Citing 54% oil production growth over the past 12 months, WPX Energy Inc.'s CEO on Thursday acknowledged that 3Q2018 results were "slightly short of expectations," but predicted growth would double next year in the Permian and Williston basins.
"We're doing things from a technical standpoint that are cutting edge, and our oil growth is on track,” CEO Rick Muncrief said during an earning conference call. He said oil and natural gas can be a "humbling business," and even though oil production was up 54% year/year, it did not meet internal expectations.
"There were a combination of factors, some in our control and some outside," he said. "Nevertheless, we own these results,” and said a joint venture natural gas plant in the Permian’s Delaware sub-basin “is exactly the solution we envision."
Last year WPX and Howard Energy Partners joined forces in a 50-50 partnership to develop natural gas and crude oil gathering and processing infrastructure in the Stateline area of the Delaware sub-basin in West Texas, representing 50,000 net acres, or 37%, of the Tulsa-based producer's 135,000 net-acre position.
WPX oil volumes in 3Q2018 were up 3% sequentially and 54% year/year at 83,400 b/d. Oil revenues eclipsed $500 million for the first time in company history.
WPX has acquired some "smart equity positions" in several takeaway pipeline systems that offer the prospect of good returns when they are monetized, said Muncrief.
COO Clay Gaspar also cited an "incredibly successful data project" on the Pecos State well pad in West Texas. "The incredible amount of real time data that we were able to collect and truly see and hear happening downhole gave us the ability to alter our completion designs in real time during the completions.” WPX has deployed fiber optics, microseismic chemical tracers, geo-phones, and external pressure/temperature gauges.
The early results provide cost-saving and well performance enhancements, along with being an important investment, he said.
"What I can tell you is that today we much better understand the characteristics of proppant selection, carrying fluid, how to pump the job, perforation strategy, land zones, fracturing dimensions, and vertical and horizontal well spacing," Gaspar said.
In 3Q2018, WPX reported a net loss of $7 million (minus 1 cent/share), versus a year-ago loss of $149 million (minus 96 cents). The 3Q2018 loss primarily was driven by $139 million in hedging writedowns.