A month has gone by since the last earnings report for WPX Energy (WPX). Shares have lost about 1.6% 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 its most recent earnings report in order to get a better handle on the important catalysts.
WPX Energy Q2 Earnings Beat on Strong Oil Production
WPX Energy Inc.’s second-quarter earnings of 6 cents per share surpassed the Zacks Consensus Estimate of 2 cents by 200%. In the year-ago quarter, the company incurred a loss of 14 cents.
WPX Energy’s quarterly revenues of $430 million lagged the Zacks Consensus Estimate of $446 million by 3.6%. However, total revenues improved 22.8% from $350 million in the year-ago quarter.
Highlights of the Release
Total production in the second quarter was 125,700 barrels oil equivalent per day, up 65.0% year over year. Total liquids accounted for nearly 80% of the total production, reflecting the company’s increasing focus on oil.
Oil production in the quarter was 80,800 barrels per day, nearly 65% higher than the year-ago level, courtesy of 94% increase in Delaware Basin volumes over the past 12 months.
Total expenses were $433 million, up 57.5% from $275 million in the year-ago quarter. Interest expenses in the reported quarter were $39 million, down 15.2% from $46 million in the prior-year quarter.
Realized Prices & Hedges
Realized oil prices in the quarter were $63.63 per barrel, up 49.2% from the year-ago quarter.
Realized natural gas prices were $1.12 per thousand cubic feet, down 41.0% from a year ago. Realized prices for natural gas liquids were up 32.9% to $20.94 per barrel.
For the rest of 2018, WPX Energy has 70,500 barrels per day of oil hedged at a weighted average price of $53.94 per barrel. The company also has 129,158 MMBtu per day of natural gas hedged at a weighted average price of $2.99 per MMBtu.
WPX Energy generated $103 million of cash and cash equivalents on Jun 30, 2018 compared with $189 million at the end of 2017.
Long-term debt as of Jun 30, 2018 was $2,154 million, down from 2017-end level of $2,575 million.
Net cash from operating activities in the first half of 2018 was $428 million compared with $142 million in the first half of 2017. For the same period, capital expenditure was $660 million compared with $542 million in the year-ago period.
WPX Energy updated its total production for 2018 in the range of 122-130 thousand barrels of oil-equivalent per day (Mboe/d), up from prior expectation of 117-126 Mboe/d. Oil production for 2018 is expected within 78,000-82,000 bbl/d, up 3% from the prior guided range of 75,000-80,000 bbl/d.
WPX Energy updated its 2018 capital spending guidance to $1,300-$1,400 million (earlier expectation was $1,160-$1,310 million), driven by additional investments for non-operated wells, facilities and infrastructure in the Delaware Basin, along with larger completions in the Williston Basin.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 39.29% due to these changes.
Currently, WPX has a great Growth Score of A, a grade with the same score on the momentum front. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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