What happened

Shares of WPX Energy (NYSE:WPX) rallied more than 12% by 10:45 a.m. EDT on Tuesday. Fueling the oil driller's surge was its second-quarter earnings report.

So what

WPX Energy produced $0.09 per share of adjusted net income during the second quarter, beating the consensus estimate by $0.02 per share. Driving that expectation-thumping result was robust production out of both the Delaware Basin and the Bakken shale. Output in the Delaware Basin surged 30% year over year, powered by a 53% jump in natural gas liquids (NGLs) volumes thanks to the recent completion of several midstream projects. Meanwhile, production in the Bakken jumped 25% after WPX brought several high-rate wells online during the quarter.

An oil pump with a bright sun and blue sky in the background.

Image source: Getty Images.

Robust production results during the quarter enabled WPX Energy to boost its full-year forecast by 5%. The driller also noted that it could deliver that improved production profile while sticking to its existing capital budget plan.

Because of that capital discipline and higher oil prices, WPX Energy expects to start generating excess cash flow during the second half of the year. That gave it the confidence to initiate a $400 million share-repurchase program, which it intends on completing over the next two years. "This accelerates our original plan to return capital to shareholders in 2021," stated CEO Rick Muncrief.

Now what

Thanks to its strong well results, WPX Energy is on track to produce more oil for the same amount of money this year. That should allow the oil company to generate between $100 million and $150 million in free cash in the second half at current commodity prices. As a result, it can accelerate its plan to join its peers in returning money to shareholders. The company expects this strategy will allow it to create more value for its investors over the long term.