Friday, September 5, 2014

WPX Energy: Watch Out For This Turnaround Stock

This article was first published by Seeking Alpha on August 30, 2014.

By Sarfaraz A. Khan

Summary: WPX Energy is a natural gas -focused E&P company. The company has not reported any meaningful increase in total production and has struggled with profitability. That said, WPX Energy could change its fortune in the near future.

WPX Energy (NYSE:WPX) has struggled with profitability and production growth on the back of a tough pricing environment in the natural gas market. But this could change in the future on the back of increasing oil production in the near term and higher gas production in the long term.

WPX Energy is an independent natural gas focused exploration and production company formed about two years ago from a spinoff of the pipeline operator Williams Cos (NYSE:WMB). Since its birth, the natural gas prices have improved from less than $3/MBtu in early 2012 to nearly $4/MBtu in mid-2014 but have largely remained below $5/MBtu since 2011.

WPX Energy has significant operations at Colorado's Piceance Basin, North Dakota's Williston Basin in the larger Bakken formation and New Mexico's San Juan Basin.

No Production Growth

WPX Energy has not reported any meaningful increase in production over the last several quarters. Since the beginning of 2013, the company's total output has hovered between 1,230 mmcfe/d and 1,268 mmcfe/d.

WPX Energy's gas production has fallen from 1,007 mmcf/d in Q2-2013 to 965 mmcf/d in Q2-2014. However, the company's gas production from Piceance Basin has been largely flat from last year. Amid the weak pricing environment in the natural gas market, WPX Energy has turned towards oil. … read full article at Seeking Alpha