Independent oil & gas operator WPX Energy Inc. (WPX) reported earnings of 6 cents per share in the second quarter, which convincingly beat the Zacks Consensus Estimate of a loss of 10 cents by 160%. In the prior-year quarter, the company had reported a net loss of 22 cents per share.
The strong performance of WPX Energy in the reported quarter was primarily attributable to a 57% increase in domestic oil production.
On a GAAP basis, the company reported a loss of 66 cents per share versus earnings of 9 cents per share in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to a loss of 61 cents associated with the sale of working interests in certain Piceance Basin natural gas wells and domestic exploratory well costs and leasehold expenses of 11 cents.
Total Revenue
WPX Energy’s quarterly revenues of $814 million surpassed the Zacks Consensus Estimate of $745 million by 9.3%. Total revenues were marginally lower than the year-ago figure of $815 million.
Highlight of the Release
Total average daily production in the second quarter 2014 was 1,249 million cubic feet equivalent per day (MMcfe/d), down 1.0% from 1,262 MMcfe/d in the year-ago quarter. However, total production in the reported quarter exceeded the company’s guidance of 1,183–1,195 MMcfe/d on the back of robust domestic oil production. Domestic oil production was driven by higher volumes in the Williston Basin, which grew 53% year over year.
Consolidated natural gas production of 965 million cubic feet per day (MMcf/d) in second-quarter 2014 exceeded the company’s guidance of 918–925 MMcf/d. Natural gas liquids (NGL) production of 18.3 thousand barrels per day (Mbbl/d) was in line with the low end of WPX’s guidance range of 18.3–18.7 Mbbl/d.
Realized prices of oil, natural gas and natural gas liquids were higher than the comparable prior-year period. The realized price of oil was $89.24 per barrel, up 1.7% year over year. The realized price of natural gas was $3.62 per thousand cubic feet (Mcf), up 4.9% year over year. The realized price of natural gas liquids was $33.58 per barrel, up 11.1%.
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Total expenses in the reported quarter were $993 million, up nearly 30% year over year.
Interest expenses in the reported quarter were $28 million, in line with the year-ago quarter.
Guidance
Taking into account robust second quarter 2014 oil production, WPX Energy has raised its 2014 total production guidance on an equivalent basis to 1,209–1,256 MMcfe/d from the previous projection of 1,203 MMcfe/d–1,217 MMcfe/d.
The revised guidance takes into account the impact of sale of a portion of the company’s working interest in the Piceance Basin and a higher growth rate for domestic oil production.
Other Company Releases
EOG Resources Inc. (EOG) posted net earnings of $1.45 per share in second quarter 2014, surpassing the Zacks Consensus Estimate of $1.36 by 6.6%.
EQT Corporation (EQT) posted earnings of 81 cents per share in second quarter 2014, surpassing the Zacks Consensus Estimate by 1.3%.
Pioneer Natural Resources Co. (PXD) posted earnings of $1.36 per share in second quarter 2014, surpassing the Zacks Consensus Estimate by 7.1%.
Our View
WPX Energy beat expectations significantly in the second quarter, thanks to higher domestic oil production as well as realized prices.
WPX Energy made capital investments of $728 million in the first half of 2014 and is on course to meet its target of $1.56 billion to $1.64 billion for 2014. The company is making systematic investments to develop its Williston, Piceance and San Juan Gallup assets. The company has started to realize the benefits of its investments in these reserve rich assets.
WPX Energy currently holds a Zacks Rank #1 (Strong Buy).
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