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WPX Energy Inc Class A WPX
Q4 2012 Earnings Call Transcript

Transcript Call Date 02/28/2013

Operator: Good day, and welcome to the WPX Energy Operations Update. Today's call is being recorded. At this time, I would like to turn the conference over to David Sullivan, Manager of Investor Relations. Please go ahead.

David Sullivan - IR: Thank you. Good morning, everybody. Welcome to the WPX Energy 2012 year-end operational update. We appreciate your interest in WPX Energy. Ralph Hill, our CEO; and Rod Sailor, our CFO, will review the prepared slide presentation this morning. Along with Ralph Hill and Rod Sailor are members of the senior management team; Bryan Guderian, Senior VP of Operations; Neal Buck, Senior VP of A&D and Land; and Mike Fiser, Senior VP of Marketing, and all will be available for questions after the presentation.

Since the market closed yesterday, we have released our 2012 earnings results, 2013 guidance and 2012 yearend reserves and also today's presentation, all of which are available on our website, wpxenergy.com.

The 2012 10-K will be filed later today and you'll be able to access that on our website as well. Please review the cautionary language regarding the forward-looking statements on Slide 2 and the disclaimer on the oil and gas reserves on Slide Number 3. They are important and integral to our remarks, so please review them. Also included are various non-GAAP numbers that have been reconciled back to Generally Accepted Accounting Principles. Those schedules follow the presentation.

So with that, Ralph, I'll turn it over to you.

Ralph A. Hill - President and CEO: Thank you, David. Welcome to our 2013 operational outlook and fourth quarter 2012 earnings call, and thank you for your interest in WPX. A couple of key reminders before I move into the body of the slides. With over 18 Tcf of 3P reserves, in the appropriate commodity environment we can grow all three of our product lines at double-digit rate for many years. In other words, we can double the size of our Company within five years by developing what we own today and that is before our recent Niobrara discovery that I'll discuss today.

Our balance sheet remains very strong with about $1.7 billion of liquidity. That keeps us in a position of strength to grow at the appropriate time and we continue to believe and by choice we're in the best basins in the nation and since have the best oil basin in Bakken, the best gas and NGL basin in the Piceance and the best pure gas basin in the Marcellus.

Let's turn to Slide 4 please, our 2013 path to greater shareholder value, we intend to grow our oil production as a total Company about 21%. Our Bakken oil production will grow between 25% and 30%. We're going to maintain a very disciplined natural gas development. We're not growing our gas volumes at this current environment, but we're poised for growth when prices recover and I continue to believe we can be the first and the fastest and the best returns when prices recover to grow our gas.

We are continuing our cost improvements and discuss in a few minutes our drilling and completion cost decreases in our major and operating areas. We had significant improvements in cost and we have contractual improvements such as our Willow Creek contract that have already kicked in that would also improving some of our other costs. And we have new opportunities we're going to pursue this year. The organic opportunities in the Niobrara discovery, we'll talk about that in a few minutes and we have oil explorations underway in two new basins. We've already spud one of our first wells in early January. I can talk more about the Niobrara here in just a few minutes, but as for the two new oil plays, that will be more of a mid-year update.

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