WPX Energy CEO ‘Steps Down’- Or Was He Pushed Out?

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WPX Energy (WPX) announced that its CEO & President, Ralph Hill, would be stepping down at the end of the year and that a new committee was being formed to find his replacement. No reason was reported in the press release. Mr. Hill had been with WPX and its parent company Williams (WMB) for over 30 years and had a strong hand in building up and managing the asset portfolio at WPX. James Bender, SVP and General Council, will be named interim CEO.

According to Chairman William Lowrie, “the new CEO will be expected to critically review the strategic direction of the company and enhance its operating and financial performance, driving improved returns for all of our stakeholders.’ Although it has assets in good locations, its focus on natural gas, which has continued to trade at low prices, has hurt the company. Additionally, due to its holding in APCO, the company was dinged last year after the Argentinian government seized YPF’s assets. As a result, WPX has only posted one quarter of positive net income since being spun out from Williams at the end of 2011. Shares are almost flat since the spin, but the name has recovered a bit this year.

Interestingly, the company announced the very next day that it had reached an agreement with one of its largest investors, event driven fund Taconic Capital Advisors, to expand its board to 12 members and include a Taconic appointee. The new board member will also be on the search committee for the new CEO. In exchange, the fund, which owns ~6.9% of the company’s shares, agreed to vote for all of the Board’s 2014 nominees.

Even though not done so by the company, I think it’s hard not to link these two announcements together. If I had to guess, it looks like Taconic had some differing ideas about how to run the company and when the dust settled, the CEO got sent packing. I mean…he got to step down on his ‘own terms’. I think the Chairman’s comment above hints at this idea by essentially saying the company needs someone to ‘review the strategic direction’. It’s worth remembering that most activists work behind the scenes and don’t stage press conferences or release ‘informational’ white papers to influence their targets.

Disclosure: Author holds no position in any stock mentioned.

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