WPX Aligns Capital Plan with Operating Cash Flow

WPX Energy (NYSE: WPX) today announced a 2015 capital investment plan of approximately $725 million (midpoint), in line with the company’s projected operating cash flow.

As part of its long-term strategy, WPX will continue to diversify its historically gas-weighted portfolio. WPX’s oil production grew 56 percent in 2014 year over year, far exceeding its plan for 40 percent growth last year.

In fourth-quarter 2014, oil volumes rose 6,500 barrels per day to approximately 32,300 barrels per day, accounting for nearly 20 percent of the company’s equivalent production. This marked a 25 percent sequential-quarter increase over third-quarter 2014 oil production of 25,800 barrels per day.

The company’s 2015 capital plan is roughly half the amount of its capital plan last year, excluding acquisition capital.

“Our capital plan is prudent, disciplined and consistent with our long-term focus,” said Rick Muncrief, WPX president and chief executive officer.

“At the same time, we have financial and operational flexibility because of how well we executed over the past year, completing asset sales, increasing oil volumes and heavily hedging our 2015 production at very favorable prices.

“We’ll stay primed to accelerate development, even as we take appropriate steps to respond to current prices,” Muncrief added.

WPX expects its oil production to climb again in 2015. The company is targeting 15 to 20 percent oil growth this year even as it decreases capital spending and builds an inventory of wells awaiting completion for when commodity prices are more favorable.

The company’s expected increase in oil production this year will be offset, in part, by an expected decline of about 4 percent in overall equivalent production from reduced development activity – normalized for divestitures over the past year.

WPX has hedged approximately three-fourths of its anticipated 2015 natural gas production at a weighted average price of $4.10 per MMbtu and approximately two-thirds of expected oil production this year at an average price of $94.88 per barrel.

WPX also recently generated nearly $600 million cash through selling its international interests and part of its operations in the Marcellus Shale. As previously announced, the company is focusing on its core assets in the Williston, San Juan and Piceance basins.

The company’s 2015 capital program includes $275 million to $300 million for San Juan Basin development, $200 million to $225 million for Williston Basin activity, $200 million to $225 million for Piceance Basin development and $25 million for land and exploration.

WPX started the year with five rigs in the Williston Basin and is ramping down to one rig by late spring for the balance of the year.

WPX started the year with three rigs in the San Juan Basin and already ramped down to two rigs for the balance of the year.

WPX plans to deploy three rigs in the Piceance Basin for the balance of the year, including a rig for Niobrara Shale resource assessment. WPX started the year with eight rigs in the Piceance Basin.

“Head winds bring challenges and opportunities. We’re ready for both. It’s why we have a long-term plan to reshape WPX and grow our margins and cash flow. Margin expansion comes from diversifying our production and right-sizing our cost structure,” Muncrief added.

The company’s 2015 guidance and plans are based on NYMEX commodity price assumptions of $55 per barrel oil and $3.00 per MMbtu natural gas.

WPX anticipates that the cash expenditures it reports in 2015 will exceed $725 million. This difference primarily relates to capital costs incurred in 2014 but paid for in 2015. Additional information about WPX’s 2015 capital plan, including a reconciliation to the 2015 cash expenditures that WPX expects to report, is available in a brief presentation at www.wpxenergy.com under the investors tab.

About WPX Energy, Inc.

WPX Energy develops and operates oil and gas producing properties in North Dakota, New Mexico and Colorado. The company has a long history of innovation and stakeholder engagement, recognized through more than 40 local, state, federal and industry awards.

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.