WPX Energy cuts capital expenditures budget by 25% to preserve cash flow
TULSA — WPX Energy announced this week it is reducing its planned capital expenditures for 2020 by $400 million.
That equates to about 25% of what it had planned to spend for the year.
Officials said they expect the company will be able to maintain an average daily production of about 150,000 barrels of oil and will still generate at least $150 million of free cash flow.
It will be August of 2023 before WPX faces a significant debt reduction hurdle, when it will be required to retire $406 million in outstanding notes, they also said.
“We will continue to assess the market and adjust our activity levels as necessary,” Rick Muncrief, WPX’s CEO, stated as part of the announcement. “You can expect us to be flexible and focused on generating free cash flow.”
WPX operates in the Delaware and Williston basins. The company's revised capital expenditures plan now stands between $1.275 billion to $1.4 billion for the year.
Officials stated about two-thirds of WPX’s expected oil production in 2020 is protected with fixed price swaps at a weighted average price of $56.27 per barrel.
Another 20,000 barrels per day is protected using fixed price collars at a weighted average floor price of $53.33.
Beyond the hedges, WPX officials also stated the company could see some improved cash flow after factoring in potential cost reductions from its service providers.
They noted WPX is actively discussing potential cost changes with vendors and that a notable reduction could enable it to trim its capital expenditure plans further, thereby boosting its expected free cash flow target for the year.
The company will provide additional details in future months.
“Our balance sheet, liquidity, commodity hedges and track record gives WPX an edge in a very difficult period,” Muncrief said.
“We’re also grateful for our business partners, service providers and vendors. We never take lightly how our decisions affect others.”