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WPX ENERGY, INC.
2019 ANNUAL REPORT
F E L L O W S T O C K H O L D E R S
WPX Energy, Inc. | 2019 Annual Report 1
We do a lot of great things at WPX
and throughout our industry as we
make the production of energy safer,
smarter and more sustainable. Today,
energy remains widely accessible
and vastly affordable for millions and
millions of people on the planet.
We wholeheartedly embrace our
responsibility — socially and financially —
to deliver meaningful results. Consider
what we’ve accomplished since we
became an independent company,
completing more than $10 billion of M&A
activity to shift our business to higher-
margin, higher-return products and areas.
We transformed our company in a way
that’s second to none in our sector. In fact,
transforming is quite possibly what we
do best. We’re decisive forward thinkers,
savvy creators of shareholder value and
innovative developers of infrastructure.
In 2019, WPX shares closed the year
up 21 percent vs. an average decline
of 13 percent for our peer group.
We also increased net income by 70
percent to $256 million and raised cash
flow from operations by 42 percent
to $1.26 billion, even as commodity
price realizations declined.
Our oil sales topped $2 billion for the first
time. Producing a single barrel of oil is
a marvel in and of itself when you think
about the application of science and
the coordination of complex logistics.
In 2019, we produced nearly 38 million
barrels, up 27 percent vs. the prior year.
Our natural gas production increased
32 percent, enough to meet the energy
needs of some 1.2 million homes per day.
This was aided by reduced flaring and
increased gas capture from the millions
of dollars we invested in new pipes,
compression and processing capacity.
We also kept our capital spending right
where we said it would be — about
$1.3 billion — and generated free
cash flow of $101 million in the
back half of the year. Free cash flow
is a non-GAAP measure generally
representing cash flow from operations
excluding working capital changes
less incurred capital expenditures.
With a new year, however, comes new
challenges. As I write this letter, factors
beyond our control continue to evolve.
The turbulence in global energy demand
and the financial markets requires a
thoughtful response. The strength
of our balance sheet, our revolver
capacity, our commodity hedges,
and our track record for managing
difficult days gives us an edge.
Richard E. Muncrief Chairman and CEO
We embrace our
responsibility — socially
and financially — to deliver
meaningful results.
HISTORIC TIMES
What we’re witnessing in early 2020 is
without question — historic. The effects
of COVID-19 on the global economy,
combined with the geopolitical showdown
for market share in oil, have been swift,
severe and seemingly unprecedented.
I can tell you that we are significantly better
positioned than most of our peers to work
through these events. In 2020, we have
95,978 barrels per day of oil hedged with
fixed price swaps at a weighted average
price of $56.27 per barrel and another
20,000 bbl/d with fixed price collars at
a weighted average floor of $53.33.
Our team also has an experienced
hand when it comes to withstanding
headwinds. We’ve overcome market
challenges before by staying disciplined,
maintaining positive relationships with
our service providers, cutting capital,
and smartly adjusting our drilling
plans. We will do the same in 2020.
WPX, today, has become an
outperformance story specifically
because of this very approach. We also
paid down nearly $300 million of debt
last year and reshaped our debt towers
saving roughly $4 million per year in
interest. Our next significant maturity
($406 million) does not occur until 2023.
Fitch upgraded WPX to investment-grade
in March 2020 following the close of
our acquisition of Felix Energy in a cash
and stock transaction. Moody’s and S&P
also reaffirmed our credit ratings while
many in our sector were downgraded
following the collapse in oil prices and
the economic impact from COVID-19.
We benefitted from the timing of our
acquisition, purchasing Felix during a
down cycle in the M&A market. This is
typical of our approach to either get
ahead of the market — as we did when we
purchased RKI Exploration in 2015 — or
to seize opportunities in a trough.
With the acquisition, WPX reached
150,000 barrels per day of oil. This
provides revenue assurance and
equips WPX to remain laser-focused
on generating free cash flow.
All of this is driven by an effective strategy,
a bias for action and being disciplined
enough to wait for home runs when
singles and doubles are perhaps more
at the ready. We also possess the power
of a world-class portfolio in the two best
oil producing basins in the Lower 48.
Our success is driven
by our discipline, an
effective strategy and a
bias for action.
S T O C K H O L D E R L E T T E R
2 WPX Energy, Inc. | 2019 Annual Report
SHREWDLY OPPORTUNISTIC
If you’re interested in the consensus
on WPX, the analysts say that we’re
positioning ourselves as a larger,
long-term player; are widely respected
and recognized for execution; and
are adept at taking advantage of the
M&A environment as it shifts.
That characterization is accurate,
with plenty of evidence from 2019
as we closed the year with 29 buy
ratings, 3 holds and 1 sell. Of course,
the seeds that produce fruit have to
be planted, grown and harvested.
Timing is everything, right?
Some of our 2019 success traces
back to 2017 and 2018 when we
leveraged our oil and gas volumes to
acquire minority interests in Permian
pipelines. We dedicated certain
volumes on the Whitewater and Oryx II
pipes while investing approximately
$125 million in the projects.
We monetized those investments
for half a billion dollars in 2019 while
retaining our flow assurance and
saving roughly $40 million in additional
capital requirements. Our remaining
infrastructure boasts other attractive
possibilities, too, through our various
natural gas and water systems.
We’re also known for our ability to
accelerate and execute on our plans.
In 2014, we laid out a plan to triple our
cash operating margins over five years
by shifting how and where we deployed
capital. We accomplished that goal
nearly two years ahead of schedule.
In February 2019, we introduced a
framework for returning capital to
shareholders starting in 2021. Before
the end of October, we had bought
back 5.7 million shares of our common
stock. Given the opportunity in our
stock price in early 2020, we also
repurchased additional shares.
We also unveiled a new five-year vision for
shareholders in late 2019 that enhances
what WPX offers investors, including our
goals to further reduce our leverage down
to 1x, reducing our base decline rate
and increasing our free cash flow yield.
Meeting these five-year targets is the
benchmark for any investment we
make. Weeks after we debuted this
vision, we inked the Felix acquisition,
which is accretive on all important
metrics — earnings per share, cash
flow per share, return on capital
employed and net asset value.
We’re known for our ability
to execute on our plans
ahead of schedule.
S T O C K H O L D E R L E T T E R
WPX Energy, Inc. | 2019 Annual Report 3
RISK MANAGEMENT
Disclosure and transparency aren’t
buzzwords. They’re foundational for any
company that prizes its reputation and
ability to attract talent. More than ever,
they speak to the underlying strength of
your value proposition to stakeholders.
I take that to heart. Our executive
team takes it to heart. Our board takes
it to heart. And our employees take
it to heart. At WPX, we want to show
leadership in the activities that are
material to our business. Our charge is
to earn and retain your trust. Our track
record speaks to that commitment.
Nearly a decade ago, WPX was one
of the first energy producers to
voluntarily disclose details about
hydraulic fracturing on a national
registry (FracFocus) even before states
required this data. Since then, we’ve
disclosed data for more than 2,500
of our natural gas and oil wells.
In the same vein, we published our first
ESG report last year. It wasn’t expansive,
but it was a place to start and a way to
engage in the broader discussion about
responsible energy development in the
midst of changes in climate, investor
expectations and public sentiment.
Our second edition, available on our
website, covers topics ranging from our
relationship with indigenous peoples
to how we inspect for archeological
artifacts prior to drilling. We also
joined a Dark Skies Initiative in 2019
to support research by the McDonald
Observatory in West Texas.
Our 2020 focus will entail more
formalization of our internal ESG
structure and more comprehensive
development of our quantitative
data reporting. It also means
continuing to intentionally evolve
the culture of the company and the
behaviors that contribute to it.
That’s why we rewrote our company’s
core values, emphasizing our desire
to constantly analyze outcomes to
deliver improvement. There is progress.
In the Permian Basin, we increased
the amount of produced water we
recycled by 57 percent last year.
Proactively discussing the tact
we take to run our business and
manage its associated risks should
increase our appeal to generalist and
socially conscious investors. We also
believe there’s value in working with
others, which is why we’ve joined a
coalition of 19 other companies in
the Permian Strategic Partnership.
S T O C K H O L D E R L E T T E R
Our 2020 focus will entail
more formalization of our
internal ESG structure.
4 WPX Energy, Inc. | 2019 Annual Report
ETHICS & INNOVATION
Everything we’re accomplishing
starts with the courage and creativity
of our people. They’re delivering
incredible things, many that never
make a press release but are essential
to our business. At the end of 2019,
women comprised 37 percent of our
workforce; minorities 22 percent.
In the Williston Basin, we recently
celebrated five straight years without an
employee lost-time-accident. That’s no
small task, coupled with the challenges
of navigating North Dakota winters.
On the technical side, we deployed a
fiber-optic cable and several downhole
pressure gauges on a well in the Permian
to monitor different reservoirs. This
technology allows us to actively assess
fracture treatments while experimenting
with different design variables.
We also have a new innovation team
staffed with reservoir, business
intelligence and data science engineers.
One of these individuals pioneered
our drone program, which has grown
to eight certified pilots in just a year.
This gives us more eyes to identify
fugitive emissions, allowing us to
make repairs faster than before.
Our community engagement, which is
employee-led vs. company directed,
was recognized with the 2019
Community Impact Award presented
by the Oklahoma Business Ethics
Consortium. This is the second award
OK Ethics has presented to WPX.
The organization found that our
effectiveness is driven by the “strong
collaborative bond between the company
and its employees, with structure and
programs that encourage community
service and charity, while giving
employees the freedom to plug in at a
place or places of their choosing.”
This bottom-up approach inspires
initiative and helps incubate new ideas
civically and in the workplace. At WPX,
relationships are core to who we are, and
we’re always listening to our employees,
investors and neighbors. It’s important
to us, and we know it’s important to you.
Richard E. Muncrief
Chairman and CEO
March 30, 2020
S T O C K H O L D E R L E T T E R
At WPX, relationships are
core to who we are.
WPX Energy, Inc. | 2019 Annual Report 5
DIRECTORS
JOHN A. CARRIGIndependent Director
Former President & COO
ConocoPhillips
ROBERT K. HERDMANIndependent Director
Managing Director
Kalorama Partners LLC
KELT KINDICKLead Independent Director
Advisory Partner & Former CFO
Bain & Company, Inc.
KARL F. KURZIndependent Director
Former Managing Director
CCMP Capital Advisors LLC
HENRY E. LENTZIndependent Director
Former Managing Director
Lazard Fréres & Co.
WILLIAM G. LOWRIE Independent Director
Former Deputy CEO, BP Amoco PLC
Retiring from WPX Board in May
KIMBERLY S. LUBELIndependent Director
Former President, CEO and Chairman
CST Brands, Inc.
RICHARD E. MUNCRIEF, CHAIRMANInside Director
CEO
WPX Energy, Inc.
D. MARTIN PHILLIPSIndependent Director
Managing Partner
EnCap Investments
DOUGLAS E. SWANSON, JR.Independent Director
Managing Partner
EnCap Investments
VALERIE M. WILLIAMSIndependent Director
Former Partner
Ernst & Young, LLP
DAVID F. WORKIndependent Director
Former Executive
BP Amoco Corp.
SENIOR LEADERSHIP
RICHARD E. MUNCRIEFChief Executive Officer
DENNIS C. CAMERONExecutive Vice President and
General Counsel
CLAY M. GASPARPresident and
Chief Operating Officer
BRYAN K. GUDERIANExecutive Vice President,
Business Development
ANGELA E. KOUPLENSr. Vice President,
Administration & CIO
J. KEVIN VANNExecutive Vice President and
Chief Financial Officer
COMMITTEES
Audit
John Carrig (Chair)
Karl Kurz
Valerie Williams
Compensation
Henry Lentz (Chair)
Robert Herdman
Kimberly Lubel
Douglas Swanson
Nominating, Governance, Environmental, Public Policy
Kelt Kindick (Chair)
Kimberly Lubel
D. Martin Phillips
David Work
B O A R D O F D I R E C T O R S A N D S E N I O R L E A D E R S H I P
6 WPX Energy, Inc. | 2019 Annual Report
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Annual Meeting
Stockholders are invited to our annual meeting at
9:30 a.m. Central Daylight Time on May 21, 2020,
Robert J. LaFortune Studio, Tulsa Performing
Arts Center, 110 E 2nd St, Tulsa, OK 74103.
Internet
Company information is available at www.wpxenergy.com.
Inquiries
A stockholder may obtain a free copy of our 2019 Annual
Report or Form 10-K, which was filed with the SEC, by
contacting our investor relations group. Call David Sullivan
at 539-573-9360 or 855-979-2012. Direct your written
inquiries to investor relations at our headquarters
address below.
Corporate Headquarters
3500 One Williams Center, Tulsa, OK 74172
Phone: 855-979-2012
Transfer Agent and Registrar
Computershare
P.O. Box 30170, College Station, TX 77842-3170
800-884-4225 or 781-575-2879
Website: www.computershare.com
Send overnight mail to:
Computershare
211 Quality Circle, Suite 210, College Station, TX 77845
Auditors
Ernst & Young, LLP
1700 One Williams Center, Tulsa, OK 74172
Corporate Governance
Our Code of Business Conduct, the charters for our Board
Committees, and our Corporate Governance Guidelines
are available on our website at www.wpxenergy.com.
Equal Opportunity
The Company is an Equal Employment Opportunity
(EEO) employer and does not discriminate in any
employer/employee relations based on race, color,
religion, sex, sexual orientation, national origin, age,
genetic information, disability or veteran’s status.
Forward-Looking Statements
Certain matters discussed in this report, except
historical information, include forward-looking
statements. Although WPX believes such statements
are based on reasonable assumptions, no assurance
can be given that every objective will be achieved.
For more detail, see the disclosure beginning
on page 23 of the Form 10-K in this report.
WPX Energy Securities
WPX Energy common stock began trading on the
New York Stock Exchange on Jan. 3, 2012,
under the ticker symbol WPX.
On March 30, 2020, there were 559,364,806 shares of
common stock issued, outstanding and entitled to vote.
© 2020 WPX Energy, Inc. All rights reserved.
www.wpxenergy.com | NYSE: WPX