WPX Energy 2Q Results Show Surge in Oil Production, Outlook

TULSA, Okla -- WPX Energy’s (WPX) unaudited results for the second quarter of 2014 reflect a 57 percent jump in domestic oil production and stronger than expected natural gas production vs. a year ago.

As a result of well performance, enhanced pad design, larger stimulations and recent technical work in the company’s oil operations, WPX is:

• Adding approximately 200 drilling locations to its Williston Basin inventory
• Increasing plans for Gallup oil play spuds from 29 to 40 this year using the same rig count
• Raising guidance for 2014 domestic oil production growth from 40% to 55%

During the second quarter, oil and liquids (NGL) sales accounted for 47 percent of WPX’s total product revenues. Domestic oil revenue grew 60 percent quarter-over-quarter from $121 million a year ago to $194 million in second-quarter 2014. WPX’s performance also is driven by development of the company’s significant proved natural gas reserves, which exceeded 3.5 trillion cubic feet at year-end 2013.

“Our exposure to high-margin oil basins strengthens the diversity in our portfolio and gives us the opportunity to deploy capital in the most optimal way,” said Rick Muncrief, WPX president and chief executive officer.

“WPX’s oil assets are an important part of our value creation ability. We’re excited about adding significant inventory in some of the highest quality acreage in the entire Williston Basin,” Muncrief added.

OIL HIGHLIGHTS AND OPERATIONS SUCCESS

WPX is increasing its well inventory by approximately 200 locations in the Middle Bakken and Upper Three Forks formations in the Williston Basin following the technical analysis from completing wells in a tighter infill density pattern.

WPX also is transitioning to larger stimulations in Williston well completions. Pilot work to increase proppant levels by approximately 25 percent in two wells – one in the Middle Bakken and one in the Upper Three Forks – enhanced performance by 33 percent and 60 percent, respectively, in cumulative production over 180 days.

The company initiated completion on 10 Williston wells in the second quarter using the 25 percent increased proppant level and plans to do even higher concentrations during the second half of 2014. A completion using 6 million pounds of sand on the Ruby multi-well pad was finished at the end of July. This is twice the size of WPX’s historical Williston completions and is expected to become its new standard in the basin.

In the San Juan Basin’s Gallup oil play, WPX is more than 25 percent ahead of its 2014 drilling plan with 19 wells spud as of June 30 vs. a plan of 15.

WPX’s 30-day IP rates for its Gallup wells in 2014 have averaged 626 barrels of oil equivalent per day, up more than 30 percent vs. an IP rate of 474 Boe/d in 2013.

As a result of drilling efficiencies, lower well costs and higher production, WPX is adding 11 more wells to its 2014 Gallup drilling plan. WPX now expects to spud 40 Gallup wells this year vs. the original plan of 29 using the same rig count in the basin.

To expedite development of the company’s domestic oil properties, WPX is adding $100 million to its 2014 capital plan. The increase will fund the additional Gallup drilling, as well as larger stimulations and flaring reduction efforts in the Williston Basin where WPX is currently capturing up to 90 percent of its associated natural gas volumes.

SECOND-QUARTER 2014 FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $135 million for second-quarter 2014, or a loss of $0.66 per share on a diluted basis, compared with net income of $18 million, or income of $0.09 per share, in the same period a year ago.

For the first six months of 2014, WPX reported an unaudited net loss attributable to WPX Energy of $117 million, or a loss of $0.58 per share on a diluted basis, compared with a net loss of $98 million, or a loss of $0.49 per share, for the same period in 2013.

Results for the second quarter and first six months of 2014 were impacted by a $195 million before-tax loss, or an after-tax loss of $0.61 per share, associated with the sale of a portion of WPX’s working interests in certain Piceance Basin natural gas wells, along with $36 million in impairments of domestic exploratory well costs and leasehold, or an after-tax loss of $0.11 per share. These items more than offset higher consolidated oil revenue which increased 48 percent quarter-over-quarter.

Excluding unrealized mark-to-market gains (losses), the loss on the sale of the working interest, and impairments of exploratory well costs and leasehold, WPX had adjusted income from continuing operations of $11 million, or income of $0.06 per share on a diluted basis, for second-quarter 2014, compared with an adjusted loss from continuing operations of $44 million, or a loss of $0.22 per share, for the same period in 2013. A reconciliation accompanies this press release.

For the first six months of 2014, WPX had adjusted income from continuing operations of $55 million, or income of $0.27 per share on a diluted basis, compared with an adjusted loss of $95 million, or a loss of $0.47 per share, for the first six months of 2013. A reconciliation accompanies this press release.

Improved results in 2014 reflect the benefit of a 60 percent increase in domestic oil revenues, higher weighted average gross sales prices for domestic natural gas and natural gas liquids and lower per-unit costs for certain expenses.

The weighted average gross sales price – excluding revenue deductions – for domestic natural gas was $4.03 per Mcf in second-quarter 2014 compared with $3.78 per Mcf a year ago.

The weighted average gross sales price – excluding revenue deductions – for domestic oil was $88.94 per barrel in second-quarter 2014 compared with $88.62 per barrel a year ago.

The weighted average gross sales price – excluding revenue deductions – for domestic NGL was $44.18 per barrel in second-quarter 2014 compared with $37.41 per barrel a year ago.

ADJUSTED EBITDAX

WPX’s adjusted EBITDAX (a non-GAAP measure) for second-quarter 2014 was $294 million, an increase of 40 percent compared with $210 million for the same period in 2013.

For the first six months of 2014, WPX’s adjusted EBITDAX was $614 million, up 49 percent compared with $413 million for the same period in 2013.

The primary factors contributing to the increase in 2014 adjusted EBITDAX were increased domestic oil volumes and the corresponding increase in domestic oil revenues, as well as higher net realized average prices for natural gas.

EBITDAX (non-GAAP)		Second Quarter								YTD
			2014				2013				2014				2013
		millions				millions				millions				millions
Net income (loss)			($133	)		$	22				($114	)			($91	)
Interest expense		$	28			$	28			$	57			$	54
Provision (benefit) for income taxes			($68	)		$	11				($45	)			($52	)
Depreciation, depletion and amortization		$	215			$	227			$	422			$	458
Exploration expenses		$	57			$	20			$	72			$	39
EBITDAX		$	99			$	308			$	392			$	408
Loss on sale of working interests in the Piceance Basin		$	195				–			$	195				–
Net (gain) loss on derivatives not designated as hedges		$	17				($78	)		$	212			$	16
Net cash received (paid) on settlement of derivatives not designated as hedges			($17	)			($20	)			($185	)			($11	)
Adjusted EBITDAX		$	294			$	210			$	614			$	413

EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion and amortization and exploration expenses. Adjusted EBITDAX includes adjustments for net (gain) loss on derivatives not designated as hedges, loss on the sale of working interests in the Piceance Basin and net cash received (paid) on settlement of derivatives not designated as hedges.

WPX believes these non-GAAP measures provide useful information regarding its ability to meet future debt service, capital expenditures and working capital requirements.

CEO PERSPECTIVE

“I’m pleased with our progress and improving execution,” said Rick Muncrief, who joined WPX as president and CEO in May.

“It’s imperative for us to relentlessly focus on increasing our margins. We have to continually improve how we operate our assets to optimize the value in our portfolio,” Muncrief added.

“We’re exceeding our 2014 oil production guidance, bringing value forward in a creative, well thought out way and setting the stage for transforming WPX.

“Our long-term vision for WPX is coming into focus and we’re solidifying our strategy for how we’re going to accomplish it. We’re working on it diligently and plan to roll it out this fall,” Muncrief added.

PRODUCTION

WPX’s overall domestic and international production for second-quarter 2014 was 1,249 MMcfe/d, up slightly from the sequential quarter and exceeding the company’s guidance for volumes of 1,183 to 1,195 MMcfe/d. Production figures for 2014 include a one-month impact of the recent sale of working interests in some of WPX’s Piceance Basin natural gas wells.

Average Daily Production		2Q									1Q		Sequential
		2014		2013		Change					2014		Change
Natural gas (MMcf/d)
Piceance Basin		584		592		-1	%				598		-2	%
Appalachian Basin		88		85		4	%				78		13	%
Powder River Basin		154		179		-14	%				161		-4	%
San Juan Basin		107		122		-12	%				108		-1	%
International		20		18		11	%				19		5	%
Other		12		11		9	%				11		9	%
Subtotal (MMcf/d)		965		1,007		-4	%				975		-1	%
Oil (Mbbl/d)
Williston Basin		18.8		12.3		53	%				15.6		21	%
San Juan Basin		3.0		0.5		NM					1.7		76	%
Piceance Basin		2.0		2.0		0	%				1.9		5	%
International		5.2		6.1		-15	%				5.2		0	%
Other		0.0		0.3		-100	%				0.1		-100	%
Subtotal (Mbbl/d)		29.0		21.2		37	%				24.5		18	%
NGLs (Mbbl/d)
Piceance		15.8		19.7		-20	%				16.0		-1	%
International		0.4		0.5		-20	%				0.5		-20	%
Other		2.1		1.1		91	%				1.6		31	%
Subtotal (Mbbl/d)		18.3		21.3		-14	%				18.1		1	%
Total Production (MMcfe/d)		1,249		1,262		-1	%				1,230		2	%

NM is a percentage calculation that is not meaningful due to the nominal nature of prior-period production.

WPX’s oil production showed dramatic growth in the second quarter, increasing 57 percent year-over-year on a domestic basis, 37 percent on a consolidated basis that includes international volumes and 23 percent domestically vs. the sequential quarter.

Domestic oil production was driven by higher volumes in the Williston Basin, which grew 53 percent year-over-year and 21 percent from first-quarter 2014. Oil production in the San Juan Basin’s Gallup play also climbed 76 percent vs. the sequential quarter.

Total oil and liquids (NGL) production increased 4,700 barrels per day from the first quarter this year, growing from 42,600 barrels per day in the first three months of 2014 to 47,300 barrels per day in the second quarter, accounting for 23 percent of WPX’s total production volumes.

Natural gas liquids (NGL) production of 18.3 Mbbl/d was in line with the lower end of WPX’s second-quarter guidance range of 18.3 to 18.7 Mbbl/d and increased slightly from sequential-quarter volumes of 18.1 Mbbl/d. Second-quarter 2014 volumes were lower than a year ago as a result of a 28.5 percent ethane recovery rate. WPX expected a 37 percent recovery rate in 2014.

Consolidated natural gas production of 965 MMcf/d in second-quarter 2014 exceeded the company’s quarterly guidance of 918 to 925 MMcf/d and was down slightly vs. sequential quarter production of 975 MMcfd. Piceance Basin volumes of 584 MMcf/d accounted for 60 percent of WPX’s total second-quarter natural gas production.

EXPENSES

On a basis that only includes lease operating expense (LOE), gathering, processing and transportation expense (GP&T), taxes other than income, general and administrative (G&A), and depreciation, depletion and amortization (DD&A), WPX’s domestic expenses were approximately 2 percent lower in second-quarter 2014 than the same period in 2013. WPX beat its second-quarter guidance for each of these items on a per Mcfe basis.

WPX's domestic lease and facility operating expenses for second-quarter 2014 were $69 million vs. $63 million in the same period in 2013. The increase is primarily attributable to increased production from the company’s oil plays. Oil production typically has a higher operating expense than natural gas.

Domestic gathering, processing and transportation charges of $96 million in second-quarter 2014 were 13 percent lower compared with $110 million a year ago.

Taxes other than income for domestic operations in second-quarter 2014 were $35 million vs. $30 million a year ago, driven by a significant increase in oil volumes compared with a year ago.

Domestic depreciation, depletion and amortization expense was $206 million in second-quarter 2014, down 5 percent from $217 million a year ago primarily due to lower natural gas production volumes in 2014 compared to 2013 and the impact of impairments taken in 2013 in the Appalachia and Powder River Basins, partially offset by the impact of increased oil production which is at a higher rate per Mcfe. In addition, 2014 decreased due to the impact of the completion of the sale of a portion of the company’s working interests in the Piceance Basin.

Domestic general and administrative expenses were up slightly at $71 million in second-quarter 2014 vs. $69 million in the same period a year ago.

Domestic exploration expense was higher at $54 million in second-quarter 2014 compared with $17 million a year ago related to leasehold impairments and impairments of exploratory area well costs.

CASH AND LIQUIDITY

Net cash provided by operating activities for the first half of 2014 was $520 million, marking an 80 percent increase vs. $289 million for the same period a year ago.

At June 30, 2014, WPX had approximately $72 million in unrestricted domestic cash and cash equivalents and $33 million in international cash. WPX’s total domestic liquidity as of June 30, 2014, was approximately $1.1 billion.

DEVELOPMENT ACTIVITY

WPX made approximately $376 million of capital investments during second-quarter 2014, consistent with its guidance range of $355 million to $410 million. Use of funds included the completion of 92 gross operated wells in the company’s Piceance, Williston and San Juan basins.

For the first half of 2014, WPX participated in a total of 228 gross (167 net) wells in the United States. This represents the number of wells that were completed and began commercial delivery of production.

Highlights for the company’s operated wells in its growth areas are provided below. The balance of gross (net) wells is accounted for in non-operated interests, as well as WPX’s own properties in other areas such as the Appalachia and Powder River basins.

In the Piceance Basin, WPX completed 117 gross (114 net) wells in the first six months of the year, including 68 gross (67 net) wells in the second quarter. WPX has nine rigs deployed in the Piceance, including a rig for Ryan Gulch development and a rig for Niobrara exploration.

WPX has approximately 35,000 net acres in the Piceance Highland’s Ryan Gulch, where the company drilled a well in just 8.1 days in 2014 – 31 percent better than an average of 11.8 days a year ago. WPX has more than 4,000 drillable locations on a 3P basis in Ryan Gulch, whose estimated ultimate recoveries (EURs) and NGL content are higher than wells in the Piceance Valley.

In the Piceance’s Niobrara Shale, WPX spud two wells in the first half of 2014 – a horizontal well and the company’s second vertical test well since late 2013. Both wells are scheduled to begin completion operations in August. WPX has three other Niobrara horizontal wells and a vertical well on production. The horizontal discovery well has produced 2.7 billion cubic feet in cumulative gas volumes in just over 18 months.

In the Williston Basin, WPX completed 25 gross (22 net) wells for the first half of the year, including 14 gross (13 net) wells during the second quarter. The company has five rigs deployed on its Williston acreage.

During the second quarter, WPX set a new company best for its drilling time in the Williston, drilling a well in 19.5 days – an improvement of approximately a full day vs. the company’s prior best in the basin. WPX is now averaging 25.6 days on its Williston wells from spud to rig release, an improvement of 10 percent vs. an average of 28.5 days per well in 2013.

WPX also lowered its LOE in the Williston Basin to $8.32 per barrel in the second quarter, down 17 percent from $10.06 per barrel in the first quarter this year. The company incurred cost savings on water disposal, work overs, fuel costs and rentals. Electrical power installations will continue to reduce LOE as WPX pads are connected to the grid.

In the San Juan Basin’s Gallup oil play, WPX completed 13 gross (11 net) wells for the first half of the year, including 10 gross (9 net) wells during the second quarter. The company has two rigs deployed on its Gallup acreage.

During the second quarter, WPX drilled a Gallup well in 12 days – an improvement of approximately a full day vs. the company’s prior best in the basin. For the first half of 2014, WPX reduced its average well cost in the Gallup by 26 percent from the company’s 2013 rate when it initiated oil development in the basin.

WPX now has nearly 50,000 net acres under lease for Gallup development after adding another 1,100 acres during the second quarter. WPX’s cumulative Gallup volumes since the company’s discovery in spring 2013 have surpassed 875,000 barrels of oil equivalent on a net basis, including 700,000 barrels of oil production.

2014 UPDATED GUIDANCE

WPX is now forecasting total production on an equivalent basis of 1,209 MMcfe/d to 1,256 MMcfe/d for full-year 2014, which includes the impact of the sale of a portion of the company’s working interests in the Piceance Basin and a higher growth rate for domestic oil production.

Additional updated estimates for full-year 2014 results, including expenses on a consolidated per-unit basis and capital spending, are available at www.wpxenergy.com.

TOMORROW’S CONFERENCE CALL

WPX management will discuss its second-quarter 2014 results during a webcast starting at 10 a.m. Eastern tomorrow, Aug. 6. Participants can access the audio and the slides for the event via the homepage at www.wpxenergy.com.

A limited number of phone lines also will be available at 866-318-8620. International callers should dial 617-399-5139. The conference identification code for both phone numbers is 12043766. A replay of the webcast will be available on WPX’s website for one year following the event.

UPCOMING CONFERENCE PRESENTATION

WPX CEO Rick Muncrief is scheduled to present at the Enercom Oil and Gas Conference in Denver on Tuesday, Aug. 19. Muncrief’s presentation is scheduled to begin at approximately 12:20 p.m. Mountain time. Please visit www.wpxenergy.com on the day of the event to view the webcast.

Form 10-Q

WPX plans to file its second-quarter Form 10-Q with the Securities and Exchange Commission this week. Once filed, the document will be available on both the SEC and WPX websites.

About WPX Energy, Inc.

WPX Energy is an independent exploration and production company formed during a spinoff two years ago. Overall, WPX has more than 30 years of experience in its sector along with 40 local, state and federal awards for efficiency, innovation and corporate social responsibility.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by WPX Energy on its website or otherwise. WPX Energy does not undertake and expressly disclaims any obligation to update the forward-looking statements as a result of new information, future events or otherwise. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla., 74102, or from the SEC’s website at www.sec.gov.

Additionally, 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. From time to time, we elect to use “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 in our SEC filings that may be accessed through the SEC’s website at www.sec.gov.

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.

WPX Energy, Inc.
Consolidated
(UNAUDITED)
							2013																						2014
(Dollars in millions)							1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year						1st Qtr				2nd Qtr				YTD
	Revenues:
		Product revenues:
				Natural gas sales			$	267			$	316			$	252			$	258			$	1,093					$	384			$	317			$	701
				Oil and condensate sales				139				151				183				176				649						175				223				398
				Natural gas liquid sales				54				58				57				61				230						61				55				116
					Total product revenues			460				525				492				495				1,972						620				595				1,215
			Gas management					261				205				176				249				891						561				231				792
			Net gain (loss) on derivatives not designated as hedges					(94	)			78				(15	)			(93	)			(124	)					(195	)			(17	)			(212	)
			Other					4				7				5				6				22						1				5				6
					Total revenues			631				815				658				657				2,761						987				814				1,801
	Costs and expenses:
			Lease and facility operating					75				73				82				78				308						79				77				156
			Gathering, processing and transportation					107				111				106				109				433						106				97				203
			Taxes other than income					35				36				36				34				141						47				42				89
			Gas management, including charges for unutilized pipeline capacity					243				222				201				265				931						391				233				624
			Exploration					19				20				21				371				431						15				57				72
			Depreciation, depletion and amortization					231				227				241				241				940						207				215				422
			Impairment of producing properties and costs of acquired unproved reserves					-				-				19				1,036				1,055						-				-				-
			Gain on sale of Powder River Basin deep rights leasehold					-				-				-				(36	)			(36	)					-				-				-
			Loss on sale of working interests in the Piceance Basin					-				-				-				-				-						-				195				195
			General and administrative					72				74				68				75				289						72				74				146
			Other-net					7				1				10				(1	)			17						3				3				6
					Total costs and expenses			789				764				784				2,172				4,509						920				993				1,913
	Operating income (loss)							(158	)			51				(126	)			(1,515	)			(1,748	)					67				(179	)			(112	)
	Interest expense							(26	)			(28	)			(28	)			(26	)			(108	)					(29	)			(28	)			(57	)
	Interest capitalized							1				1				2				1				5						-				1				1
	Investment income, impairment of equity method investment and other							7				9				4				(15	)			5						4				5				9
	Income (loss) from continuing operations before income taxes						$	(176	)		$	33			$	(148	)		$	(1,555	)		$	(1,846	)				$	42			$	(201	)		$	(159	)
	Provision (benefit) for income taxes							(63	)			11				(32	)			(571	)			(655	)					23				(68	)			(45	)
	Net income (loss)						$	(113	)		$	22			$	(116	)		$	(984	)		$	(1,191	)				$	19			$	(133	)		$	(114	)
		Less: Net income (loss) attributable to noncontrolling interests						3				4				(2	)			(11	)			(6	)					1				2				3
	Net income (loss) attributable to WPX Energy, Inc.						$	(116	)		$	18			$	(114	)		$	(973	)		$	(1,185	)				$	18			$	(135	)		$	(117	)
	Adjusted EBITDAX
		Reconciliation to net income (loss):
				Net income (loss)			$	(113	)		$	22			$	(116	)		$	(984	)		$	(1,191	)				$	19			$	(133	)		$	(114	)
				Interest expense				26				28				28				26				108						29				28				57
				Provision (benefit) for income taxes				(63	)			11				(32	)			(571	)			(655	)					23				(68	)			(45	)
				Depreciation, depletion and amortization				231				227				241				241				940						207				215				422
				Exploration expenses				19				20				21				371				431						15				57				72
					EBITDAX			100				308				142				(917	)			(367	)					293				99				392
			Impairment of producing properties, costs of acquired unproved reserves and equity investments					-				-				19				1,056				1,075						-				-				-
			(Gain) on sale of Powder River Basin deep rights leasehold					-				-				-				(36	)			(36	)					-				-				-
			Loss on sale of working interests in the Piceance Basin					-				-				-				-				-						-				195				195
			Net (gain) loss on derivatives not designated as hedges					94				(78	)			15				93				124						195				17				212
			Net cash received (paid) related to settlement of derivatives not designated as hedges					9				(20	)			(2	)			(4	)			(17	)					(168	)			(17	)			(185	)
					Adjusted EBITDAX		$	203			$	210			$	174			$	192			$	779					$	320			$	294			$	614

WPX Energy, Inc.
Domestic Segment
(UNAUDITED)
							2013																						2014
(Dollars in millions)							1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				YTD						1st Qtr				2nd Qtr				YTD
	Revenues:
		Product revenues:
				Natural gas sales			$	263			$	310			$	248			$	253			$	1,074					$	379			$	310			$	689
				Oil and condensate sales				111				121				154				148				534						149				194				343
				Natural gas liquid sales				53				58				57				60				228						61				54				115
					Total product revenues			427				489				459				461				1,836						589				558				1,147
			Gas management					261				205				176				249				891						561				231				792
			Net gain (loss) on derivatives not designated as hedges					(94	)			78				(15	)			(93	)			(124	)					(195	)			(17	)			(212	)
			Other					1				1				3				1				6						1				3				4
					Total revenues			595				773				623				618				2,609						956				775				1,731
	Costs and expenses:
			Lease and facility operating					67				63				74				67				271						71				69				140
			Gathering, processing and transportation					106				110				106				108				430						106				96				202
			Taxes other than income					29				30				30				28				117						41				35				76
			Gas management, including charges for unutilized pipeline capacity					243				222				201				265				931						391				233				624
			Exploration					18				17				21				368				424						15				54				69
			Depreciation, depletion and amortization					224				217				233				232				906						197				206				403
			Impairment of producing properties and costs of acquired unproved reserves					-				-				19				1,033				1,052						-				-				-
			Gain on sale of Powder River Basin deep rights leasehold					-				-				-				(36	)			(36	)					-				-				-
			Loss on sale of working interests in the Piceance Basin					-				-				-				-				-						-				195				195
			General and administrative					69				69				65				72				275						68				71				139
			Other-net					6				5				7				(1	)			17						2				1				3
					Total costs and expenses			762				733				756				2,136				4,387						891				960				1,851
	Operating income (loss)							(167	)			40				(133	)			(1,518	)			(1,778	)					65				(185	)			(120	)
	Interest expense							(26	)			(28	)			(28	)			(26	)			(108	)					(29	)			(28	)			(57	)
	Interest capitalized							1				1				2				1				5						-				1				1
	Investment income, impairment of equity method investment and other							2				2				-				(20	)			(16	)					2				-				2
	Income (loss) from continuing operations before income taxes						$	(190	)		$	15			$	(159	)		$	(1,563	)		$	(1,897	)				$	38			$	(212	)		$	(174	)
	Summary of Production Volumes
	Natural gas (MMcf)							90,411				90,022				91,392				87,638				359,463						85,988				85,998				171,986
	Oil (MBbls)							1,242				1,373				1,575				1,738				5,928						1,738				2,160				3,898
	Natural gas liquids (MBbls) ...							1,907				1,895				1,811				1,808				7,421						1,587				1,625				3,212
	Combined equivalent volumes (MMcfe)(1)							109,303				109,628				111,707				108,916				439,554						105,936				108,709				214,645
	(1)	Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.
	Realized average price per unit, including the impact of hedges
		Natural gas (per Mcf)					$	2.90			$	3.45			$	2.72			$	2.87			$	2.99					$	4.40			$	3.62			$	4.01
		Oil (per barrel)					$	89.77			$	87.76			$	97.91			$	85.50			$	90.21					$	86.24			$	89.24			$	87.90
		Natural gas liquids (per barrel)					$	28.21			$	30.21			$	31.19			$	33.33			$	30.70					$	38.27			$	33.58			$	35.90
	Expenses per Mcfe
		Lease and facility operating					$	0.61			$	0.59			$	0.65			$	0.63			$	0.62					$	0.67			$	0.64			$	0.66
		Gathering, processing and transportation					$	0.98			$	1.00			$	0.94			$	1.00			$	0.98					$	1.00			$	0.89			$	0.94
		Taxes other than income					$	0.27			$	0.27			$	0.27			$	0.26			$	0.27					$	0.39			$	0.33			$	0.36
		Depreciation, depletion and amortization					$	2.04			$	1.98			$	2.09			$	2.13			$	2.06					$	1.86			$	1.89			$	1.88
		General and administrative					$	0.62			$	0.64			$	0.58			$	0.66			$	0.62					$	0.65			$	0.65			$	0.65
	Unutilized pipeline capacity
		Total unutilized pipeline capacity in gas management expense					$	13			$	14			$	17			$	17			$	61					$	16			$	12			$	28

WPX Energy, Inc.
International Segment
(UNAUDITED)
							2013																		2014
(Dollars in millions)							1st Qtr			2nd Qtr				3rd Qtr			4th Qtr			YTD					1st Qtr			2nd Qtr			YTD
	Revenues:
		Product revenues:
				Natural gas sales			$	4		$	6			$	4		$	5		$	19				$	5		$	7		$	12
				Oil and condensate sales				28			30				29			28			115					26			29			55
				Natural gas liquid sales				1			-				-			1			2					-			1			1
					Total product revenues			33			36				33			34			136					31			37			68
			Gas management					-			-				-			-			-					-			-			-
			Net gain (loss) on derivatives not designated as hedges					-			-				-			-			-					-			-			-
			Other					3			6				2			5			16					-			2			2
					Total revenues			36			42				35			39			152					31			39			70
	Costs and expenses:
			Lease and facility operating					8			10				8			11			37					8			8			16
			Gathering, processing and transportation					1			1				-			1			3					-			1			1
			Taxes other than income					6			6				6			6			24					6			7			13
			Gas management, including charges for unutilized pipeline capacity					-			-				-			-			-					-			-			-
			Exploration					1			3				-			3			7					-			3			3
			Depreciation, depletion and amortization					7			10				8			9			34					10			9			19
			Impairment of producing properties					-			-				-			3			3					-			-			-
			Gain on sale of Powder River Basin deep rights					-			-				-			-			-					-			-			-
			Loss on sale of working interests in the Piceance Basin					-			-				-			-			-					-			-			-
			General and administrative					3			5				3			3			14					4			3			7
			Other-net					1			(4	)			3			-			-					1			2			3
					Total costs and expenses			27			31				28			36			122					29			33			62
	Operating income (loss)							9			11				7			3			30					2			6			8
	Interest expense							-			-				-			-			-					-			-			-
	Interest capitalized							-			-				-			-			-					-			-			-
	Investment income and other							5			7				4			5			21					2			5			7
	Income (loss) from continuing operations before income taxes						$	14		$	18			$	11		$	8		$	51				$	4		$	11		$	15
	Summary of Net Production Volumes (1)
	Natural gas (MMcf)							1,485			1,620				1,707			1,723			6,534					1,723			1,838			3,561
	Oil (MBbls)							506			553				484			489			2,032					466			475			941
	Natural gas liquids (MBbls)							42			44				42			40			167					41			40			81
	Combined equivalent volumes (MMcfe)(2)							4,775			5,202				4,862			4,894			19,733					4,766			4,927			9,694

(1) Reflects approximately 69 percent of Apco's production (which corresponds to our ownership interest in Apco) and other minor directly held interests.

(2) Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.

WPX Energy, Inc.
Reconciliation- Adjusted Income (Loss) from Continuing Operations
(UNAUDITED)
					2013																						2014
(Dollars in millions, except per share amounts)					1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year						1st Qtr				2nd Qtr				YTD
Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders					$	(116	)		$	18			$	(114	)		$	(973	)		$	(1,185	)				$	18			$	(135	)		$	(117	)
Income (loss) from continuing operations - diluted earnings per share					$	(0.58	)		$	0.09			$	(0.57	)		$	(4.85	)		$	(5.91	)				$	0.09			$	(0.66	)		$	(0.58	)
Pre-tax adjustments:
Impairment of producing properties, costs of acquired unproved reserves, leasehold and equity method investment (1)					$	-			$	-			$	19			$	1,361			$	1,380					$	-			$	-			$	-
Impairments- exploratory related					$	-			$	-			$	-			$	-			$	-					$	-			$	36			$	36
Gain on sale of Powder River Basin deep rights leasehold					$	-			$	-			$	-			$	(36	)		$	(36	)				$	-			$	-			$	-
Loss on sale of working interests in the Piceance Basin					$	-			$	-			$	-			$	-			$	-					$	-			$	195			$	195
Accrual for litigation					$	-			$	-			$	7			$	1			$	8					$	-			$	-			$	-
Costs related to chief executive officer separation					$	-			$	-			$	-			$	4			$	4					$	-			$	-			$	-
Buyout of transportation agreement					$	-			$	-			$	-			$	9			$	9					$	-			$	-			$	-
Unrealized MTM (gain) loss					$	103			$	(98	)		$	13			$	89			$	107					$	27			$	-			$	27
Total pre-tax adjustments					$	103			$	(98	)		$	39			$	1,428			$	1,472					$	27			$	231			$	258
Less tax effect for above items					$	(38	)		$	36			$	(14	)		$	(521	)		$	(537	)				$	(10	)		$	(85	)		$	(95	)
Impact of new Argentine capital tax law (1)					$	-			$	-			$	6			$	-			$	6					$	-
Impact of new state tax law in New York (net of federal benefit)					$	-			$	-			$	-			$	-			$	-					$	9			$	-			$	9
Total adjustments, after-tax					$	65			$	(62	)		$	31			$	907			$	941					$	26			$	146			$	172
Adjusted income (loss) from continuing operations available to common stockholders					$	(51	)		$	(44	)		$	(83	)		$	(66	)		$	(244	)				$	44			$	11			$	55
Adjusted diluted earnings (loss) per common share					$	(0.25	)		$	(0.22	)		$	(0.41	)		$	(0.34	)		$	(1.22	)				$	0.21			$	0.06			$	0.27
Diluted weighted-average shares (millions)						199.9				203.8				200.7				200.9				200.4						205.2				202.7				202.1

(1) These items are presented net of amounts attributable to noncontrolling interests.

WPX Energy, Inc.
Consolidated Statement of Operations
(Unaudited)
			Three months ended June 30,								Six months ended June 30,
				2014				2013				2014				2013
			(Millions, except per share amounts)
Revenues:
	Product revenues:
	Natural gas sales		$	317			$	316			$	701			$	583
	Oil and condensate sales			223				151				398				290
	Natural gas liquid sales			55				58				116				112
	Total product revenues			595				525				1,215				985
	Gas management			231				205				792				466
	Net gain (loss) on derivatives not designated as hedges			(17	)			78				(212	)			(16	)
	Other			5				7				6				11
Total revenues				814				815				1,801				1,446
Costs and expenses:
	Lease and facility operating			77				73				156				148
	Gathering, processing and transportation			97				111				203				218
	Taxes other than income			42				36				89				71
	Gas management, including charges for unutilized pipeline capacity			233				222				624				465
	Exploration			57				20				72				39
	Depreciation, depletion and amortization			215				227				422				458
	Loss on sale of working interests in Piceance Basin			195				-				195				-
	General and administrative			74				74				146				146
	Other - net			3				1				6				8
Total costs and expenses				993				764				1,913				1,553
Operating income (loss)				(179	)			51				(112	)			(107	)
Interest expense				(28	)			(28	)			(57	)			(54	)
Interest capitalized				1				1				1				2
Investment income and other				5				9				9				16
Income (loss) before income taxes				(201	)			33				(159	)			(143	)
Provision (benefit) for income taxes				(68	)			11				(45	)			(52	)
Net income (loss)				(133	)			22				(114	)			(91	)
	Less: Net income (loss) attributable to noncontrolling interests			2				4				3				7
Net income (loss) attributable to WPX Energy, Inc.			$	(135	)		$	18			$	(117	)		$	(98	)
Amounts attributable to WPX Energy, Inc.:
Earnings (loss) per common share:
	Basic		$	(0.66	)		$	0.09			$	(0.58	)		$	(0.49	)
	Diluted		$	(0.66	)		$	0.09			$	(0.58	)		$	(0.49	)
Weighted-average shares (millions):
	Basic			202.7				200.4				202.1				200.1
	Diluted			202.7				203.8				202.1				200.1

WPX Energy, Inc.
Consolidated Balance Sheet
(Unaudited)
		June 30, 2014				December 31, 2013
ASSETS		(Millions)
Current assets:
Cash and cash equivalents		$	105			$	99
Accounts receivable, net of allowance of $7 at June 30, 2014 and December 31, 2013			502				536
Deferred income taxes			58				49
Derivative assets			47				50
Inventories			81				72
Margin deposits			49				71
Other			35				45
Total current assets			877				922
Investments			151				145
Properties and equipment (successful efforts method of accounting)			11,808				12,686
Less: Accumulated depreciation, depletion and amortization			(4,870	)			(5,445	)
Properties and equipment, net			6,938				7,241
Derivative assets			13				7
Other noncurrent assets			39				114
Total assets		$	8,018			$	8,429
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		$	684			$	652
Accrued and other current liabilities			178				190
Customer margin deposits payable			7				55
Derivative liabilities			144				110
Total current liabilities			1,013				1,007
Deferred income taxes			718				788
Long-term debt			1,794				1,916
Derivative liabilities			8				12
Asset retirement obligations			317				358
Other noncurrent liabilities			44				138
Equity:
Stockholders' equity:
Preferred Stock (100 million shares authorized at $0.01 par value; no shares issued)			-				-
Common Stock (2 billion shares authorized at $0.01 par value; 203.1 million shares issued at June 30, 2014 and 201 million shares issued at December 31, 2013)			2				2
Additional paid-in-capital			5,544				5,516
Accumulated deficit			(1,525	)			(1,408	)
Accumulated other comprehensive income (loss)			(1	)			(1	)
Total stockholders' equity			4,020				4,109
Noncontrolling interests in consolidated subsidiaries			104				101
Total equity			4,124				4,210
Total liabilities and equity		$	8,018			$	8,429

WPX Energy, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
				Six months ended June 30,
					2014				2013
				(Millions)
Operating Activities
Net income (loss)				$	(114	)		$	(91	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation, depletion and amortization				422				458
	Deferred income tax provision (benefit)				(78	)			(63	)
	Provision for impairment of properties and equipment (including certain exploration expenses)				66				29
	Amortization of stock-based awards				17				17
	(Gain) loss on sale of assets				195				(5	)
	Cash provided (used) by operating assets and liabilities:
		Accounts receivable			34				23
		Inventories			(9	)			(9	)
		Margin deposits and customer margin deposits payable			(26	)			(5	)
		Other current assets			15				(11	)
		Accounts payable			1				9
		Accrued and other current liabilities			(20	)			(51	)
		Changes in current and noncurrent derivative assets and liabilities			27				5
		Other, including changes in other noncurrent assets and liabilities			(10	)			(17	)
Net cash provided by operating activities					520				289
Investing Activities
Capital expenditures (a)					(728	)			(548	)
Proceeds from sales of assets (b)					338				10
Purchases of investments					-				(3	)
Other					(5	)			-
Net cash used in investing activities					(395	)			(541	)
Financing Activities
Proceeds from common stock					12				2
Borrowings on credit facility					904				315
Payments on credit facility					(1,024	)			(135	)
Other					(6	)			9
Net cash provided by financing activities					(114	)			191
Net increase (decrease) in cash and cash equivalents					11				(61	)
Effect of exchange rate changes on cash and cash equivalents					(5	)			(2	)
Cash and cash equivalents at beginning of period					99				153
Cash and cash equivalents at end of period				$	105			$	90
(a) Increase to properties and equipment				$	(760	)		$	(540	)
Changes in related accounts payable and accounts receivable					32				(8	)
Capital expenditures				$	(728	)		$	(548	)

(b) Proceeds in 2014 relate to the sale of a portion of our working interests in the Piceance Basin and are subject to post-closing adjustments.

 

Contact:

WPX Energy
Media Contact:
Kelly Swan, 539-573-4944
or
Investor Contact:
David Sullivan, 539-573-9360