WPX Energy Reports 2012 Results

TULSA, Okla.--(BUSINESS WIRE)--WPX Energy (NYSE:WPX) today announced its unaudited operating and financial results for the fourth quarter and the year ended Dec. 31, 2012. Highlights for full-year 2012 include:

“For 2012, we maintained the strength of our balance sheet in the face of lower natural gas prices and exceeded our production goal even with ongoing pipeline bottlenecks in the Marcellus.”

• 98% growth in Bakken oil production
• 40% growth in overall oil production
• 3% growth in overall NGL production
• 2% growth in overall natural gas production
• 634 Bcfe of domestic reserves additions

CEO PERSPECTIVE

“Our focused growth plan and rate-of-return driven strategy is delivering strong results. Production is up, Bakken well costs are down and continue to improve, and new opportunities like our Niobrara discovery are providing upside potential and future visibility for value creation at WPX,” said Ralph Hill, president and CEO.

“For 2012, we maintained the strength of our balance sheet in the face of lower natural gas prices and exceeded our production goal even with ongoing pipeline bottlenecks in the Marcellus.

“For 2013, our diversified portfolio of reserves gives us the opportunity to continue to grow our Bakken production and devote the majority of our capital to oil and liquids resource plays,” Hill said.

“We’re also committed to continuously improving the cost structure in each of our basins and gaining new efficiencies as we apply our large-scale development expertise.

“Specifically, reduced drilling times positively impact our internal rates of return. Our record drilling times are 3.7 days in the Piceance Valley, 10.8 days in the Marcellus and 25 days in the Bakken.

“Piceance wells originally took 30 days to drill. A decade ago they took 20. We’ve since reduced that by another 60 percent down to an average of 8 days for our Valley wells. This is an example of the efficiencies we can deliver in our other major operating areas,” Hill added.

FULL-YEAR 2012 FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $223 million for full-year 2012, or a loss of $1.12 per share on a fully-diluted basis, compared with a net loss of $302 million, or a loss of $1.53 per share, in 2011.

The net loss from continuing operations attributable to WPX Energy was $245 million in 2012 vs. $160 million for full-year 2011.

Full-year 2012 results were impacted by a 22 percent decrease in domestic net realized natural gas prices. Higher production volumes – particularly domestic oil – together with lower asset impairments partially offset the impact of lower realized natural gas prices.

Non-cash impairment charges included in continuing operations were $225 million in 2012 related to producing properties and costs of acquired unproved reserves, compared with $367 million in 2011. These charges were primarily driven by declines in forward natural gas prices.

Excluding these charges and unrealized mark-to-market gains (losses), WPX had an adjusted loss from continuing operations of $123 million, or a loss of $0.62 per share on a diluted basis, in 2012 compared with adjusted income from continuing operations of $80 million, or $0.40 per share, in 2011. A reconciliation accompanies this press release.

FOURTH-QUARTER 2012 FINANCIAL RESULTS

WPX reported an unaudited net loss attributable to WPX Energy of $106 million for fourth-quarter 2012, or a loss of $0.53 per share on a fully-diluted basis, compared with a net loss of $338 million, or a loss of $1.71 per share, in the same period in 2011.

The net loss from continuing operations attributable to WPX Energy was $105 million in fourth-quarter 2012 vs. $209 million for the fourth quarter of 2011.

Oil revenues increased 56 percent quarter over quarter, but natural gas and natural gas liquids (NGL) revenues declined a combined 19 percent. Results of continuing operations were also impacted by non-cash impairment charges of $108 million in fourth-quarter 2012 and $367 million in fourth-quarter 2011.

Excluding these charges and unrealized mark-to-market gains (losses), WPX had an adjusted loss from continuing operations of $39 million, or a loss of $0.20 per share on a diluted basis, for fourth-quarter 2012, compared with adjusted income from continuing operations of $24 million, or $0.12 per share, for the same period in 2011. A reconciliation accompanies this press release.

ADJUSTED EBITDAX

WPX’s adjusted EBITDAX (a non-GAAP measure) for full-year 2012 was $1 billion, compared with approximately $1.3 billion for the same measure in 2011. For fourth-quarter 2012, WPX had adjusted EBITDAX of $256 million, compared with $336 million for the same period in 2011.

The difference in year-over-year adjusted EBITDAX is primarily the result of lower commodity prices in 2012 vs. 2011, partially offset by higher production volumes.

EBITDAX (non-GAAP)	Full Year		Fourth Quarter
	2012	2011	2012	2011
	millions	millions	millions	millions
Net income (loss)	($211)	($292)	($104)	($335)
Interest expense	$102	$117	$25	$20
Provision (benefit) for income taxes	($111)	($74)	($40)	($104)
Depreciation, depletion and amortization	$966	$902	$247	$232
Exploration expenses	$83	$126	$23	$26
EBITDAX	$829	$779	$151	($161)
Impairments	$225	$367	$108	$367
Unrealized MTM (gains) losses	($32)	$11	($4)	$1
(Income) Loss from discontinued operations	($22)	$142	$1	$129
Adjusted EBITDAX	$1,000	$1,299	$256	$336

EBITDAX represents earnings before interest expense, income taxes, depreciation, depletion and amortization and exploration expenses. Adjusted EBITDAX includes adjustments for impairments, unrealized mark-to-market gains (losses) and discontinued operations.

WPX believes that these non-GAAP measures provide useful information regarding its ability to meet future debt service, capital expenditures and working capital requirements.

PRODUCTION

WPX’s overall domestic and international production climbed 4 percent in 2012 to an average of 1,386 MMcfe/d, excluding volumes for discontinued operations in the Barnett Shale and Arkoma Basin which were sold in 2012.

The production increase was led by 40 percent growth in oil production, 3 percent growth in NGL production and 2 percent growth in natural gas production. NGL growth was curbed in late 2012 due to reduced ethane recovery rates.

Average Daily Production	Full Year				4Q
	2012	2011	Change		2012	2011	Change
Natural gas (MMcf/d)
Piceance Basin	673	679	-1	%	637	686	-7	%
Marcellus Shale	63	15	320	%	71	27	163	%
Powder River Basin	208	226	-8	%	195	229	-15	%
San Juan Basin	132	135	-2	%	138	119	16	%
International	19	20	-5	%	19	21	-10	%
Other	10	10	0	%	10	9	10	%
Subtotal (MMcf/d)	1,105	1,085	2	%	1,070	1,091	-2	%
Oil (Mbbl/d)
Bakken Shale	9.5	4.8	98	%	11.4	6.4	78	%
Piceance	2.3	2.3	0	%	2.0	2.2	-9	%
International	6.0	5.6	7	%	5.8	5.9	-2	%
Other	0.2	0.2	12	%	0.2	0.3	-24	%
Subtotal (Mbbl/d)	18.0	12.9	40	%	19.4	14.8	31	%
NGLs (Mbbl/d)
Piceance	27.5	27.1	1	%	23.1	27.1	-15	%
International	0.5	0.5	0	%	0.5	0.4	25	%
Other	0.9	0.5	80	%	1.4	0.5	180	%
Subtotal (Mbbl/d)	28.9	28.1	3	%	25.0	28.0	-11	%
Total Production (MMcfe/d)	1,386	1,331	4	%	1,336	1,348	-1	%

Oil production in the Bakken Shale increased to an average of 11,400 barrels per day in the fourth quarter. This represents a 78 percent increase vs. the same period a year ago. The company’s 2012 exit rate in December was slightly higher, at 11,600 barrels per day or 12,700 barrels of oil equivalent per day.

For the full-year, Bakken oil production increased 98 percent over 2011, growing from an average of 4,800 barrels per day to an average of 9,500 barrels per day.

Piceance production remained nearly flat year-over-year, despite a decrease in drilling and development. However, the basin’s total volumes from more than 4,100 wells continue to drive approximately 60 percent of WPX’s overall production.

Natural gas production in the Marcellus Shale rose significantly in 2012. Fourth-quarter 2012 volumes of 71 MMcf/d were up 163 percent vs. a year ago. For the full-year, Marcellus production was up 320 percent vs. 2011 despite ongoing reliability issues with a third-party gathering system. At year-end 2012, approximately 30 MMcf/d of Marcellus gas remained curtailed by infrastructure constraints.

WPX’s total overall natural gas production increased 2 percent in 2012 to 1,105 MMcf/d, but declined 2 percent in the fourth quarter vs. the same period a year ago reflecting the company’s capital discipline in reducing natural gas drilling and completion activity.

Total NGL production increased 3 percent to 28,900 barrels per day in 2012 but declined in the fourth quarter by 11 percent due to reduced ethane recovery.

The domestic net realized average price for natural gas, inclusive of hedges, was $3.38 per Mcf in 2012, down 22 percent from $4.32 per Mcf a year ago.

The net realized average price for domestic oil, inclusive of hedges, was $85.58 per barrel in 2012, up slightly from $85.30 per barrel a year ago.

The domestic net realized average price for NGL was $28.56 per barrel in 2012, down 29 percent from $40.17 per barrel a year ago.

EXPENSES

WPX’s domestic expenses were approximately 15 percent lower for full-year 2012 than in 2011, primarily driven by lower gas management expenses. The following expenses represent per-unit expenses related to the company’s domestic production.

Domestic Expenses	Per-Unit Basis
	2012			2011
Lease operating	$	0.52		$	0.51
Gathering, processing & transportation	$	1.04		$	1.05
Taxes other than income	$	0.18		$	0.24
General & administrative	$	0.56		$	0.57
DD&A	$	1.93	*	$	1.89
* Reflects a decline in the 12-month average commodity price that is
used to calculate the company's DD&A rate. The impact is $31 MM.

CASH AND LIQUIDITY

At Dec. 31, 2012, WPX had approximately $153 million in cash and cash equivalents – including $35 million for international operations.

The company’s total liquidity at the end of the year was approximately $1.65 billion, including an undrawn $1.5 billion revolving credit agreement.

DEVELOPMENT ACTIVITY

In 2012, WPX participated in 548 gross (367 net) wells in the United States, including 102 gross (53 net) wells in the fourth quarter. This figure represents the number of wells that were completed and began commercial delivery of production. WPX did not have any dry holes in 2012.

Highlights for the company’s operated wells in its primary areas are provided below, as well as those for WPX’s new opportunities. The balance of gross (net) wells is accounted for in non-operated interests, as well as WPX’s own properties in the San Juan and Powder River basins.

In the liquids-rich Piceance Basin, WPX completed 240 gross (209 net) wells in 2012, including 23 gross (19 net) in the fourth quarter. During 2012, WPX set new record times in the Piceance, drilling a well on its Valley acreage in 3.7 days and a well on its Highlands acreage in 7.7 days.

In the oil-rich Bakken Shale, WPX completed 41 gross (27 net) wells in 2012, including 14 gross (10 net) in the fourth quarter.

WPX continues to improve its drilling and completion costs in the Bakken, particularly with the shift to multi-well development pads. The company’s recent Bakken well costs are down 10 to 20 percent through fewer drilling days and completion efficiencies.

With the benefit of pad drilling, WPX drilled a recent well in 2013 – the Blackhawk 1-12 HW – in 25 days, which is the company’s record in the basin.

In the Marcellus Shale, WPX completed 54 gross (33 net) wells in 2012, including 11 gross (9 net) in the fourth quarter. The majority of this activity took place in Susquehanna County. At year-end, 25 gross wells were awaiting completion and nine wells were awaiting pipeline connection.

Since the third quarter, WPX has shaved another half-day off its record drilling time in the Marcellus. The company’s new best time is 10.8 days, which was achieved in January 2013.

Also in 2013, on Jan. 22 WPX announced a natural gas discovery in western Colorado’s Niobrara formation that was drilled, cored and completed in 2012.

The Niobrara discovery well has registered an average production rate of 10.6 million cubic feet per day over its first 60 days, despite being substantially choked back.

WPX has the lease rights to approximately 180,000 net acres of the Niobrara/Mancos shale play in western Colorado. Over time, the Niobrara discovery has the potential to more than double the company’s proved, probable and possible (3P) reserves.

2012 PROVED RESERVES

Yesterday, WPX announced that its domestic proved reserves at Dec. 31, 2012, were nearly 4.5 trillion cubic feet equivalent based on 2012 commodity price averages. The company added 634 Bcfe of proved domestic reserves in 2012 through drilling.

Including international reserves of 159 billion cubic feet equivalent, WPX had total proved reserves of 4.65 Tcfe.

WPX’s press release about its 2012 proved reserves is available at www.wpxenergy.com, including an alternate scenario whereby 2012 domestic proved reserves were 19 percent higher at 5,339 Bcfe using 2011 SEC pricing.

TODAY’S CONFERENCE CALL

WPX management will discuss its 2012 results and 2013 outlook during a webcast starting at 10 a.m. Eastern today. Participants can access the audio and the slides for the event via the homepage at www.wpxenergy.com.

A limited number of phone lines also will be available at [phone]. International callers should dial [phone]. The participant passcode for both lines is 69817966. A replay will be available on WPX’s website for one year following the event.

Form 10-K

WPX plans to file its 2012 Form 10-K with the Securities and Exchange Commission later today. Once filed, the document will be available on both the SEC and WPX websites.

About WPX Energy, Inc.

WPX Energy is an exploration and production company focused on developing its significant oil and gas reserves, particularly in the liquids-rich Piceance Basin, the Bakken and Three Forks oil shales and the Marcellus Shale. WPX also has domestic operations in the San Juan and Powder River basins, as well as a 69 percent interest in Apco Oil and Gas International. Go to http://www.wpxenergy.com/investors.aspx to join our e-mail list.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by WPX Energy on its website or otherwise. WPX Energy does not undertake and expressly disclaims any obligation to update the forward-looking statements as a result of new information, future events or otherwise. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla., 74102, or from the SEC’s website at www.sec.gov.

Additionally, the SEC requires oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and governmental regulations. The SEC permits the optional disclosure of probable and possible reserves. From time to time, we elect to use “probable” reserves and “possible” reserves, excluding their valuation. The SEC defines “probable” reserves as “those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC defines “possible” reserves as “those additional reserves that are less certain to be recovered than probable reserves.” The Company has applied these definitions in estimating probable and possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC’s reserves reporting guidelines. Investors are urged to consider closely the disclosure in our SEC filings that may be accessed through the SEC’s website at www.sec.gov.

The SEC’s rules prohibit us from filing resource estimates. Our resource estimations include estimates of hydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or even possible reserves, (ii) other areas to take into account the low level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Resource estimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon. Resource estimates might never be recovered and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.

WPX Energy, Inc.
Consolidated
(UNAUDITED)
		2011															2012
(Dollars in millions)		1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			YTD
	Revenues:
	Product revenues:
	Natural gas sales	$	408		$	423		$	440		$	423		$	1,694		$	357		$	312		$	331		$	364		$	1,364
	Oil and condensate sales		52			83			84			93			312			106			122			118			145			491
	Natural gas liquid sales		85			107			110			106			408			93			78			65			63			299
	Total product revenues		545			613			634			622			2,414			556			512			514			572			2,154
	Gas management		408			337			347			336			1,428			337			187			186			239			949
	Net gain (loss) on derivatives not designated as hedges		2			6			12			9			29			14			71			(22	)		15			78
	Other		3			3			2			3			11			3			5			(1	)		1			8
	Total revenues		958			959			995			970			3,882			910			775			677			827			3,189
	Costs and expenses:
	Lease and facility operating		63			61			70			68			262			67			67			68			81			283
	Gathering, processing and transportation		112			121			130			124			487			135			120			124			127			506
	Taxes other than income		30			43			32			29			134			30			25			23			33			111
	Gas management, including charges for unutilized pipeline capacity		417			344			359			351			1,471			355			194			200			247			996
	Exploration		12			14			74			26			126			19			19			22			23			83
	Depreciation, depletion and amortization		207			224			239			232			902			228			248			243			247			966
	Impairment of producing properties and costs of acquired unproved reserves		-			-			-			367			367			52			65			-			108			225
	General and administrative		67			63			70			75			275			68			71			67			81			287
	Other-net		1			4			(1	)		(4	)		-			5			(2	)		5			4			12
	Total costs and expenses		909			874			973			1,268			4,024			959			807			752			951			3,469
	Operating income (loss)		49			85			22			(298	)		(142	)		(49	)		(32	)		(75	)		(124	)		(280	)
	Interest expense		(49	)		(48	)		-			(20	)		(117	)		(26	)		(26	)		(25	)		(25	)		(102	)
	Interest capitalized		4			4			-			1			9			2			3			2			1			8
	Investment income and other		6			6			7			7			26			10			8			7			5			30
	Income (loss) from continuing operations before income taxes	$	10		$	47		$	29		$	(310	)	$	(224	)	$	(63	)	$	(47	)	$	(91	)	$	(143	)	$	(344	)
	Provision (benefit) for income taxes		3			17			10			(104	)		(74	)		(25	)		(18	)		(28	)		(40	)		(111	)
	Income (loss) from continuing operations	$	7		$	30		$	19		$	(206	)	$	(150	)	$	(38	)	$	(29	)	$	(63	)	$	(103	)	$	(233	)
	Income (loss) from discontinued operations		(8	)		(2	)		(3	)		(129	)		(142	)		(2	)		23			2			(1	)		22
	Net income (loss)	$	(1	)	$	28		$	16		$	(335	)	$	(292	)	$	(40	)	$	(6	)	$	(61	)	$	(104	)	$	(211	)
	Less: Net income attributable to noncontrolling interests		2			3			2			3			10			3			4			3			2			12
	Net income (loss) attributable to WPX Energy	$	(3	)	$	25		$	14		$	(338	)	$	(302	)	$	(43	)	$	(10	)	$	(64	)	$	(106	)	$	(223	)
	Adjusted EBITDAX
	Reconciliation to net income (loss):
	Net income (loss)	$	(1	)	$	28		$	16		$	(335	)	$	(292	)	$	(40	)	$	(6	)	$	(61	)	$	(104	)	$	(211	)
	Interest expense		49			48			-			20			117			26			26			25			25			102
	Provision (benefit) for income taxes		3			17			10			(104	)		(74	)		(25	)		(18	)		(28	)		(40	)		(111	)
	Depreciation, depletion and amortization (a)		207			224			239			232			902			228			248			243			247			966
	Exploration expenses		12			14			74			26			126			19			19			22			23			83
	EBITDAX		270			331			339			(161	)		779			208			269			201			151			829
	Impairment of producing properties and costs of acquired unproved reserves		-			-			-			367			367			52			65			-			108			225
	Unrealized MTM (gains) losses		18			(3	)		(5	)		1			11			1			(60	)		31			(4	)		(32	)
	(Income) loss from discontinued operations		8			2			3			129			142			2			(23	)		(2	)		1			(22	)
	Adjusted EBITDAX	$	296		$	330		$	337		$	336		$	1,299		$	263		$	251		$	230		$	256		$	1,000
	(a) Includes depreciation and amortization reported in general and administrative expense

WPX Energy, Inc.
Domestic Segment
(UNAUDITED)
			2011															2012
(Dollars in millions)			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			YTD
	Revenues:
		Product revenues:
		Natural gas sales	$	404		$	419		$	436		$	419		$	1,678		$	353		$	307		$	327		$	359		$	1,346
		Oil and condensate sales		34			63			62			67			226			80			95			87			114			376
		Natural gas liquid sales		84			106			109			105			404			92			77			65			62			296
		Total product revenues		522			588			607			591			2,308			525			479			479			535			2,018
		Gas management		408			337			347			336			1,428			337			187			186			239			949
		Net gain (loss) on derivatives not designated as hedges		2			6			12			9			29			14			71			(22	)		15			78
		Other		2			2			1			2			7			3			4			(1	)		1			7
		Total revenues		934			933			967			938			3,772			879			741			642			790			3,052
	Costs and expenses:
		Lease and facility operating		58			55			63			59			235			61			60			60			70			251
		Gathering, processing and transportation		112			121			130			124			487			135			120			124			125			504
		Taxes other than income		27			37			26			23			113			25			18			17			27			87
		Gas management, including charges for unutilized pipeline capacity		417			344			359			351			1,471			355			194			200			247			996
		Exploration		11			13			74			25			123			14			16			19			23			72
		Depreciation, depletion and amortization		202			219			233			226			880			222			242			236			239			939
		Impairment of producing properties and costs of acquired unproved reserves		-			-			-			367			367			52			65			-			108			225
		General and administrative		64			61			67			71			263			65			68			64			76			273
		Other-net		-			4			(2	)		(5	)		(3	)		5			-			4			3			12
		Total costs and expenses		891			854			950			1,241			3,936			934			783			724			918			3,359
	Operating income (loss)			43			79			17			(303	)		(164	)		(55	)		(42	)		(82	)		(128	)		(307	)
	Interest expense			(49	)		(48	)		-			(20	)		(117	)		(26	)		(26	)		(25	)		(25	)		(102	)
	Interest capitalized			4			4			-			1			9			2			3			2			1			8
	Investment income and other			1			2			2			1			6			2			-			1			-			3
	Income (loss) from continuing operations before income taxes		$	(1	)	$	37		$	19		$	(321	)	$	(266	)	$	(77	)	$	(65	)	$	(104	)	$	(152	)	$	(398	)
	Summary of Production Volumes(1)
	Natural gas (MMcf)			92,473			95,207			102,615			98,485			388,780			101,346			102,163			97,310			96,664			397,483
	Oil (MBbls)			384			714			736			816			2,651			948			1,123			1,076			1,247			4,394
	Natural gas liquids (MBbls)			2,425			2,527			2,567			2,539			10,057			2,746			2,779			2,613			2,254			10,392
	Combined equivalent volumes (MMcfe)(2)			109,331			114,655			122,430			118,614			465,030			123,511			125,574			119,443			117,670			486,198
	(1)	Excludes production from our Arkoma Basin and Barnett Shale operations which were classified as discontinued operations and comprised less than 6 percent of our total production.
	(2)	Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.
	Realized average price per unit, including the impact of hedges (1)
		Natural gas (per Mcf)	$	4.37		$	4.41		$	4.25		$	4.25		$	4.32		$	3.48		$	3.01		$	3.35		$	3.71		$	3.38
		Oil (per barrel)	$	87.13		$	87.51		$	84.75		$	83.10		$	85.30		$	84.54		$	83.89		$	82.31		$	90.76		$	85.58
		Natural gas liquids (per barrel)	$	34.84		$	41.90		$	42.54		$	41.14		$	40.17		$	33.46		$	27.96		$	24.43		$	28.12		$	28.56
	(1)	Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
	Expenses per Mcfe (1)
		Lease and facility operating	$	0.52		$	0.48		$	0.51		$	0.51		$	0.51		$	0.50		$	0.47		$	0.51		$	0.60		$	0.52
		Gathering, processing and transportation	$	1.02		$	1.06		$	1.06		$	1.04		$	1.05		$	1.09		$	0.95		$	1.04		$	1.06		$	1.04
		Taxes other than income	$	0.24		$	0.33		$	0.22		$	0.19		$	0.24		$	0.20		$	0.15		$	0.14		$	0.23		$	0.18
		Depreciation, depletion and amortization	$	1.84		$	1.92		$	1.90		$	1.91		$	1.89		$	1.80		$	1.93		$	1.98		$	2.02		$	1.93
		General and administrative	$	0.58		$	0.53		$	0.55		$	0.60		$	0.57		$	0.52		$	0.54		$	0.53		$	0.65		$	0.56
	(1)	Excludes our Arkoma Basin and Barnett Shale operations, which were classified as discontinued operations.
	Unutilized pipeline capacity
		Total unutilized pipeline capacity in gas management expense	$	10		$	7		$	9		$	9		$	35		$	11		$	12		$	12		$	11		$	46

WPX Energy, Inc.
International Segment
(UNAUDITED)
			2011										2012
(Dollars in millions)			1st Qtr		2nd Qtr		3rd Qtr		4th Qtr		Year		1st Qtr		2nd Qtr			3rd Qtr		4th Qtr		YTD
	Revenues:
		Product revenues:
		Natural gas sales	$	4	$	4	$	4	$	4	$	16	$	4	$	5		$	4	$	5	$	18
		Oil and condensate sales		18		20		22		26		86		26		27			31		31		115
		Natural gas liquid sales		1		1		1		1		4		1		1			-		1		3
		Total product revenues		23		25		27		31		106		31		33			35		37		136
		Gas management		-		-		-		-		-		-		-			-		-		-
		Net gain (loss) on derivatives not designated as hedges		-		-		-		-		-		-		-			-		-		-
		Other		1		1		1		1		4		-		1			-		-		1
		Total revenues		24		26		28		32		110		31		34			35		37		137
	Costs and expenses:
		Lease and facility operating		5		6		7		9		27		6		7			8		11		32
		Gathering, processing and transportation		-		-		-		-		-		-		-			-		2		2
		Taxes other than income		3		6		6		6		21		5		7			6		6		24
		Gas management, including charges for unutilized pipeline capacity		-		-		-		-		-		-		-			-		-		-
		Exploration		1		1		-		1		3		5		3			3		-		11
		Depreciation, depletion and amortization		5		5		6		6		22		6		6			7		8		27
		Impairment of producing properties and costs of acquired unproved reserves		-		-		-		-		-		-		-			-		-		-
		General and administrative		3		2		3		4		12		3		3			3		5		14
		Other-net		1		-		1		1		3		-		(2	)		1		1		-
		Total costs and expenses		18		20		23		27		88		25		24			28		33		110
	Operating income (loss)			6		6		5		5		22		6		10			7		4		27
	Interest expense			-		-		-		-		-		-		-			-		-		-
	Interest capitalized			-		-		-		-		-		-		-			-		-		-
	Investment income and other			5		4		5		6		20		8		8			6		5		27
	Income (loss) from continuing operations before income taxes		$	11	$	10	$	10	$	11	$	42	$	14	$	18		$	13	$	9	$	54
	Summary of Net Production Volumes (1)
	Natural gas (MMcf)			1,826		1,940		1,726		1,896		7,389		1,737		1,726			1,861		1,737		7,061
	Oil (MBbls)			473		509		529		542		2,054		507		562			573		536		2,178
	Natural gas liquids (MBbls)			44		47		55		37		183		45		44			45		47		181
	Combined equivalent volumes (MMcfe)(2)			4,926		5,280		5,231		5,373		20,810		5,052		5,362			5,569		5,235		21,218
	(1)	Reflects approximately 69 percent of Apco's production (which corresponds to our ownership interest in Apco) and other minor directly held interests.
	(2)	Oil and natural gas liquids were converted to MMcfe using the ratio of one barrel of oil, condensate or natural gas liquids to six thousand cubic feet of natural gas.

WPX Energy, Inc.
Reconciliation- Adjusted Income (Loss) from Continuing Operations
(UNAUDITED)
			2011															2012
(Dollars in millions, except per share amounts)			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			YTD
	Income (loss) from continuing operations attributable to WPX Energy, Inc. available to common stockholders		$	5		$	27		$	17		$	(209	)	$	(160	)	$	(41	)	$	(33	)	$	(66	)	$	(105	)	$	(245	)
	Income (loss) from continuing operations - diluted earnings per share		$	0.03		$	0.13		$	0.09		$	(1.06	)	$	(0.81	)	$	(0.21	)	$	(0.17	)	$	(0.33	)	$	(0.53	)	$	(1.23	)
	Adjustments:
		Impairment of producing properties and costs of acquired unproved reserves	$	-		$	-		$	-		$	367		$	367		$	52		$	65		$	-		$	108		$	225
		Unrealized MTM (gains) losses	$	18		$	(3	)	$	(5	)	$	1		$	11		$	1		$	(60	)	$	31		$	(4	)	$	(32	)
	Total adjustments		$	18		$	(3	)	$	(5	)	$	368		$	378		$	53		$	5		$	31		$	104		$	193
	Less tax effect for above items		$	(7	)	$	1		$	2		$	(135	)	$	(138	)	$	(19	)	$	(2	)	$	(12	)	$	(38	)	$	(71	)
	Adjusted income (loss) from continuing operations available to common stockholders		$	16		$	25		$	14		$	24		$	80		$	(7	)	$	(30	)	$	(47	)	$	(39	)	$	(123	)
	Adjusted diluted earnings (loss) per common share		$	0.08		$	0.13		$	0.07		$	0.12		$	0.40		$	(0.04	)	$	(0.15	)	$	(0.23	)	$	(0.20	)	$	(0.62	)
	Weighted-average shares -diluted - millions (1)			197.1			197.1			197.1			197.1			197.1			198.1			198.9			199.1			199.2			198.8
	(1)	For comparative purposes and to provide a more meaningful calculation for weighted average shares, we have assumed the amount of common stock issued at December 31, 2011 to be outstanding for all 2011 periods presented.

WPX Energy, Inc.
Consolidated Statement of Operations
(Unaudited)
		Three months ended December 31,						Year ended December 31,
		2012			2011			2012			2011
		(Millions, except per share amounts)
Revenues:
	Product revenues:
	Natural gas sales	$	364		$	423		$	1,364		$	1,694
	Oil and condensate sales		145			93			491			312
	Natural gas liquid sales		63			106			299			408
	Total product revenues		572			622			2,154			2,414
	Gas management		239			336			949			1,428
	Net gain (loss) on derivatives not designated as hedges		15			9			78			29
	Other		1			3			8			11
Total revenues			827			970			3,189			3,882
Costs and expenses:
	Lease and facility operating		81			68			283			262
	Gathering, processing and transportation		127			124			506			487
	Taxes other than income		33			29			111			134
	Gas management, including charges for unutilized pipeline capacity		247			351			996			1,471
	Exploration		23			26			83			126
	Depreciation, depletion and amortization		247			232			966			902
	Impairment of costs of producing properties and costs of acquired unproved reserves		108			367			225			367
	General and administrative		81			75			287			275
	Other - net		4			(4	)		12			-
Total costs and expenses			951			1,268			3,469			4,024
Operating income (loss)			(124	)		(298	)		(280	)		(142	)
Interest expense			(25	)		(20	)		(102	)		(117	)
Interest capitalized			1			1			8			9
Investment income and other			5			7			30			26
Income (loss) from continuing operations before income taxes			(143	)		(310	)		(344	)		(224	)
Provision (benefit) for income taxes			(40	)		(104	)		(111	)		(74	)
Income (loss) from continuing operations			(103	)		(206	)		(233	)		(150	)
Income (loss) from discontinued operations			(1	)		(129	)		22			(142	)
Net income (loss)			(104	)		(335	)		(211	)		(292	)
	Less: Net income attributable to noncontrolling interests		2			3			12			10
Net income (loss) attributable to WPX Energy		$	(106	)	$	(338	)	$	(223	)	$	(302	)
Amounts attributable to WPX Energy, Inc.:
Basic and diluted earnings (loss) per common share:
	Income (loss) from continuing operations	$	(0.53	)	$	(1.06	)	$	(1.23	)	$	(0.81	)
	Income (loss) from discontinued operations		(0.00	)		(0.65	)		0.11			(0.72	)
	Net income (loss)	$	(0.53	)	$	(1.71	)	$	(1.12	)	$	(1.53	)
Weighted-average shares			199.2			197.1			198.8			197.1

WPX Energy, Inc.
Consolidated Balance Sheet
(Unaudited)
	December 31, 2012			December 31, 2011
ASSETS	(Dollars in millions, except per share amounts)
Current assets:
Cash and cash equivalents	$	153		$	526
Accounts receivable, net of allowance of $11 at December 31, 2012 and $ 13 at December 31, 2011		443			509
Deferred income taxes		17			-
Derivative assets		58			506
Inventories		66			73
Other		35			60
Total current assets		772			1,674
Investments		145			125
Properties and equipment (successful efforts method of accounting)		13,339			12,199
Less: Accumulated depreciation, depletion and amortization		(4,923	)		(3,977	)
Properties and equipment, net		8,416			8,222
Derivative assets		2			10
Other noncurrent assets		121			401
Total assets	$	9,456		$	10,432
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	509		$	702
Accrued and other current liabilities		203			186
Deferred income taxes		-			116
Derivative liabilities		14			152
Total current liabilities		726			1,156
Deferred income taxes		1,401			1,556
Long-term debt		1,508			1,503
Derivative liabilities		1			7
Asset retirement obligations		316			283
Other noncurrent liabilities		133			168
Equity:
Stockholders' equity:
Preferred Stock (100 million shares authorized at $0.01 par value; no shares issued)		-			-
Common Stock (2 billion shares authorized at $0.01 par value; 199.3 million shares issued at December
31, 2012 and 197.1 million shares issued at December 31, 2011)		2			2
Additional paid-in-capital		5,487			5,457
Accumulated deficit		(223	)		-
Accumulated other comprehensive income		2			219
Total stockholders' equity		5,268			5,678
Noncontrolling interests in consolidated subsidiaries		103			81
Total equity		5,371			5,759
Total liabilities and equity	$	9,456		$	10,432

WPX Energy, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
		Year ended December 31,
		2012			2011
		(Millions)
Operating Activities
Net income (loss)		$	(211	)	$	(292	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation, depletion and amortization		973			951
	Deferred income tax benefit		(160	)		(176	)
	Provision for impairment of properties and equipment (including certain exploration expenses)		288			694
	Amortization of stock-based awards		28			5
	(Gain) loss on sale of assets		(42	)		(1	)
	Cash provided (used) by operating assets and liabilities:
	Accounts receivable		68			(100	)
	Inventories		7			3
	Margin deposits and customer margin deposits payable		(5	)		(18	)
	Other current assets		7			(11	)
	Accounts payable		(128	)		131
	Accrued and other current liabilities		12			10
	Changes in current and noncurrent derivative assets and liabilities		(32	)		8
	Other, including changes in other noncurrent assets and liabilities		(11	)		2
Net cash provided by operating activities			794			1,206
Investing Activities
Capital expenditures (a)			(1,521	)		(1,572	)
Proceeds from sale of assets			310			15
Purchases of investments			(2	)		(12	)
Other			9			13
Net cash used in investing activities			(1,204	)		(1,556	)
Financing Activities
Proceeds from common stock			3			-
Proceeds from long-term debt			6			1,502
Proceeds from revolver debt			50			-
Payments of revolver debt			(50	)		-
Contribution from noncontrolling interest			10			-
Excess tax benefit of stock based awards			13			-
Net increase in notes payable to Williams			-			159
Net changes in Williams' net investment			-			(777	)
Revolving debt facility costs			-			(30	)
Other			5			(15	)
Net cash provided by (used in) financing activities			37			839
Net increase (decrease) in cash and cash equivalents			(373	)		489
Cash and cash equivalents at beginning of period			526			37
Cash and cash equivalents at end of period		$	153		$	526
________
(a) Increase to properties and equipment		$	(1,449	)	$	(1,641	)
Changes in related accounts payable			(72	)		69
Capital expenditures		$	(1,521	)	$	(1,572	)