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WPX Energy (WPX) Gains from Oil Focus

Zacks

WPX Energy Inc. WPX, a Zacks Rank #3 (Hold) stock, has gained in the last year against the industry’s decline. WPX Energy’s strong portfolio of assets, improvement in its existing cost structure and expansion of the oil-rich Delaware Basin are boosting its performance.



Post divestiture of its San Juan Basin holdings, WPX Energy is primarily focusing on its assets situated in North Dakota’s Williston Basin and the Permian’s Delaware Basin. Ongoing investments in WPX Energy’s core assets in the Delaware and Williston basins will help it to enhance production and build reserves.

In the Delaware and Williston Basin, WPX Energy has more than 6,600 and 465 gross drillable locations, respectively, with commodity mix skewed toward oil. At present, nearly 80% production of the company is oil and rest is natural gas. It was simply the opposite five years ago. This transformation is a result of execution of the company’s plan to produce more liquids.

WPX Energy, Inc. Price and Consensus


WPX Energy, Inc. Price and Consensus | WPX Energy, Inc. Quote

WPX Energy’s management has decided to rationalize its portfolio and improve existing cost structure. The company plans to lower costs through reduced drilling times, efficient use of pad design and completion activities, and negotiating lower costs for vendor goods and services. Thanks to these initiatives, the total cost and expenses in 2017 were $1.29 billion, down 9.2% year over year.

WPX Energy uses the hydraulic fracturing method to produce commercial quantities of natural gas and oil from many of its existing reservoirs. If legislations or regulations pertaining to the restricted use hydraulic fracturing are implemented, it could result in increased costs and lower margins.

Investors can consider a few better-ranked stocks from the same industry that include Concho Resources Inc. CXO, Pioneer Natural Resources Co. PXD and Energen Corp. EGN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Concho Resources reported an average positive earnings surprise of 48.89% in the last four quarters. Its 2018 and 2019 earnings estimates moved up 23.3% and 23.6%, respectively, in the last 30 days.

Pioneer Natural Resources reported an average positive earnings surprise of 66.92% in the trailing four quarters. Its 2018 and 2019 earnings estimates moved up 51.6% and 33.7%, respectively, in the last 30 days.

Energen Corp. reported an average positive earnings surprise of 19.67% in the last four quarters. Its 2018 and 2019 earnings estimates moved up 24.1% and 21.4%, respectively, over the last 30 days.

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