Independent oil & gas operator WPX Energy Inc. WPX reported a loss of 17 cents per share in the third quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 12 cents. The company had reported a narrower loss of 7 cents per share in the year-ago quarter.

The reported quarter was primarily affected by significantly lower commodity prices.

On a GAAP basis, WPX Energy reported a loss of 44 cents per share compared with earnings of  23 cents per share in the year-ago quarter. The difference between the GAAP and operating figures in the reported quarter was due to unrealized mark-to-market gains, gains and losses on asset sales, impairments, contract termination and early rig release expenses, severance and relocation costs, and acquisition costs.

Total Revenue

WPX Energy’s quarterly revenues of $537 million surpassed the Zacks Consensus Estimate of $527 million by 1.8%. Total revenues were lower than the year-ago figure of $747 million by 28.1%.

Highlights of the Release

Total average daily production in the third quarter was 1,004 million cubic feet equivalent per day (MMcf/d), nearly in line with 1,003 MMcf/d in the year-ago quarter.

Oil production shot up 36.0%, while natural gas trended down nearly 11%.

Total expenses were $566 million, down 12.3% from the year-ago level of $645 million.

Interest expenses in the reported quarter were $65 million, increasing 109.7% from $31 million in the year-ago quarter.

Realized Prices

Realized oil prices in the quarter were $38.11 per barrel, down 54.7% from $84.11 per barrel in the year-ago quarter. Realized prices for natural gas liquids were down 63.1% to $12.40 per barrel from $33.64 per barrel in the year-ago quarter.

Natural gas price realization was down 18.1% year over year to $2.39 per thousand cubic feet (Mcf) from $2.92 per Mcf in the year-ago quarter.

Financial Update

WPX Energy had $99 million of cash and cash equivalents as of Sep 30, 2015, compared with $41 million at the end of 2014.

Long-term debt as of Sep 30, 2015, was $3,400 million, up from $2,280 million as of Dec 31, 2014.

Net cash from operating activities in the first nine months of 2015 was $629 million compared with $779 million for the same period a year ago, which benefited from higher commodity prices.

Guidance

The company raised its 2015 total production guidance to a range of 165–172 Mboe/d from the earlier estimate of 163–168Mboe/d.

WPX Energy maintained its capital expenditure guidance in a band of $825–$925 million.

WPX Energy expects cash operating expenses per boe in the range of $9.00 to $10.50, down from an earlier guidance of $9.50 to $11.00.

Other Company Releases

Noble Energy, Inc. NBL reported an adjusted loss of 21 cents per share in the third quarter of 2015, wider than the Zacks Consensus Estimate of a loss of 15 cents.

Murphy Oil Corporation MUR reported a third-quarter 2015 loss of 72 cents per share, narrower than the Zacks Consensus Estimate of a loss of 95 cents.

Anadarko Petroleum Corporation APC reported a third-quarter 2015 loss of 72 cents, in line with the Zacks Consensus Estimate.

Our View

WPX Energy like other oil and gas players in the space is suffering from the ongoing softness in commodity prices. Despite matching production levels of the prior-year quarter, total revenues were down 28.1%.

The company expects to maximize returns and margins by scaling down its historically gas-weighted portfolio to make room for more oil production and inventory. The completion of the acquisition of RKI Exploration & Production will boost the company’s production volumes from the Permian Basin assets.

We believe WPX Energy’s significant presence in several oil rich basins and ability to lower operating expenses will help it to improve its performance over the long term.

WPX Energy has a Zacks Rank #3 (Hold).

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