Ralph Hill rang the opening bell on the New York Stock Exchange on January 3, but for the chief executive officer of newly minted WPX Energy Inc., the event represented an evolution, not an overnight leap to success. After 30 years with midstream giant Williams, where the E&P was embedded, overlooked and undervalued, Hill can now shine a light on a lot of oil and gas.

"Through a series of adventures…we got to build an E&P company within a pipeline, but my love was always E&P. Now our team is energized," he says.

Pushed from its parent's nest on New Year's Eve 2011, WPX has 550 employees at its Tulsa headquarters and 1,200 nationwide. Now it is free to pursue its own course, entering the ranks of independents as a top-10 gas producer, fairly close to EOG Resources in daily natural gas production.

Last year WPX's proved reserves rose 9% to a company record of nearly 5.3 trillion cubic feet (Tcf) equivalent (59% proved developed). For the five years ended December 31, 2011, WPX grew production at a compound annual growth rate of 12%. It is now producing about 1.4 billion cubic feet equivalent per day.

Hill's entire career had been with Williams, which the Missouri native joined right after obtaining an MBA from the University of Tulsa and a bachelor's degree in finance from the University of Missouri-Columbia.

Before the split from the parent, he was president of Williams' Exploration and Production Co. Along the way, he also served as vice president of Williams Gas Marketing, vice president and general manager of Williams Production Co. and Williams Field Services Gas and Liquids Resources, and vice president of Williams Petroleum Services.

Today, in addition to heading WPX, he is chairman of the board and chief executive officer of Apco Oil and Gas International, roles he has held since 2002. Williams acquired a 69% interest in the latter, which has interests in Argentina and Colombia. He is also a director for Petrolera Entre Lomas S.A.

After a long history as a big natural gas player—WPX has drilled over 6,000 gas wells since 2007—the company is moving to a liquids focus. It will add a sixth rig in the Bakken shale this summer and maintain an average of five rigs in the liquids-rich Piceance and three in Susquehanna County, Pennsylvania, which is dry-gas country.

Some 20% of its volumes will be oil and liquids this year, up from close to zero two years ago. The 2012 capital budget was cut by $500 million to $1.2 billion and refocused on liquids, with the goal of boosting oil production by at least 50%, and natural gas liquid (NGL) production by 8%. Natural gas will be held flat. Sixty-eight percent of the company's capital is designated for its oil and NGL plays.

WPX also has a sizeable, established presence in the Powder River and San Juan basins.

Overall, the company has nearly 1.6 million net acres under lease across all of its operating areas.

Recently the company sold its Barnett shale assets and some Oklahoma Arkoma Basin assets to an affiliate of KKR for $306 million.

In first-quarter 2012, WPX participated in 163 gross (115 net) wells in the U.S. This included eight wells in the Bakken, 92 in the Piceance, and 11 in the Marcellus on a gross basis.

Oil and Gas Investor caught up with Hill recently to talk about his plans for the company.

WPX Energy map

Now tightly focused, WPX Energy Inc. should show double-digit growth in its three core plays, the Piceance Basin and Bakken and Marcellus shales. Source: WPX Energy Inc.

Investor Congratulations on being an independent company. You've been through a lot over the years, such as when Williams was in trouble in 2002 and 2003, after the Enron debacle. You had to sell some good assets back then.

Hill You're right. We sold some attractive properties in places like Jonah Field, Brundage Canyon and the Raton Basin to help Williams reestablish its finances. Then we re-grew our E&P business around our Powder River, San Juan and Piceance assets, where today we still have some 10,000 gross 3P locations in western Colorado.

We had talked with the board about a split-off several times, as far back as 2008, but the financial downturn derailed that. Then, we thought about doing an IPO in 2010, but that was a bad time in the market. We worked very hard for 11 months to complete this split. It was a really fun jet ride. We had to go into a quiet period at the beginning of 2011, which was unfortunate because we had just bought our Bakken and Marcellus positions in 2010 and wanted to talk about them.

Investor The message must be a little tough right now, since you're still primarily a natural gas producer.

Hill Yes, but our team is energized. We were followed by pipeline and utility analysts before, so we've really had to reinvent ourselves and get the message out. I've spent a lot of time on the road, but it's the right thing to do. We're the eighth- or ninth-largest gas producer in the nation. Almost all of our employees in the field and my direct reports have been with us forever, and they always wanted to be independent. Gas prices are way down, but vs. our peers, our balance sheet is stronger—we have about $2 billion of liquidity, so we're really well capitalized.

Investor How are you dealing with low gas prices?

Hill We've pulled in our horns on gas drilling and cut the budget by $500 million in February, for a 40% decrease in our gas rig count. We had 11 rigs in the Piceance and we're going down to five. We're on our way to an average of three in the Marcellus and we'll increase to six in the Bakken. We can, if need be, cut our capex and not lose any leases. We are not forced to drill, and we are hedged.

Investor What are your growth prospects like, if you've had to cut gas drilling?

Hill We have 18.5 Tcf of 3P reserves, so we have plenty of ability to grow, and can do it by acquisitions or organically. We can grow by double digits in oil, liquids and gas for five years, without having to buy anything.

Investor Which of your three core areas have the best returns?

Hill Clearly, the Bakken. We are increasing reserves per well there. We took over operations in May 2011, and we're getting estimated ultimate recoveries of 710,000 to 805,000 barrels per well. So at $100 oil, those returns are 50% to 60%.

Our second-best returns are in the Piceance Basin, where we are uniquely positioned in the sweetest spot. And, we have a cryogenic plant that we control with 900 million cubic feet a day capacity. We get an $0.87 uplift there due to the liquids content. It's lean gas, 37 barrels per million. We have drilled 4,000 wells there and have another 4,000 locations, just in the valley.

Investor How do you make that play work?

Hill We were the first onshore producer to adopt what you see offshore—we drill up to 22 wells from a single pad using fit-for-purpose rigs that we first contracted from Helmerich & Payne. If you drill that much you have to be able to complete them too, and we do—we are at 10 or 12 days, spud to spud.

We've also done a remote frac pad that is basically a football field away from the wells. That worked, so now we'll put a frac pad in one area and frac to multiple drill pads that are up to three miles away. That way, you are not moving so many crews and frac trucks in. We recycle the water to limit trucking.

We've ordered six fit-for-purpose rigs from Nabors and Patterson-UTI for the Bakken too, all new rigs, and we'll have three coming to the Marcellus.

Our guys work with the rig contractors to help design these rigs in an interactive process, and we'll end up with great efficiencies. What I love about this is that any day you shave off the time is good. The teams in the field are very excited to do things faster, better, safer.

Investors didn't realize how big we are, and they love our balance sheet, so I tell my team, "Just go execute."