FARMINGTON — WPX Energy announced in a Monday press release that it plans to invest $160 million. That could increase to $180 million as the company develops new oil wells in the San Juan Basin's Gallup Sandstone, WPX spokesman Kelly Swan said in a Tuesday telephone interview.
The investment is part of the company's new $1.47 billion capital plan which will increase its commitment to oil exploration and production.
For the San Juan Basin, the enhanced oil portfolio means WPX plans to drill 29 wells this year and the company has added one rig to its operations.
WPX drilled 15 wells last year.
"The Gallup oil play is getting a bigger piece of the pie this year because of the cash flow and attractive financial returns it generates. Basically, we're investing in growth by working to increase our oil production," Swan stated in an email.
The plan also includes an increase in the company's net-acre lease holdings to 43,000 acres from 31,000 acres last year.
The announcement about increased investment in the San Juan Basin comes after the company told investors to expect a $1.4 billion financial loss on its 2013 earnings primarily due to the fact that natural gas prices in the Northeast dropped by as much as 34 percent last year. In addition, the company had a larger investment in natural gas in 2013.
The company decided to focus more efforts into developing their oil portfolio.
"Increased oil volumes, efficient development of our resource base and enhanced balance-sheet flexibility will help drive increased cash flows and better overall results," said Jim Bender, president and CEO, in the Monday press release.
For the San Juan Basin, this translates into the possibility of nearly tripling production, according to a presentation for WPX investors.
Last year, WPX generated about 290,000 barrels of oil and plans to increase its production by 275 percent, the presentation stated.
For investors, the new capital plan comes two months after former CEO Ralph Hill stepped down after reports of disappointment over financial results at the oil and gas exploration and production company.
The public company plans to invest 85 percent of its capital into domestic oil exploration in the Williston Basin play area, the Piceance Basin and the San Juan Gallup Sandstone.
"We know we have a lot of work ahead of us in 2014. We're committed to taking actions that will improve our financial and operating performance," Bender stated.Erny Zah is The Daily Times business editor. He can be reached at 505-564-4638.and email@example.com. Follow him @ernyzah on Twitter.