On Oct. 8, WPX Energy Inc. (NYSE: WPX) detailed its five-year strategy for simplifying its geographic area and expanding returns, margins and cash flow. The company narrowed its investment strategy to the Williston, San Juan and Piceance basins.
The balance of the properties will either be divested or sold, WPX said.
The company’s core resource plays in North Dakota, New Mexico and Colorado have 16,000 estimated remaining drilling locations on about 480,000 acres. These produced more than 14 trillion cubic feet of proved, probable and possible reserves at year-end 2013, WPX said.
In less than 18 months, more than 400 oil locations were identified in the San Juan Basin, which previously had none, the company noted. The first two 7,500-foot laterals in the Gallup oil area of the San Juan were completed, and completions are being started in the Williston, the company said.
In the Williston, early results—from doubled stimulation size—show a 14% production increase from three Bakken wells, and a 13% production increase from three Three Forks wells, the company noted.
The five-year strategy might increase oil production five-fold and triple the operating margins and company value by 2020, WPX said.
Earlier this year, the San Juan well count increased to 40 from 29, and by year’s end, WPX plans to spud 48 Gallup wells.
More capital will go to the Piceance Basin’s Ryan Gulch Field, which has more than 4,000 drillable locations on 10-acre spacing.
For the annual capital program, the goal is 30% or more internal rate of return, the company said, noting that the Gallup and Bakken currently yield the highest.
The historically-weighted gas portfolio produced 14% of equivalent volumes in oil during this year’s second quarter, the company said. Oil sales rose to 37% from 23%.
Tulsa, Okla.-based WPX Energy Inc. explores and produces domestic natural gas, NGL and oil.
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