Focuses Company on Permian and Williston Basins; Accelerates Deleveraging
TULSA, Okla.–(BUSINESS WIRE)–WPX Energy (NYSE: WPX) has signed an agreement to sell its holdings in the San Juan Basin’s Gallup oil play for $700 million to an undisclosed third party. Closing is expected to occur in the first quarter.
The divestiture accelerates WPX’s stated deleveraging efforts, with a significant portion of the proceeds slated for debt reduction. WPX now believes it can reduce its net debt/EBITDAX to a target level of 1.5x during 2019.
The transaction completes WPX’s exit from the San Juan Basin, signaling the company’s confidence in its two remaining core positions in the Delaware (Permian) and Williston basins. Capital that was earmarked for the Gallup oil play this year will be reallocated to these operations.
In addition to the $700 million sale of its Gallup oil holdings, WPX previously divested its legacy natural gas assets in the San Juan Basin for $175 million (after closing adjustments) and a gathering system in the basin for $309 million in total consideration.
The purchaser of the Gallup assets also is assuming the associated transportation commitments. Upon closing, WPX will not have any future commercial obligations in the San Juan Basin.
“WPX is now completely focused on our outstanding assets in the top two oil-prone basins in North America– the Permian’s Delaware Basin and North Dakota’s Williston Basin,” said Rick Muncrief, WPX chairman and CEO.
“Our bias for action has completely reshaped our story and our outlook, evidenced by the positive trends in our financial results. WPX is opportunistic, disciplined and committed to a strong balance sheet, ample liquidity and ongoing value creation,” Muncrief added.
On a pro forma basis, WPX’s production is approximately 80 percent liquids (oil and NGL) and 20 percent natural gas. Five years ago, it was the opposite at 80 percent gas and 20 percent liquids. WPX has aggressively transformed its portfolio through nearly $8 billion of transactions.
Gallup production from last year will be reflected in continuing operations for fourth-quarter 2017 and full-year 2017 results. San Juan Basin volumes are expected to be reclassified as discontinued operations in 2018.
With the Gallup sale, WPX is revising its 2018 volume guidance. WPX is now forecasting 75-80 Mbbl/d of oil and 117-126 Mboe/d of production in 2018 following the Gallup sale. Further guidance can be found in a presentation at www.wpxenergy.com. WPX’s original 2018 capital budget of $1.1-$1.2 billion is unchanged.
Gallup oil production averaged 10.8 Mbbl/d in third-quarter 2017. Overall, the Gallup position represented less than 5 percent of WPX’s gross undeveloped locations.
CIBC Griffis & Small provided advisory services to WPX for the transaction. Holland & Hart LLP served as WPX’s external legal counsel.
About WPX Energy, Inc.
WPX is an independent energy producer with core positions in the Permian and Williston basins. WPX’s production is approximately 80 percent oil/liquids and 20 percent natural gas. The company also has an emerging infrastructure portfolio in the Permian Basin. Visit www.wpxenergy.com for more information.