WPX Enjoying TPL Land

WPX 5/2/19 call transcript

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Your next question comes from the line of Neal Dingmann from SunTrust.

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Neal David Dingmann, SunTrust Robinson Humphrey, Inc., Research Division – MD [35]

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Clay, for you or Rick, you guys have done a great job of just creating value around your midstream. And my question is around sort of on a go forward, do you still see a number of other ways to create internal midstream value, whether it’s with the water system or Howard JV or any of the other things you have?

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Richard E. Muncrief, WPX Energy, Inc. – CEO & Chairman of the Board [36]

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Yes, Neal, it’s — we do have the water system core, there’s a lot of value there, the JV, there’s a lot of value there. But the other thing I think that a lot of folks don’t understand is once you have shown an established a track record for value creation and investing at the right time and monetizing at the right time, you get more opportunities coming your way. And so that’s one of the things that we really focused on is just looking at opportunities and seeing how that — if that fits with us and can live within our capital budget. And we’re going to be, once again for — don’t want to sound like a broken record, but we’re going to be very, very disciplined around that. But we do see, from time to time some opportunities present themselves that are very intriguing. So I think on the water and the JV, we’ll continue. They’re still somewhat, I think, immature. I’m really excited about the recycling capabilities that we now have and that’s a growing part of our business. So I think you’ll just continue to see value growth in both those arenas, with water gathering and the JV, so.

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Clay M. Gaspar, WPX Energy, Inc. – President & COO [37]

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I’ll just add a quick comment. Completely agree with Rick’s thoughts around water all the other things we’ve talked about around the gas that we’ve been ahead of the market on. These light barrel business, I mean clearly, we’ve got that box checked as well. If I think about the announcement from last quarter, the TPLT, the surface acreage, that opens up a whole new arena of value creation for us. On the call I believe I tried to convey how important in value creating this $100 million investment is going to be to the company. I mean I tell you, as we stand today, we clearly see time and time again opportunities coming our way because of that position that we hold. Multiple times over potential value creation of what we have invested in it. So it lines up exactly with what Rick was talking about, what your question was around our culture of thinking about forward value creation in creative ways.

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Neal David Dingmann, SunTrust Robinson Humphrey, Inc., Research Division – MD [38]

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Great, no, I figured as much. And then just a follow-up. Clay, you strategically added that surface acreage around Stateline [last week]. Could you just maybe comment on the benefits you’re seeing from that? And has anything changed or you think you’ll continue to see just sort of the fruits of that labor?

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Clay M. Gaspar, WPX Energy, Inc. – President & COO [39]

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Yes, Neal, that’s exactly what I was talking about. The TPLT, maybe a little bit inside speak on the surface acreage. We invested $100 million last quarter to buy 14,000 acres over the heart of our Stateline field. How that’s materializing in value, I can tell you it’s dealing with other surface owners, making sure that all of this value creation Rick was just talking about around the water business and the recycling, that is imperative that you have a strong land position, because otherwise the surface owners can essentially hold you hostage to a lot of the decisions you’d like to make. But it’s also really showing value in our conversations peer to peer with other operators. They see the value creation opportunity that we have. And the opportunity that we’re seeing for trade, working deals with some of our partners, I think those things are continuing to flow our direction, really on the back of this surface acreage acquisition.