$775 Million Transaction to Add More than 900
Gross Locations
WPX Energy (NYSE: WPX) announced today that it has agreed to
acquire assets that would increase its Permian operations to more
than 120,000 net acres and deepen its drilling inventory of
top-tier Delaware locations while enhancing key financial metrics
and margin expansion.
The acquisition includes approximately 6,500 Boe/d (55% oil) of
existing production from 23 producing wells (17 horizontals), two
drilled but uncompleted horizontal laterals, 18,100 net acres in
Reeves, Loving, Ward and Winkler counties in Texas and 920 gross
undeveloped locations in the geologic sweet spot of the Delaware
Basin.
WPX expects the acquisition to be immediately accretive and
accelerate its deleveraging progress without increasing its
projected 2017 capital outspend. WPX expects the incremental cash
flow from the purchase to fund the existing two-rig program on the
acquired acreage. This will bring WPX’s rig count in the Permian to
seven.
The sellers are Panther Energy Company II, LLC and Carrier
Energy Partners, LLC. WPX plans to close the $775 million cash
transaction in approximately 60 days using a combination of
proceeds from an equity issuance and cash on hand.
ACQUISITION HIGHLIGHTS
- Expected to be immediately accretive to
WPX shareholders on a cash flow and NAV basis
- Projected IRR on wells ranging from
55%-95% at current strip pricing
- Estimated acreage cost excluding
flowing production is ~ $28,500 per acre
- Transaction valued primarily on three
zones with upside in five additional zones
- EUR’s of ~ 1.0 MMBoe for Wolfcamp A and
X/Y 1-mile laterals (55% oil)
- Increases WPX’s total gross drillable
Delaware locations from ~5,500 to ~6,400
- New drillable locations include more
than 150 long laterals (1.5-2 miles)
- Increases WPX’s growth trajectory for
2017-2020
- Offset operators: RSP Permian,
Anadarko, Shell, Matador, Cimarex, Concho and Centennial.
Including the Panther transaction, WPX has added approximately
32,000 net acres in the core of the Delaware Basin at an average
cost of $18,600 per acre since its transformative purchase of RKI
Exploration and Production in August 2015. The average cost
excludes flowing production.
“In just 18 months, WPX has firmly established itself as a
leader in the Delaware Basin,” said Rick Muncrief, WPX chairman,
president and chief executive officer.
“The acquisition leverages our experience to create long-term
shareholder value, further builds our inventory of core acreage and
accelerates our oil growth with cash on hand and operating cash
flow without adding incremental debt,” Muncrief added.
On a pro forma basis, WPX is now targeting 30 percent oil growth
and 25 percent overall production growth in 2017, along with a
targeted net debt/EBITDAX ratio at the lower end of the company’s
previously announced range of 2.0x to 2.5x by year-end 2018.
A presentation with pro forma guidance, capital spending and
operating plans is available at www.wpxenergy.com. The forecast
targets 52,000-56,000 barrels of oil per day in 2017. This estimate
includes nine months of production associated with the bolt-on
purchase.
WPX also is reaffirming its full-year 2016 production guidance
and announcing that its fourth-quarter 2016 oil production is
expected to exceed the company’s 42-44 Mbbl/d range, despite recent
weather conditions in North Dakota’s Williston Basin. Additionally,
WPX’s 2017 guidance remains unchanged prior to the pro forma impact
of the bolt-on acquisition.
Tudor, Pickering, Holt & Co. acted as financial advisor to
WPX on the Panther and Carrier bolt-on transaction.
Panther is a Tulsa-based E&P company run by Chief Executive
Officer Berry Mullennix and Chief Operating Officer Roy
Grossman.
About WPX Energy, Inc.
WPX is an oil-focused energy company with operations in the
Permian, Williston and San Juan basins. The company is one of the
20 largest U.S. producers based on total assets and market
capitalization. WPX has eight rigs deployed and has engaged in more
than $6 billion of transactions since mid-2014 to high-grade the
company’s portfolio.
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 and
expectations regarding future performance are subject to all of the
risks and uncertainties normally incident to the exploration for
and development and production of oil and gas. These statements are
also based on management’s beliefs and assumptions and on
information currently available to management, including
assumptions on the amount and nature of future capital
expenditures, oil, natural gas and natural gas liquids (“NGLs”)
prices, expansion and growth of our business and operations,
estimates of proved natural gas and oil reserves and acquisitions
or divestitures, including the consummation of the Acquisition and
its effects on us. Specific factors that could cause actual results
to differ from results contemplated by the forward-looking
statements include, among others, 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170112005996/en/
WPX Energy, Inc.Media Contact:Kelly Swan,
539-573-4944orInvestor Contact:David Sullivan,
539-573-9360
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