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WPX Energy (WPX) Q4 Loss Narrower than Expected, Sales Lag

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Independent oil & gas operator, WPX Energy Inc . WPX reported a loss of 16 cents per share in the fourth quarter of 2016, narrower than the Zacks Consensus Estimate of a loss of 17 cents.

Full-year adjusted loss was 82 cents compared with the Zacks Consensus Estimate of a loss of 83 cents.

Total Revenue

WPX Energy's quarterly revenues of $231 million missed the Zacks Consensus Estimate of $298 million by 22.5%. Further, total revenue slumped 38.3% from $167 million in the year-ago quarter. The year-over-year increase in total revenue was due to higher realized average prices and production volumes.

Total Revenue in 2016 was $693 million down 49.3% from the year-ago level and 29.7% lower than the Zacks Consensus Estimate.

Highlights of the Release

Total production in the fourth quarter was 88,700 barrels per oil equivalent (boe) per day, up 9% year over year. Total liquids accounted for 62% of the total production, reflecting the company's increasing focus on oil.

Oil production was 44,700 barrels per day which was nearly 15.8% higher than the year-ago quarter level of 38,600 barrels per day.

Total expenses were $309 million, down 0.9% from $312 million in the year-ago quarter.

Interest expenses in the reported quarter were $48 million, down 15.8% from $57 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 $42.18 per barrel, up 20.0% from the year-ago quarter.

Realized natural gas prices were $2.13 per thousand cubic feet (Mcf), down 17.7%. Realized prices for natural gas liquids were up 90.1% to $18.54 per barrel.

For 2017, the company has 39,554 barrels per day of oil hedged at a weighted average price of $50.93 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 30,000 barrels per day of oil hedged at a weighted average price of $54.61 per barrel. The company also has 155,000 MMBtu per day of natural gas hedged at a weighted average price of $2.98 per MMBtu.

Financial Update

WPX Energy had $496 million of cash and cash equivalents as of Dec 31, 2016, compared with $38 million at the end of 2015.

Long-term debt as of Dec 31, 2016 was $2,575 million, down from $3,189 million as of Dec 31, 2015.

Net cash from operating activities in 2016 was $206 million, compared with $811 million in the same period a year ago. Capital expenditure in 2016 was $578 million, compared with $1,124 million in the year-ago period.

Guidance

For 2017, WPX Energy has a capital budget of $870-$940 million. More than half of the capital is targeted for development in the Delaware Basin.

The company expects 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. Projected 2017 oil volumes represent 30% growth from 2016 levels.

Peer Releases

Anadarko Petroleum Corporation APC reported fourth-quarter 2016 adjusted loss of 50 cents per share, wider than the Zacks Consensus Estimate of a loss of 48 cents.

Devon Energy Corporation DVN is scheduled to report fourth-quarter 2016 earnings on Feb 14. The Zacks Consensus Estimate is pegged at 19 cents.

Noble Energy, Inc. NBL reported adjusted earnings of 26 cents per share for fourth-quarter 2016 compared with the Zacks Consensus Estimate of a loss of 9 cents.

Our View

WPX Energy's fourth-quarter loss was narrower than estimates and outlook of the company looks strong, due to its focus on oil production assets.

The company continues to work on its strategy of increasing oil production, which was evident from the rising liquid mix in total production. We believe WPX Energy's exposure in the Delaware, Williston and San Juan basins will enable it to achieve its goal of 30% higher oil generation in 2017 from 2016 levels.

WPX Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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