TULSA, Okla. – WPX Energy (NYSE:WPX) announced today it has completed the sale of a working interest in some of its historical Piceance Basin wells to Legacy Reserves LP for a sales price of $355 million subject to customary post-closing adjustments.
The agreement also provides WPX with 10 percent ownership in a newly created class of incentive distribution rights (IDR) with Legacy. WPX has the opportunity to increase its ownership to 30 percent, contingent upon completing other transactions in the future including the potential to partner on third-party acquisitions.
WPX’s undeveloped locations in the Piceance Basin are not included in the transaction, which is limited to a graduated working interest in WPX’s proved developed producing Piceance wells drilled prior to 2009. The interest represents approximately 9 percent of WPX’s year-end 2013 Piceance proved reserves based on contractual terms and commodity price assumptions as of Dec. 31, 2013.
WPX will reflect the sale in its second-quarter financial results. Barclays provided a fairness opinion to WPX Energy in connection with the transaction.
“I’m pleased with the benefits this transaction brings to WPX in both 2014 and beyond,” said Rick Muncrief, WPX’s president and chief executive officer. “This fills the majority of the funding gap in our 2014 capital plan and monetizes mature gas assets in a way that keeps our corporate structure and our story simple.
“We will use the proceeds from the sale to build on the successes we’re seeing in our growth basins, particularly our oil plays where we grew domestic volumes by 40 percent in the first quarter vs. a year ago,” Muncrief added.
More than half of WPX’s $1.47 billion capital budget this year is focused on growing the company’s domestic oil properties in the Williston and San Juan basins, where WPX has seven rigs deployed.
During the first quarter, WPX completed 11 new oil wells in the Williston Basin and spud seven oil wells in the San Juan. Overall domestic oil production climbed 40 percent to 19.3 Mbbl/d in the first quarter vs. the same period in 2013.
About WPX Energy, Inc.
WPX Energy is an independent exploration and production company formed during a spinoff two years ago. Overall, WPX has more than 30 years of experience in its sector along with 40 local, state and federal awards for efficiency, innovation and corporate social responsibility.
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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.