WPX Energy Sells San Juan Gallup Holdings for $700 Million
February 05 2018 - 8:30AM
Business Wire
Focuses Company on Permian and Williston
Basins; Accelerates Deleveraging
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.
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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version on businesswire.com: http://www.businesswire.com/news/home/20180205005486/en/
WPX Energy, Inc.Media Contact:Kelly Swan,
539-573-4944orInvestor Contact:David Sullivan,
539-573-9360
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