WPX Energy Q4, 2013 Results To Be Hit By Impairment Charges

(RTTNews) - WPX Energy, Inc. (WPX) said Monday that its financial results for the fourth quarter and fiscal 2013 will include the impact of up to $1.4 billion in pre-tax impairment charges due to a decline in forward market natural gas prices.

Looking ahead, WPX Energy projects a 20 percent increase in capital spending for 2014 compared to the prior year, driven by larger investments in domestic oil drilling.

In addition, the independent natural gas and oil exploration company expects total production levels for 2014 to remain flat compared to the prior year, while domestic oil volumes are expected to increase nearly 40 percent.

According to the Tulsa, Oklahoma-based company, about $1.1 billion of the estimated impairment charges are related to the Appalachian properties, with the remaining majority of the balance attributable to Powder River properties.

WPX Energy noted that the non-cash charges reflect a decline in forward market natural gas prices particularly in the Northeast, where Appalachia pricing declined 26 percent in the fourth quarter and 34 percent overall. NYMEX pricing also declined 18 percent throughout 2013.

On average, analysts polled by Thomson Reuters expected the company to report loss of $0.32 per share for the quarter on revenues of $703.57 million. Analysts' estimates typically exclude special items.

For fiscal 2013, Street expects the company to report loss of $1.16 per share on revenues of $2.83 billion.

In a separate statement, WPX Energy projects capital spending for the first quarter of $335 million to $395 million, and total production on an equivalent basis of 1,204 MMcfe/d to 1,217 MMcfe/d.

For 2014, WPX Energy announced a capital plan in a range of $1.420 billion to $1.525 billion, with a midpoint of $1.47 billion. The company noted that about 85 percent of spending will be allocated to the development of Williston, Piceance and San Juan Gallup.

The 2014 plan represents a 20 percent capital increase compared to the company's spending in 2013, driven by larger investments in domestic oil drilling. More than half of WPX's planned 2014 investments are in domestic oil properties. The capital plan anticipates a 39 percent planned increase in domestic oil volumes.

WPX projects full-year 2014 total production on an equivalent basis of 1,246 MMcfe/d to 1,259 MMcfe/d for full-year 2014, with a December exit rate that represents a 5 percent increase over the 2013 exit rate.

While the company expects total production levels for 2014 to remain flat compared to total 2013 production levels, domestic oil volumes are expected to increase nearly 40 percent.

WPX closed Monday's regular trading session at $18.92, down $0.29 or 1.51 percent on a volume of 1.78 million shares. In after-hours, the stock further declined $1.33 or 7.03 percent to $17.59.