Please ensure Javascript is enabled for purposes of website accessibility

Why WPX Energy Stock Is Soaring Today

By Matthew DiLallo - Updated Aug 6, 2019 at 11:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The oil and gas company pleased its investors.

What happened

Shares of WPX Energy (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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

WPX Energy, Inc. Stock Quote
WPX Energy, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.