WPX Exceeds 2015 Deleveraging Goal with New Transaction
December 31 2015 - 8:00AM
Business Wire
Divesting San Juan Basin Gathering System to I
Squared Capital for More Than $300 Million in Consideration
WPX Energy (NYSE:WPX) announced today that it signed an
agreement to sell its San Juan Basin gathering system for
consideration of approximately $309 million to a portfolio company
of ISQ Global Infrastructure Fund, a fund managed by I Squared
Capital.
WPX is receiving $285 million cash subject to closing
adjustments and a commitment estimated at $24 million in capital
designated by the purchaser to expand the system to support WPX’s
development in the Gallup oil play.
The agreement increases the amount of WPX’s recent divestitures
to nearly $575 million. WPX originally targeted $400-$500 million
in activity for the latter half of the year.
The sales are part of WPX’s deleveraging plan following its
acquisition of Permian Basin properties in August. WPX also
continues to evaluate options to accelerate value from its Piceance
Basin holdings.
Currently, WPX has net debt of $3.2 billion consisting of $3
billion in notes and the remainder primarily in revolver
borrowings.
“I’m pleased with the success of our asset sales,”
stated Rick Muncrief, WPX president and chief executive
officer. “We exceeded our 2015 target and will continue to
prioritize debt reduction in 2016.”
Adil Rahmathulla, Partner at I Squared Capital, added, “We are
excited about the opportunity to invest in the San Juan Basin and
look forward to collaborating with WPX in the build-out of the
gathering system.”
Under the terms of the agreement, WPX will continue to operate
the gathering system for at least two years with the opportunity to
continue in ensuing years. The parties expect to close in
first-quarter 2016.
Upon closing, the gathering system will consist of more than 220
miles of oil, gas and water gathering lines that WPX installed in
conjunction with its drilling in the Gallup oil play where it made
a discovery in 2013.
Over the past two years, WPX has rapidly grown its footprint in
the Gallup play to approximately 100,000 acres with oil production
exceeding 10,000 barrels per day in third-quarter 2015.
Subsequent to the close of the third quarter, WPX initiated
production on a three-well Gallup pad that produced approximately
2,500 barrels per day of oil over the first 30 days. This
represents an increase of more than 85 percent vs. the company’s
previous IP rates on its Gallup wells. The improvement is driven by
four changes WPX made to its Gallup drilling and completion
design.
In November, WPX also divested a North Dakota gathering system
that it built in conjunction with its drilling in the Williston
Basin. These sales are examples of how WPX leveraged its
investments in infrastructure to add value for shareholders.
JP Morgan Securities LLC acted as the exclusive financial
advisor to WPX. Deutsche Bank Securities advised I Squared Capital
on the transaction.
About WPX Energy, Inc.
WPX is a domestic energy producer with operations in the western
United States. The company has reported double-digit oil volume
growth in each of the past three years and is reshaping its
portfolio through more than $4.5 billion of acquisitions and
divestitures over the past 20 months.
About I Squared Capital
I Squared Capital is an independent global infrastructure
investment manager focusing on energy, utilities and transport in
North America, Europe and select high growth economies. The firm
has offices in New York, Houston, London, New Delhi, Hong Kong and
Singapore.
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151231005081/en/
WPX Energy, Inc.Media Relations:Kelly Swan,
539-573-4944orInvestor Relations:David Sullivan, 539-573-9360
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