital program is to have at least a 30 percent internal rate of return at reasonable commodity price assumptions. WPX’s highest returns today are in the Gallup and Bakken Shale oil plays.


WPX expects to maximize returns and margins by increasing the amount of oil production in the company’s historically gas-weighted portfolio. Progress is occurring.

In 2012, oil accounted for 8 percent of WPX’s equivalent production. In 2013, oil accounted for 10 percent of WPX’s equivalent production. During second-quarter 2014, oil comprised 14 percent of equivalent volumes.

Over the same time frame, oil sales – as a percentage of WPX’s total product revenues – have risen from 23 percent to 37 percent.

“Here’s the fundamental question I hear: ‘Are you a gas company or are you going to be an oil company?’ For WPX, it’s not either or. We’re both,” Muncrief said.

“With the depth we have in our gas reserves, we like the optionality it gives us. We also believe that our gas is going to be advantaged on pricing because of the access we have to premium western markets.

“At the same time, increasing our oil output brings significant value to our stockholders. Ideally, oil will account for more than 25 percent of our total volumes as we execute on our strategy. That’s going to require us to achieve a five-fold increase in our oil production compared to what we did domestically last year.”


WPX has an established leadership position in the Piceance Basin with more than 220,000 net acres and more than 4,600 wells, providing a model for innovation, efficiency and scalability that the company is working to replicate in its core resource plays. In particular:

  • Building positions that are large enough to drive economies of scale and enhanced returns
  • Adding acreage and inventory through logical acquisitions, bolt-on opportunities and creative structures

Along these lines, WPX has taken its Gallup Sandstone oil exploration project in the San Juan Basin from zero locations to more than 400 in less than 18 months. At the same time, it reduced its average well cost in the basin by 26 percent during the first half of 2014 compared to 2013. WPX now owns or controls approximately 84,000 net acres in the Gallup oil window.

“Scale drives efficiency,” Muncrief added. “All three of our core resource plays have opportunities to increase returns through cost reductions and other operational efficiencies, especially with cycle times, GP&T expense and D&C costs.

“By driving down development costs, we’re increasing our amount of available capital. That can be a sizeable number considering that there are opportunities to save anywhere from a quarter million dollars per well to a million dollars per well,” Muncrief said.

For example, WPX plans to improve its drilling economics in the Williston Basin before boosting its rig count there. As previously announced, WPX also is optimizing its completion practices in the basin with the goal of increasing initial production rates and estimated ultimate recoveries.

Additionally, WPX expects to increase inventory through oil-focused exploration and ongoing resource assessment. WPX plans to test potential for inventory growth in all three of its core basins.


“The value in our strategy comes down to how well we execute. Changing how we think about our assets and how we manage our business are critical to our success,” Muncrief added. “The greatest change at WPX may very well come from within.”

Accountability, greater risk tolerance, a cost-conscious mindset, faster decision-making, a spirit of tenacity and reduced complexity are an integral part of WPX’s culture change.

WPX is taking steps to re-align its organizational structure with the company’s multi-year strategy. These actions include creating a leadership position for business development, embedding additional staff within the resource plays, and consolidating some functions such as engineering, supply chain management and exploration, similar to how WPX streamlined its drilling team in 2013.

WPX also recently completed an early retirement program. More than 100 people accepted offers for early retirement. Upon the completion of pending and potential asset sales, G&A costs will be further affected.

“Our mission is aggressive and measurable. By casting a vision and setting out our strategy, we’re defining what success looks like and providing a means to track our progress. This is part of creating a high accountability culture at WPX and focusing on our long-term value proposition,” Muncrief said.


WPX management will discuss its company vision and business strategy during a webcast starting at 10 a.m. Eastern tomorrow, Oct. 9. Participants are encouraged to access the event at

A limited number of phone lines will be available at 877-201-0168. International callers should dial 647-788-4901. The conference identification code is 7437634. The slides for the webcast are available for download today at


WPX Energy develops and operates oil and gas producing properties in North Dakota, New Mexico and Colorado. The company has a long history of innovation and stakeholder engagement, recognized through more than 40 local, state and federal awards.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by WPX Energy on its website or otherwise. WPX Energy does not undertake and expressly disclaims any obligation to update the forward-looking statements as a result of new information, future events or otherwise. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla., 74102, or from the SEC’s website at

Additionally, the SEC requires oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and governmental regulations. The SEC permits the optional disclosure of probable and possible reserves. From time to time, we elect to use “probable” reserves and “possible” reserves, excluding their valuation. The SEC defines “probable” reserves as “those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC defines “possible” reserves as “those additional reserves that are less certain to be recovered than probable reserves.” The Company has applied these definitions in estimating probable and possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC‘s reserves reporting guidelines. Investors are urged to consider closely the disclosure in our SEC filings that may be accessed through the SEC’s website at

The SEC’s rules prohibit us from filing resource estimates. Our resource estimations include estimates of hydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or even possible reserves, (ii) other areas to take into account the low level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Resource estimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon. Resource estimates might never be recovered and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.

Source: WPX Energy Inc

WPX Energy.

Media Contact:

Kelly Swan, 539-573-4944


Investor Contact:

David Sullivan, 539-573-9360

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