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WPX Energy Sells Piceance Subsidiary for $910 Million

Source: www.gulfoilandgas.com 2/9/2016, Location: North America

WPX Energy has signed an agreement to sell its wholly owned subsidiary WPX Energy Rocky Mountain, LLC, to Terra Energy Partners LLC for $910 million. The parties expect to close the sale in the second quarter. Additionally, Terra is assuming approximately $100 million in transportation obligations in exchange for more than $90 million of WPX’s natural gas hedge value. WPX will retain more than $110 million in additional hedge gains, which will be realized throughout the year.

The divestiture will greatly enhance WPX’s liquidity, significantly improve its capital efficiency and returns, and materially lower general and administrative expenses going forward. The move solidifies WPX as a Permian-focused company and provides a more balanced commodity mix given the pro forma exposure to oil and natural gas.

WPX expects oil to comprise approximately half of its future production volumes, up from roughly 20 percent during 2015. On a per-barrel equivalent basis, WPX’s 2016 cash operating costs (LOE, GP&T and operating taxes) are not expected to change materially following the divestiture.

Upon closing, WPX will have a premier portfolio with acreage in the core of two prolific oil-dominant areas – the Permian’s Delaware Basin and North Dakota’s Williston Basin – along with a leading position in the San Juan Basin.

This is WPX’s second transformational transaction in recent months. Last August, WPX acquired assets in the Permian Basin where it has approximately 94,000 acres representing more than 670,000 prospective net effective acres.

WPX’s early results in the Permian’s Delaware Basin are exceeding its acquisition estimates. The company will provide an update on its Delaware development during its Feb. 25 webcast.

WPX has a variety of options for the Piceance proceeds, including leverage reduction, additional drilling, infrastructure investments such as expanding its Permian gathering system, and buying out of any retained transportation obligations, including obligations associated with Piceance operations.

In the past 21 months, WPX has executed approximately $5.5 billion in transactions to re-shape the company, high grade its portfolio, add decades of drilling inventory and protect its financial position.

“Our bias for action and being opportunistic won’t change. We will pursue our very best investment options and continually evaluate how to optimize our assets. We’ve created a balanced portfolio with an excellent runway for sustained value generation,” said Rick Muncrief, WPX president and CEO.

WPX plans to announce its 2016 guidance and capital plan coinciding with the release of its 2015 financial and operations results.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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