EnerCom Dallas Rick Muncrief, Chairman & CEO March 1, 2017

Transcription

1 EnerCom Dallas 2017 Rick Muncrief, Chairman & CEO March 1, 2017

2 Bias for Action (MAY 2014 MAY 2016) WE BUILT A BRAND NEW COMPANY 2

3 WPX s Portfolio PRODUCT MIX DELAWARE WELL ECONOMICS Flat $54.09 Oil and $2.91 Gas 1 16% NGL 30% GAS DELAWARE LONG LATERALS 3 100%+ WILLISTON 8% 9% NGL GAS 54% OIL DELAWARE (WCA) WILLISTON SAN JUAN GALLUP 80%+ 70%+ ROR 2 83% OIL SAN JUAN GALLUP WILLISTON BASIN 22% NGL 31% GAS 47% OIL SAN JUAN BASIN HEADQUARTERS TULSA DELAWARE BASIN 1 3-year average strip price as of February 24, Excludes G&A, acquisition land costs, and interest expense. Assumes vision for Delaware and Williston 3

4 OIL MBBL/D MILLIONS ($) Panther Acquisition Enhances Sustained Growth Outlook ASSET QUALITY SUPPORTS RAPID GROWTH ASSET QUALITY SUPPORTS RAPID GROWTH C A G R : 3 0 % - 40% C A G R : 3 0 % - 40% $2,500 $2, $1, $1, $ $ UPDATED PRO FORMA RANGE PREVIOUS FORECAST UPDATED PRO FORMA RANGE PREVIOUS FORECAST 30% oil growth in % oil growth in 2018 Panther acquisition enhances growth strategy Free cash-flow positive by year-end 2018 Assumes modest 1-3 rig additions per year Assumes 2017 WTI $50Bbl /NYMEX $2.75Mcf and WTI $55Bbl /NYMEX $3.00Mcf. 4

5 Expanding WPX s World-Class Delaware Position PANTHER ACQUISITION OVERVIEW 18,000+ acres in core of Delaware EDDY 920 gross locations, including 150+ long lateral locations Significant current production of ~6,500 Boe/d (55% oil) LEA Maintain Panther s current 2 rig program Valuation primarily supported on 3 zones with upside in 5 additional zones Expected to close in late March N E W M E X I C O T E X A S LOVING WINKLER BENEFITS HIGH QUALITY ROCK Multiple stacked pay intervals with significant upside CULBERSON WARD SELF-FUNDING DEVELOPMENT 2 rig program funded with operating cashflows REEVES DEEP INVENTORY OF CORE DELAWARE Resource supports sustained growth ACCRETIVE TO CASHFLOWS AND NAV Accretive to shareholders 2017 and beyond WPX OPERATED ACREAGE PANTHER ACREAGE PECOS 5

6 THICK Hydrocarbon Stack Across Entire Acreage Position A STATE LINE LOG B EAST TYPE LOG C CENTRAL TYPE LOG D SOUTH TYPE LOG EDDY LEA N E W M E X I C O A LOVING B T E X A S WINKLER C WARD REEVES D WPX OPERATED ACREAGE ACQUIRED ACREAGE De-risked pay section across acreage with substantial UPSIDE DE-RISKED UPSIDE POTENTIAL 6

7 350 FT Delaware Basin: Delineation of the Wolfcamp XY C-STATE 16-1H IP 30: 1,635 BOE/D (65% OIL) 90 DAY CUM: 114,338 BOE LEA DELINEATING WOLFCAMP ACROSS POSITION EDDY E. PECOS FED COM 22-14H IP 30: 1,736 BOE/D (30% OIL) 90 DAY CUM: 139,336 BOE WOLFCAMP XY-PECOS STATE 46-6H Lateral length: ~4,800 ft Proppant (#/ft): ~1,750 Utilized diverter Hybrid completion design N E W M E X I C O D LINDSAY 16-6H IP 30: 1,434 BOE/D (18% OIL) 90 DAY CUM: 119,047 BOE Tracking in-line with WCA 1,000 MBOE type curve after 45 days Engineered completions T E X A S D WOLFCAMP D-PECOS STATE 46-5H PECOS STATE 46-6H IP 30: 1,780 BOE/D (50% OIL) REEVES XY D LOVING PECOS STATE 46-5H IP 30: 1,628 BOE/D (22% OIL) Lateral length: ~4,850 ft Proppant (#/ft): ~2,750 Currently producing with 3,800 psi flowing tubing pressure (2-17) Utilized diverter Hybrid completion design Engineered completions CULBERSON WPX OPERATED ACREAGE PANTHER ACREAGE CBR SPACING TEST UNDERWAY PURPOSE OF TEST Validate 16 well U/L Wolfcamp A spacing Understand future infrastructure needs UPDATE ON CBR Expected first sales end of March 16 day record well spud-to-rig release WOLFCAMP X/Y UPPER WOLFCAMP A LOWER WOLFCAMP A WOLFCAMP B Encouraging DFIT results Note: Well production data is on a 3-stream basis 1 MILE 7

8 Williston Basin: Strong, Consistent Results 39% oil growth 4Q 16 vs 3Q 16 4Q production 28.8 MBOE/d Set new drilling record of 11.7 days 1 WILLISTON HIGHLIGHTS Completed DUC inventory Current total well cost $5.5MM 100,000 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, DAYS CUM OIL PRODUCTION FOR 2016 NEW WELLS 2 WPX PEER 1 PEER 2 PEER 3 PEER 4 PEER 5 PEER 6 PEER 7 PEER 8 PEER 9 14 wells on 1 st sales during 4Q 6 Middle Bakken and 8 Three forks wells 180, , DAYS CUM OIL PRODUCTION FOR 2016 NEW WELLS 2 140, ,000 #1 PRODUCER ON CUMULATIVE OIL BASIS 90 DAYS/180 DAYS 2 100,000 80,000 60,000 40,000 20,000 - WPX PEER 1 PEER 2 PEER 3 PEER 4 PEER 5 PEER 6 PEER 7 PEER 8 PEER 9 1 Spud-to-rig release for a 2-mile lateral 2 Public data based on production from wells completed in 2016 Peers include AXA,BURLINGTON RESOURCES,EOG,ERF,HESS,LIBERTY RESOURCE,MRO,NFX,OAS,PETRO-HUNT,QEP,SM,STL,TPLM,WLL,XTO 8

9 Cum Production MBOE San Juan Basin: Continued Strong Well Results CONTINUING TO RAISE THE BAR 21% oil growth 4Q 16 vs 3Q SAN JUAN GALLUP WELLS Set new basin record Drilled 1.5 mile lateral in 5.8 days Strong performance on 6-well pad Cumulative 180-day production: +1.0 MMBOE Average day: ~1,000 BOE/D per well (70% oil) Average lateral length: 7,250 ft. Average D&C cost: ~$4.1MM Focused on West Lybrook in 2017 New rig spud first well 12/31/ Days of Production 65% IN EUR SINCE INCREASE CURRENT 650 MBOE 6-WELL PAD 2016 GALLUP WELLS Note: Well production data is on a 3-stream basis well performance based on 1 mile laterals, 2016 based on average of 7,200 laterals 9

10 Contracted Service Cost Mitigates Potential Inflation 2017 D&C COST BREAKDOWN Fluids/Cuttings/Solids Control Directional Equipment & Services Chemicals Other (Completions) Other (Drilling) Sand Stimulation Services Drilling Rigs Tubulars/Wellhead Cementing Material and Services Water of D&C costs are contracted through 2017 Majority of services exposed to inflation are contracted Focused on securing services since 2Q 2016 to prepare for activity ramp Some contracts go through 2018, others have options to extend past 2017 ~90% of D&C costs go through Supply Chain Mgmt. Contracts in Place for 2017 Services Exposed to Spot Market Note: D&C components based on latest blended AFE (Williston, San Juan, Delaware) 10

11 Foundation in Place for Enhancing and Accelerating Value POSITIONED PRUDENT WILLISTON BASIN FLEXIBLE SAN JUAN BASIN HEADQUARTERS: TULSA DELAWARE BASIN DISCIPLINED 11

12 Disclaimer The information contained in this summary has been prepared to assist you in making your own evaluation of the Company and does not purport to contain all of the information you may consider important in deciding whether to invest in shares of the Company s common stock. In all cases, it is your obligation to conduct your own due diligence. All information contained herein, including any estimates or projections, is based upon information provided by the Company. Any estimates or projections with respect to future performance have been provided to assist you in your evaluation but should not be relied upon as an accurate representation of future results. No persons have been authorized to make any representations other than those contained in this summary, and if given or made, such representations should not be considered as authorized. Certain statements, estimates and financial information contained in this summary constitute forward-looking statements or information. Such forward-looking statements or information involve known and unknown risks and uncertainties that could cause actual events or results to differ materially from the results implied or expressed in such forward-looking statements or information. While presented with numerical specificity, certain forward-looking statements or information are based (1) upon assumptions that are inherently subject to significant business, economic, regulatory, environmental, seasonal, competitive uncertainties, contingencies and risks including, without limitation, the ability to obtain debt and equity financings, capital costs, construction costs, well production performance, operating costs, commodity pricing, differentials, royalty structures, field upgrading technology, and other known and unknown risks, all of which are difficult to predict and many of which are beyond the Company's control, and (2) upon assumptions with respect to future business decisions that are subject to change. There can be no assurance that the results implied or expressed in such forward-looking statements or information or the underlying assumptions will be realized and that actual results of operations or future events will not be materially different from the results implied or expressed in such forward-looking statements or information. Under no circumstances should the inclusion of the forward-looking statements or information be regarded as a representation, undertaking, warranty or prediction by the Company or any other person with respect to the accuracy thereof or the accuracy of the underlying assumptions, or that the Company will achieve or is likely to achieve any particular results. The forward-looking statements or information are made as of the date hereof and the Company disclaims any intent or obligation to update publicly or to revise any of the forward-looking statements or information, whether as a result of new information, future events or otherwise. Recipients are cautioned that forward-looking statements or information are not guarantees of future performance and, accordingly, recipients are expressly cautioned not to put undue reliance on forward-looking statements or information due to the inherent uncertainty therein. 12

13 Reserves Disclaimer 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. We have elected to use in this presentation 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 regarding our business 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. 13

14 WPX Non-GAAP Disclaimer This presentation may include certain financial measures, including adjusted EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses), that are non-gaap financial measures as defined under the rules of the Securities and Exchange Commission. This presentation is accompanied by a reconciliation of these non-gaap financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare a company s performance. Management believes that these measures provide investors an enhanced perspective of the operating performance of the company and aid investor understanding. Management also believes that these non-gaap measures provide useful information regarding our ability to meet future debt service, capital expenditures and working capital requirements. These non-gaap financial measures should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles. 14