With an average production rate of almost 10 MMcf/d in the first quarter, a discovery well in the Piceance Basin may produce in the first few months what a typical well in the Niobrara formation has done over 25 to 30 years, WPX energy CEO Ralph Hill said Thursday.

The one gas discovery well alone “has the potential to more than double” proved, probable and possible (3P) reserves, he said during an earnings conference call. “The discovery well in the Piceance Basin registered an average production rate of almost 10 MMcf/d in the first quarter, despite being choked back substantially,” Hill said. “It has already exceeded more than 1 Bcf in cumulative production.”

A second horizontal is under way in the Niobrara, with three more expected this year.

The Tulsa, OK-based explorer today is “encouraged by the stronger prices that started late in the quarter,” Hill said of natural gas. “WPX is ideally suited to capitalize on gas if the improved pricing is sustained. We have the track record, properties, permits, infrastructure and access to rigs to ramp up quickly, especially in the Piceance.”

WPX participated in 115 gross (92 net) U.S. wells in the the first three months of 2013, which were completed and readied for sales. Most of the wells were in the Piceance Basin, with 74 gross (71 net) wells, on five rigs running for most of the quarter.

The operator is sitting on estimated 10,000 remaining undrilled 3P locations in its Piceance “cornerstone asset,” which could substantially increase its proved reserves numbers, which totaled 4.5 Tcfe at the end of 2012.

“With increased natural gas prices, we think a more representative measure of our portfolio is our alternate reserves scenario showing 5.3 Tcf of domestic proved reserves, calculated using 2011 pricing featuring $3.68 natural gas which is below current prices,” Hill said.

In the Williston Basin, 12 gross (nine net) wells were completed in the first three months with four rigs deployed. “A shift to multi-well development pads, along with new completion efficiencies, is driving lower costs,” down 10-20% with the improvements,” management said.

Three Williston wells were drilled simultaneously in less than seven days using a “zipper frac” hydraulic fracturing application. “Previously, it would have taken 15 days to complete the three wells individually. The majority of future completions work in the Williston will be performed using zipper fracs on two or three wells simultaneously.”

WPX also completed seven gross (six net) wells in the Appalachian Basin from January through March; it has one rig deployed in Westmoreland County, PA. In Susquehanna County, PA, infrastructure resolutions also are ongoing.

In addition, exploratory oil drilling has begun in an undisclosed region of the United States where it plans to drill eight wells in two areas this year. Initial results are expected by mid-year, WPX said.

Results in the first three months of this year were in line with the company’s guidance, Hill said. “Domestic oil production is up. Appalachian production is incrementally higher and poised to keep growing with the infrastructure progress that’s finally beginning. We’re also creating value through cost savings…And we’re seeing the benefit of our new Willow Creek contract. That resulted in nearly $11 million of savings on Piceance gathering and processing expenses in the first quarter.”

Overall, U.S. and and international oil and gas production fell 10% from a year ago to 1.268 Bcfe/d, but it was in line with the company’s 2013 forecast. In the gas operations, total global output declined 10% to 1,021 MMcf/d, with San Juan Basin down 10%, Powder River Basin off 7%, and in the Piceance, gas output fell 4%. Only in the Marcellus Shale was gas production higher year/year, up 4%.

The gas declines followed WPX’s decision to reduce development in the lower price environment. “For example, on average, it takes approximately seven drilling rigs to maintain a flat natural gas production rate in the Piceance Basin,” management said. “At lower gas prices, WPX deployed an average of five rigs in the Piceance in the latter half of 2012 and first quarter of 2013.”

In the Appalachian Basin, Marcellus Shale production increased in 1Q2013 by 40% to 74 MMcf/d. The March exit rate was about 82 MMcf/d.

“Ongoing third-party infrastructure constraints are starting to be resolved,” said the company. “A service provider completed three field compression sites in March that support WPX production in Susquehanna County [PA]. Those facilities are undergoing startup procedures.”

Oil output in the Williston Basin jumped 50% year/year to average 11,500 b/d, compared with 7,700 b/d in 1Q2012. The gains came despite the effects early in the quarter from winter storms and sub-zero temperatures. “The sequential quarter increase would have been higher barring these short-lived impacts. For example, the average production rate in March was 12,500 b/d,” WPX said.

NGL production in the Piceance Basin also slumped year/year, down by nearly one-third to 20,200 b/d on lower ethane recovery rates. WPX’s ethane recovery rate in 1Q2013 was 47%.

Earnings were well below the year-ago report, which WPX attributed to “lower domestic net realized average prices, inclusive of hedges, and lower volumes for both natural gas and NGLs.”

Net losses from continuing operations totaled $116 million (minus 58 cents/share), versus a loss of $41 million (minus 21 cents) in the year-ago period. Excluding unrealized mark-to-market losses, continuing operations lost $51 million (minus 25 cents/share), versus a year-ago loss of $7 million (minus 4 cents).

Consolidated oil revenues in total jumped 31% year/year, but natural gas revenues fell 25%. Natural gas liquids (NGL) were off by 42% from the year-ago period. Net realized average prices for natural gas, including hedges, were $2.90/Mcf, down 17% from $3.48 in 1Q2012. Year/year, average oil prices were $89.77/bbl, up 6%, while NGLs fetched $28.21/bbl, down 16%.

Domestic expenses declined 18% from a year ago because of “lower gas management expenses, lower gathering, processing and transportation expenses and the absence of an impairment recorded in the 2012 period. Domestic lease operating expenses were $67 million, compared with $61 million in 1Q2012, which were attributed to increased water disposal costs resulting from decreased drilling and completion activities.

U.S. gathering, processing and transportation charges totaled $106 million, down from $135 million a year ago, in part because of a 21% improvement in the effect of “more favorable contract terms” in the Piceance.