It has been about a month since the last earnings report for WPX Energy (WPX). Shares have lost about 12.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WPX due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
WPX Energy Q3 Earnings Lag Estimates, Revenues Up Y/Y
WPX Energy Inc.’s third-quarter earnings of 7 cents per share lagged the Zacks Consensus Estimate of 9 cents by 22.2%. The company incurred a loss of 10 cents in the year-ago quarter.
WPX Energy’s quarterly revenues of $484 million lagged the Zacks Consensus Estimate of $527 million by 8.2%. However, total revenues improved a whopping 233.8% from $145 million recorded in the year-ago quarter.
Highlights of the Release
Total production in the third quarter was 123,800 barrels of oil equivalent per day, up 59.7% year over year. Total liquids accounted for nearly 78.4% of the total production, reflecting the company’s increasing focus on oil.
Oil production in the quarter was 83,400 barrels per day, nearly 54.4% higher than the year-ago level, courtesy of 89% increase in Delaware Basin volumes over the past 12 months.
Total expenses were $458 million, up 195.5% from $155 million in the year-ago quarter.
Interest expenses in the reported quarter were $38 million, down 20.8% from $48 million in the prior-year quarter.
Realized Prices & Hedges
Realized oil prices in the quarter were $65.52 per barrel, up 21.1% from the year-ago quarter.
Realized natural gas prices were $1.22 per thousand cubic feet, down 26.9% from a year ago. Realized prices for natural gas liquids were up 38.4% to $26.68 per barrel.
For the remaining of 2018, WPX Energy has 70,500 barrels per day of oil hedged at a weighted average price of $53.94 a barrel. The company also has 128,315 MMBtu per day of natural gas hedged at a weighted average price of $2.99 per MMBtu.
Cash and cash equivalents of WPX Energy as of Sep 30, 2018 were $36 million compared with $189 million at the end of 2017.
Its long-term debt as of Sep 30, 2018 was $2,243 million, down from the 2017-end level of $2,575 million.
Net cash from operating activities in the first nine months of 2018 was $652 million compared with $228 million in the corresponding period of 2017. During the same period, capital expenditure was $1,013 million compared with $855 million in the year-ago period.
WPX Energy’s total production guidance for 2018 is now expected in the range of 123-130 thousand barrels of oil-equivalent per day (Mboe/d) compared with prior expectation of 122-130 Mboe/d.
The expected oil production for 2018 is now in the range of 79,000-82,000 bbl/d. compared with prior projection of 78,000-82,000 bbl/d.
The company is targeting to improve oil volumes by 25-30% and produce 100,000-105,000 bbl/d in 2019.
For 2019, the company expects total production in the range of 159-171 Mboe/d and capital expenditure within $1,450-$1,650 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -30.92% due to these changes.
At this time, WPX has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, WPX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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