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Marks nearly $1.5 billion in divestitures since RKI acquisition
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Strengthens liquidity and financial flexibility
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Piceance exit reinforces WPX’s oil focus led by its Permian
Delaware development
TULSA, Okla.--(BUSINESS WIRE)--
WPX Energy (NYSE: WPX) announced today that it 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. The company’s
webcast takes place on Feb. 25 beginning at 10 a.m. Eastern.
Investors are encouraged to access the event and the corresponding
slides at www.wpxenergy.com.
A limited number of phone lines will be available at (844) 215-3288.
International callers should dial (615) 247-5915. The conference
identification code is 38919364.
Credit Suisse acted as the exclusive financial advisor to WPX on the
Piceance transaction.
About WPX Energy, Inc.
WPX is a domestic energy producer with operations in the western United
States. The company has transformed its portfolio through approximately
$5.5 billion of transactions, including the acquisition of a
considerable position in the core of the Permian’s Delaware Basin.
This press release includes “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, included in this
press release that address activities, events or developments that the
company expects, believes or anticipates will or may occur in the future
are forward-looking statements. Such statements are subject to a
number of assumptions, risks and uncertainties, many of which are beyond
the control of the company. Statements regarding future drilling
and production are subject to all of the risks and uncertainties
normally incident to the exploration for and development and production
of oil and gas. These risks include, but are not limited to, the
volatility of oil, natural gas and NGL prices; uncertainties inherent in
estimating oil, natural gas and NGL reserves; drilling risks;
environmental risks; and political or regulatory changes. Investors
are cautioned that any such statements are not guarantees of future
performance and that actual results or developments may differ
materially from those projected in the forward-looking statements. The
forward-looking statements in this press release are made as of the date
of this press release, even if subsequently made available by WPX Energy
on its website or otherwise. WPX Energy does not undertake and
expressly disclaims any obligation to update the forward-looking
statements as a result of new information, future events or otherwise.
Investors are urged to consider carefully the disclosure in our filings
with the Securities and Exchange Commission, available from us at WPX
Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla.,
74102, or from the SEC’s website at www.sec.gov.
Additionally, the SEC requires oil and gas companies, in filings made
with the SEC, to disclose proved reserves, which are those quantities of
oil and gas, which, by analysis of geoscience and engineering data, can
be estimated with reasonable certainty to be economically producible –
from a given date forward, from known reservoirs, under existing
economic conditions, operating methods, and governmental regulations.
The SEC permits the optional disclosure of probable and possible
reserves. From time to time, we elect to use “probable” reserves and
“possible” reserves, excluding their valuation. The SEC defines
“probable” reserves as “those additional reserves that are less certain
to be recovered than proved reserves but which, together with proved
reserves, are as likely as not to be recovered.” The SEC
defines“possible” reserves as “those additional reserves that are less
certain to be recovered than probable reserves.” The Company has applied
these definitions in estimating probable and possible reserves.
Statements of reserves are only estimates and may not correspond to the
ultimate quantities of oil and gas recovered. Any reserve estimates
provided in this presentation that are not specifically designated as
being estimates of proved reserves may include estimated reserves not
necessarily calculated in accordance with, or contemplated by, the SEC’s
reserves reporting guidelines. Investors are urged to consider closely
the disclosure in our SEC filings that may be accessed through the SEC’s
website at www.sec.gov.
The SEC’s rules prohibit us from filing resource estimates. Our
resource estimations include estimates of hydrocarbon quantities for (i)
new areas for which we do not have sufficient information to date to
classify as proved, probable or even possible reserves, (ii) other areas
to take into account the low level of certainty of recovery of the
resources and (iii) uneconomic proved, probable or possible reserves.
Resource estimates do not take into account the certainty of resource
recovery and are therefore not indicative of the expected future
recovery and should not be relied upon. Resource estimates might never
be recovered and are contingent on exploration success, technical
improvements in drilling access, commerciality and other factors.
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Source: WPX Energy Inc