WPX Energy (WPX) is a petroleum and natural gas exploration company that has been in existence since the year 2011. Their head quarter is located in Williams Center, Tulsa, Oklahoma, United States of America.
WPX Energy’s stock is continuing to climb this morning as the company hiked its oil production forecast for the year. This stock has gone up over 30% this month and still shows promise of further increasing.
Shares of WPX Energy continued to get trading higher by 6.2% to $10.79 on heavy volume on the afternoon of Monday 3rd of June 2016, after the company raised its oil production expectations for the year.
WPX Energy, a Tulsa-based independent oil and natural gas company, increased its oil production outlook to an average of 39 to 40 Mbbl/day, a 5% rise from its previous 37 to 39 Mbbl/day forecast. Total production is now projected at 77,000 to 82,000 barrels of oil equivalent per day from the earlier forecast.
This increase in production outlook for the year is as a result of better than expected well performance and an expected rise in drilling and completion activity in the Delaware and Williston basins during the second half of the year. Executives said they expect to add a third rig in the Delaware Basin in October and that their plan is to complete 15 to 20 drilled but uncompleted wells in North Dakota beginning in August.
Besides increasing production, WPX said it is expanding its owned and operated midstream infrastructure in the Delaware Basin, adding a crude oil gathering system. The new pipeline system is expected online in 2017.
The increased activity is expected to put the company’s budget near the top of its projected levels. WPX now plans to spend $400 million to $450 million on drilling and completion for the year, compared to previous guidance of $350 million to $450 million.
WPX Energy also announced that same morning the pricing of an offering of 49,500,000 shares of common stock for total gross proceeds of $485 million. The usual occurrence is that when a company announces its intentions to sell more shares, it stock price drops as a result of dilution and some other factors. But luckily for WPX Energy this usual phenomenon was not the case.
The experts have predicted that the forecast WPX could further grow production next year and keep leverage flattish at approximately 3.5x Net Debt/EBITDAX. It is believed that today’s announcements confirm their thesis, as WPX increased 2016 Williston activity and issued equity to facilitate this additional spend plus potential activity acceleration in 2017/2018 without adding more debt.
As at this present day, 37.67 million shares of WPX Energy have exchanged hands, as compared to the company’s typical average of 11.87 million shares.
The weaknesses of a company such as WPX Energy can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, weak operating cash flow, generally disappointing historical performance in the stock itself and generally high debt management risk.