WPX to receive $300MM cash, $132MM capital carry and retain 50% ownership in $850MM+ entity at closing
The joint venture with Howard is designed to support WPX’s drilling
operations in the Stateline area, representing 50,000 net acres, or 37
percent of WPX’s roughly 135,000 net acre position in the
The joint venture includes crude oil gathering assets already under
construction and a planned natural gas processing complex. It does not
include WPX’s natural gas and water gathering systems in the Stateline
area, along with midstream rights to its remaining acreage position in
In a separate transaction, WPX secured additional takeaway capacity for
JOINT VENTURE HIGHLIGHTS
The joint venture will complete the buildout of a new crude oil
gathering system, already started by WPX in the basin, and begin
constructing a new cryogenic natural gas processing complex with a
planned initial capacity of 400 MMcf/d. The parties plan to seek out
third-party volumes in an area of mutual interest in the
WPX has a 50 percent voting interest in the joint venture and
operational influence. The transaction value of
As previously stated, WPX is retaining sole ownership of its Stateline natural gas and water gathering systems which consist of more than 375 miles of scalable existing infrastructure.
WPX believes the retained assets are worth considerably more than the
EXPLAINING THE STRATEGY
“Our approach to supporting our growth plans in the
“As a producer, this is a bold and innovative way to lay a well-defined path for our expected volumes and create an additional platform for generating shareholder value. Today’s agreement breaks new ground on both fronts.
“For starters, our forward-looking action gives our long-term
“We believe the Howard team has the right skills, capabilities and focus to make this joint venture a success and we’re excited to work with them,” Muncrief said.
This transaction builds on WPX’s successful track record for creating
value from the infrastructure it develops around its operations. The
company previously sold gathering systems in the Williston and
The parties expect to close the transaction in the third quarter subject to certain closing conditions. Prior to closing, WPX and Howard will begin integrating efforts to continue to build out the crude oil gathering system and begin work on the cryogenic processing plant.
WPX already has installed approximately half of the planned 50-mile crude gathering system that initiated service in late 2016. WPX currently has 40 wells tied in, some of which are awaiting completion before starting deliveries into the system.
The trunkline is designed to have a capacity of approximately 125,000 barrels of oil per day. The parties expect to complete the project in the first half of 2018 and believe it can be expanded for other commercial opportunities with minimal capital investment through additional horsepower and line looping.
The parties expect to complete the first 200 MMcf/d train for the cryogenic natural gas processing complex in the first half of 2018. The parties plan to add a second train to double the capacity by the middle of 2019.
More Delaware Takeaway Capacity
WPX is active in securing long-term takeaway capacity in the basin for
its associated gas production. As previously announced, WPX recently
signed an agreement to ship up to 200,000 MMBtu/d of gas from the Waha
WPX also just completed a long-term agreement with WhiteWater Midstream, which provides WPX with 300,000 MMBtu/d of natural gas capacity from the Stateline area to Waha and 10 percent ownership in the related Agua Blanca Pipeline. As part of the agreement with WhiteWater, WPX has the right to increase its capacity to 500,000 MMBtu/d and its ownership up to 20 percent.
Agua Blanca will initially consist of 75 miles of 36-inch diameter pipe with a capacity of 1.25 Bcf/d, expandable to 1.75 Bcf/d. WhiteWater expects to accept first volumes from the Stateline area in the first half of 2018.
Barclays acted as financial advisor to WPX on the joint venture
WPX has posted double-digit oil volume growth each of the past five
years. The company is active in the Delaware, Williston and
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
Kelly Swan, 539-573-4944
David Sullivan, 539-573-9360