3Q 2020 EARNINGS CALL R I C K M U N C R I E F , C H A I R M A N & C E O N O V E M B E R 3 , 2 0 2 0 N Y S E : W P X
2 nd Half 2020 Highlights ✓ Increasing FREE CASH FLOW Expected 2020 free cash flow increasing 50% to $300MM+ ✓ Exceeding PRODUCTION TARGETS Current oil rate of ~140 Mbbl/d and raising 4Q 2020 guide: 137 - 143 Mbbl/d ✓ REDUCING Capital & Costs Lowering FY 2020 Capex by $50MM ($1.0B - $1.1B) 1 Lowering FY 2020 LOE per BOE by 14% at midpoint ($5.10 - $5.40) 2 ✓ Delineating ADDITIONAL BENCHES Promising initial results from 2 nd & 3 rd Bone Spring in Stateline position ✓ Announced STRATEGIC Merger of Equals Combining with Devon to create a shareholder/stakeholder focused energy company 1. Lowering “Scenario One” capital guidance by $50MM from $1.05B -$1.15B to $1.0B-$1.1B. 2. Lowering 2020 full-year LOE/BOE guide from $5.90- $6.30 per BOE to $5.10-$5.40 per BOE. 2
A Shareholder/Stakeholder Focused Energy Company Announced STRATEGIC Merger of Equals with Devon Energy ✓ Accretive on all relevant financial metrics (Combines the best capabilities of both businesses) ✓ Accelerates cash-return business model (Merger enhances free cash flow generating capabilities) Maintains strong balance sheet & liquidity ✓ ($5.0 billion of liquidity and minimal near-term debt maturities) ✓ Builds dominant Delaware Basin position (400,000 net acres in the economic core of the play) ✓ Creates value through cost synergies (Expect $575 million in annual savings by year-end 2021) 3
A Unique Shareholder Value Proposition True Merger Of Equals offers UNIQUE Benefits To WPX SHAREHOLDERS Enhances FREE CASH FLOW GROWTH potential Well positioned for MULTIPLE EXPANSION given pro forma metrics Significant SYNERGIES as % of pro forma market cap Significant OWNERSHIP and shared governance with best of both management teams ACCELERATES & ENHANCES WPX’S 5 -year vision targets 4
Capturing $575MM in Annual Cost Savings INTEGRATION TEAM IN PLACE 32% OF PRO FORMA TO START ACHIEVING SYNERGIES UPON CLOSE COMPANY MARKET CAP PV-10 OF COST SAVINGS $200MM IMPROVEMENT TO OPERATING MARGINS $2.0B • Contract labor consolidation • Field equipment optimization • Natural gas long-haul transport options OVER NEXT 5 YEARS • Crude oil aggregation opportunities for downstream marketing PRO FORMA: $6.3B 1 $200MM REDUCTION TO G&A • Organization restructure • Headquarters consolidation and field office optimization • Innovation synergies DVN MARKET CAP $3.6B $100MM IMPROVEMENT TO CAPITAL BUDGET • Drilling & completion schedule optimization • Rig contract & supply chain negotiations • Facility design and materials procurement WPX MARKET CAP $2.7B $75MM DECREASE IN FINANCING COSTS • Opportunistic reduction of pro forma debt towers • Elimination of WPX credit agreement TARGETED COST SAVINGS ACHIEVED BY YEAR-END 2021 1. As of 10/23/2020 5
OPERATIONS C L A Y G A S P A R , P R E S I D E N T & C H I E F O P E R A T I N G O F F I C E R
WPX Development of Monument Draw Acreage LANDING/CASING/SPACING DIFFERENTLY DELINEATION FOR DIVESTMENT FELIX DEVELOPMENT PROCESS TIMELINE WPX FUTURE DEVELOPMENT PROCESS Primary Target Co-Development Focus (3BSL & UPPER WC) 2018: Initial parent well development Application of WPX Operations Practices Late 2018-Early 2019: Multi bench co-development • Targeted drilling & steering 2019-Early 2020: Fully bounded infill development • Completion optimization (stage size, cluster spacing, well spacing) (as seen above). Flowback Trials & Testing • Push for area wide ‘more aggressive’ slowback • Eliminate reservoir damage, improve wellbore cleanout, and improve well returns Note: WPX will continue to appraise additional development & co-development options in other benches. Above is the focus on ‘primary’ targets. 7
Continued Improvement in Stateline Recent well in 2ND BONE SAND CBR 9-4 & 10-3 PADS DEVELOPMENT OF STATELINE 2 ND & 3 RD BONE SPRING produced ~3,742 BOE/D (62% oil) after STATELINE ACREAGE 30 days on production LOVING 2 nd & 3 rd BONE SPRING 3RD BONE LIME wells producing an average of 3,004 BOE/D (57% oil) after 30 180 days on production Average drilling & completions cost for 160 2-mile wells on the CBR 9-4 & 10-3 pads: $5.9MM 1 140 Cumulative Production MBOE 2nd and 3rd Bone Spring development 120 benefits from existing infrastructure in Stateline 100 STATELINE D&C COST PER FOOT 1 80 2-MILE LATERALS DRIVING DOWN $1,200 60 DRILLING & COMPLETIONS COST $1,000 44% $ per lateral foot 40 $800 since 2018 $600 1,064 $600 20 2 nd Bone Sand 849 $400 725 3 rd Bone Lime $200 0 0 10 20 30 40 50 60 $0 2018 2019 1H 2020 3Q 2020 Normalized Days on Production 1. Excludes facilities costs 8
FINANCIALS K E V I N V A N N , C H I E F F I N A N C I A L O F F I C E R
3Q 2020 Results 13% 8% $79MM GROWTH IN ADJ. EBITDAX GROWTH IN OIL VOLUMES FREE CASH FLOW GENERATION 3Q’20 vs. 3Q’19 3Q’20 vs. 3Q’19 3Q YTD 2020 2019 2020 2019 Average Daily Production Oil (Mbbl/d) 122.3 108.6 122.7 100.9 Gas (MMcf/d) 270.4 226.9 267.2 211.7 NGLs (Mbbl/d) 40.4 27.0 36.6 26.6 Equivalent (MBOE/d) 207.7 173.4 203.9 162.8 Adjusted EBITDAX $389 $361 $1,168 $1,028 Adjusted Net Income (Loss) from Continuing Operations $60 $38 $159 $97 Capital Expenditures $256 1 $264 $757 1 $1,030 Note: Adjusted EBITDAX, free cash flow, and adjusted net income are non-GAAP measures. A reconciliation to relevant GAAP measures is provided in this presentation. 10 1. Excludes ~$4MM (3Q) and ~$24MM (YTD) of incurred capital expenditures related to consolidated partnerships.
A Stronger Value Proposition D E V O N + W P X HIGH-IMPACT TRANSACTION DELIVERING LONG-TERM 11
APPENDIX
Return of Capital Accelerated VARIABLE DIVIDEND STRATEGY FIXED QUARTERLY DIVIDEND EFFECTIVE UPON CLOSE OF TRANSACTION ▪ Maintained at $0.11 per share ▪ Target payout: up to 10% of cash flow STEP 1: VARIABLE DIVIDEND CALCULATION Operating Cash Flow (GAAP) − Cash Capital Expenditures (GAAP) DEBT REDUCTION PROGRAM Free Cash Flow ▪ Net debt-to-EBITDAX target : ~1.0x − Fixed Quarterly Dividend ▪ $1.5 billion debt reduction target Excess Free Cash Flow × Up to 50% VARIABLE DIVIDEND ▪ Calculated on a quarterly basis Variable Dividend ▪ Up to 50% of excess free cash flow STEP 2: PAID QUARTERLY IF BELOW CRITERIA MET Cash Balance: >$500 million Strong Balance Sheet & Leverage Ratios SHARE REPURCHASES Constructive Commodity Price Outlook ▪ Potential for opportunistic share repurchases 13
Positioned for Attractive Free Cash Flow Yields Free cash flow at maintenance capital Operations scaled to lower breakeven funding 2021e pro forma free cash flow sensitivities 2021e pro forma maintenance capital assumptions 1 $33 WTI 31% >280 OIL PRODUCTION BREAKEVEN PRICING 2020e EXIT-RATE FREE CASH FLOW 32% MBOD YIELD SCENARIO $2.0 YEAR-END 2020e 20% ~130 24% UNCOMPLETED $1.5 Free Cash Flow ($B) FREE CASH FLOW WELL INVENTORY DUCS Free Cash Flow Yield YIELD 16% 2021e $ $1.0 8% $1.7 B 2 MAINTENANCE FREE CASH FLOW CAPITAL NO DUC DRAWDOWN YIELD 8% $0.5 MAINTENANCE $33 CAPITAL WTI PRICE FUNDING LEVEL 0% $0.0 $60 WTI $40 WTI $50 WTI Free Cash Flow Yield Free Cash Flow Note: Free cash flow represents 2021e operating cash flow less maintenance capital requirements of $1.7B. Assumes $2.75 Henry Hub & Mt. Belvieu is 35% of WTI. Calculation also assumes all cost savings & synergies are fully realized at the beginning of 2021. Share price as of 9/25/2020. 1. Maintenance capital is defined as investment required to keep oil production flat on an annualized basis. 2. Assumes D&C synergies are fully realized at the beginning of 2021. 14
Framework for 2021 Capital Allocation TOP PRIORITIES IN CURRENT MARKET PROTECT financial strength GREATER ▪ Evaluate select growth projects THAN $45 ▪ Limit reinvestment: up to 5% growth FUND fixed quarterly dividend ▪ Prioritize free cash flow growth ▪ Variable dividend payout expands $40-$45 ▪ Improve financial strength MAINTAIN base production ▪ Invest at maintenance capital levels LESS THAN ▪ Protect liquidity & financial strength $40 ▪ Fund fixed quarterly dividend GENERATE free cash flow WTI PRICE ASSUMES $2.75 HENRY HUB 15
Committed to Strong ESG Performance E S G ENVIRONMENTAL SOCIAL GOVERNANCE Facilitating continuous Prioritizing employee & Protecting the long-term improvement contractor safety interests of shareholders Increasing gas capture Partnering with stakeholders & Engaged, diverse and • Recycling water indigenous people accountable Board of • Strengthening air quality Directors • controls Promoting inclusion and Archeological monitoring diversity, pay equity, Executive compensation • mentoring, & Unconscious Bias aligned with shareholders’ awareness interests 16
Significant Liquidity, No Near-term Maturities SENIOR UNSECURED NOTES ($MM) $900 $600 $500 $500 $472 $242 $43 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 REVOLVING CREDIT FACILITY INTEREST RATE MATURITY IN APRIL 2023 % 5.45% $1.5B WEIGHTED AVERAGE COUPON BORROWING BASE REAFFIRMED @ $2.1B OCT 2020 17
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