WPX Energy completes acquisition of Permian producer

TULSA, Oklahoma -- WPX Energy has successfully closed the purchase of privately held RKI Exploration & Production.

With the merger complete, WPX now has a substantial presence in the core of the Permian’s Delaware basin that includes:

• Approximately 22,000 boed of existing production – more than half of which is oil;
• Approximately 92,000 net acres – approximately 98% of which is held by production;
• More than 3,600 gross risked drilling locations across stacked pay intervals; and
• More than 375 miles of scalable gas gathering and water infrastructure.

The Permian basin is characterized by numerous stacked pay reservoirs, extensive production history, long-lived reserves and high drilling success rates. The 92,000 net acres represent more than 670,000 prospective net effective acres of stacked pay.

The newly acquired Permian assets have existing production from 10 of 12 prospective benches in a 9,000 ft hydrocarbon-charged stratigraphic column that includes the Wolfcamp, Bone Spring, Avalon and Delaware Sands intervals.

“This is a defining moment for our company,” said Rick Muncrief, president and CEO of WPX. 

“This transaction drives our high-margin oil growth, accelerates our portfolio transition to more liquids, and solidifies our premier position in the western U.S. These areas enjoy significant advantages of established infrastructure, which provides the opportunity for stronger realized commodity prices,” Muncrief added.

WPX leadership has previous experience in the Permian basin and a track record of maximizing large-scale oil developments to increase production, reserves and enterprise value while lowering expenses.

Adding the Permian assets increases WPX’s total proved liquids reserves by 33% to 268 MMbbl as of year-end 2014. Total net resource potential for the Permian assets is estimated at more than 1.1 Bboe.

Throughout 2014 and 2015, WPX has been actively transforming and enhancing its portfolio, executing more than $4 billion in transactions, including the purchase of RKI.

“We have accomplished a tremendous amount in the past year. Our ability to execute is recognized,” Muncrief said. “We will build on that track record by quickly delivering and reestablishing the strength of our balance sheet.”

WPX is targeting $400-$500 million in asset divestitures by the end of 2015 and another $400-$500 million in 2016, with the goal of achieving a net debt/EBITDAX ratio of 2x by year-end 2017 including underlying cash flow growth projections.

Additionally, WPX has amended its revolving credit facility, increasing its total commitments from $1.5 billion to $1.75 billion, favorably modifying existing financial covenants to enhance the company’s liquidity position going forward.

Portfolio rationalization opportunities include the monetization of midstream infrastructure, non-operated properties or other asset sales, along with evaluating creative options to unlock Piceance basin value.