WPX Energy Completes Acquisition of Permian Producer
Represents Decades of Drilling Inventory in Permian’s Delaware Basin
Targeting Delevering Efforts of $800 Million to $1 Billion in
Divestitures by Year-End 2016
WPX Provides Hedging Update
TULSA, Okla.--(BUSINESS WIRE)--
WPX Energy (NYSE: WPX) announced today that it has successfully closed
the purchase of privately held RKI Exploration & Production, LLC.
With the merger complete, WPX now has a substantial presence in the core
of the Permian’s Delaware Basin that includes:
Approximately 22,000 boe/d of existing production – more than half of
which is oil;
Approximately 92,000 net acres – approximately 98 percent of which is
held by production;
More than 3,600 gross risked drilling locations across stacked pay
More than 375 miles of scalable gas gathering and water infrastructure.
The Permian Basin is characterized by numerous stacked pay reservoirs,
extensive production history, long-lived reserves and high drilling
success rates. The 92,000 net acres represent more than 670,000
prospective net effective acres of stacked pay.
The newly acquired Permian assets have existing production from 10 of 12
prospective benches in a 9,000 foot hydrocarbon-charged stratigraphic
column that includes the Wolfcamp, Bone Spring, Avalon and Delaware
“This is a defining moment for our company,” said Rick Muncrief, WPX
president and chief executive officer.
“This transaction drives our high-margin oil growth, accelerates our
portfolio transition to more liquids, and solidifies our premier
position in the western United States. These areas enjoy significant
advantages of established infrastructure, which provides the opportunity
for stronger realized commodity prices,” Muncrief added.
WPX leadership has previous experience in the Permian Basin and a track
record of maximizing large-scale oil developments to increase
production, reserves and enterprise value while lowering expenses.
Adding the Permian assets increases WPX’s total proved liquids reserves
by 33 percent to 268 MMbbls as of year-end 2014. Total net resource
potential for the Permian assets is estimated at more than 1.1 billion
Throughout 2014 and 2015, WPX has been actively transforming and
enhancing its portfolio, executing more than $4 billion in transactions
including the purchase of RKI.
“We have accomplished a tremendous amount in the past year. Our ability
to execute is recognized,” Muncrief said. “We will build on that track
record by quickly delevering and reestablishing the strength of our
WPX is targeting $400-$500 million in asset divestitures by the end of
2015 and another $400-$500 million in 2016, with the goal of achieving a
net debt/EBITDAX ratio of 2x by year-end 2017 including underlying cash
flow growth projections.
Additionally, WPX has amended its revolving credit facility, increasing
its total commitments from $1.5 billion to $1.75 billion, favorably
modifying existing financial covenants to enhance the company’s
liquidity position going forward.
Portfolio rationalization opportunities include the monetization of
midstream infrastructure, non-operated properties or other asset sales,
along with evaluating creative options to unlock Piceance Basin value.
Barclays and Tudor, Pickering, Holt & Co. acted as financial advisors to
WPX on the RKI transaction. Weil, Gotshal & Manges LLP served as legal
advisor to WPX.
UPDATED HEDGING ACTIVITY
With the close of the transaction, WPX will inherit RKI’s hedge
transactions which primarily consist of fixed price natural gas and
crude oil swaps.
Post-closing for the balance of 2015, WPX has hedged approximately
31,000 barrels per day of domestic oil at a weighted average price of
$85.14 per barrel, representing approximately 80 percent of anticipated
volumes. WPX has hedged approximately 485,000 MMbtu/d of domestic
natural gas at a weighted average price of $4.04 per MMbtu representing
approximately 75 percent of anticipated volumes.
In 2016, WPX has hedged approximately 25,000 barrels per day of domestic
oil at a weighted average price of $62.23 per barrel, representing at
least 50 percent of anticipated volumes; and it has hedged approximately
412,000 MMbtu/d of domestic natural gas at a weighted average price of
$3.66 per MMbtu, representing at least 70 percent of anticipated volumes.
“By incorporating RKI’s hedge transactions with WPX’s new and existing
hedge positions, we are emphasizing our commitment to managing commodity
risk and ensuring the certainty of our cash flows,” said Muncrief.
UPCOMING CONFERENCE PRESENTATION
WPX CEO Rick Muncrief is scheduled to present at the Enercom Oil and Gas
Conference on Tuesday, Aug. 18. Muncrief’s presentation is scheduled to
begin at approximately 10:25 a.m. Eastern. Please visit www.wpxenergy.com on
the day of the event to view the webcast and the company’s presentation.
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 operates more than 5,000 natural gas wells.
WPX is reshaping its portfolio through more than $4 billion of
acquisitions and divestitures.
This communication includes and references forward-looking
statements, including but not limited to those regarding the future
performance of the business, the synergies of the Company and RKI
Exploration & Production, LLC (“RKI”), and similar things. These
statements also relate to our business strategy, goals and expectations
concerning our market position, future operations, margins and
profitability. Forward-looking statements may use the words
“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“plan,” “predict,” “project,” “will,” “would,” “forecast” and similar
terms and phrases to identify forward-looking statements, and include
the assumptions that underlie such statements. Although the
Company believes the assumptions upon which these forward-looking
statements are based are reasonable, there can be no assurance that the
results implied or expressed in such forward-looking statements or
information or the underlying assumptions will be realized and that
actual results of operations or future events will not be materially
different from the results implied or expressed in such forward-looking
statements or information. These statements are subject to known and
unknown risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such statements,
including but not limited to: the Company’s ability to successfully
integrate RKI’s operations, technology and employees and realize the
expected benefits of the acquisition on the expected timeline or at all;
unknown, underestimated or undisclosed commitments or liabilities; the
level of demand for the combined companies’ products, which is subject
to many factors, including uncertain global economic and industry
conditions, and natural gas and oil prices generally; state and federal
environmental, economic, health and safety, energy and other policies
and regulations, including those related to climate change and any
changes therein, and any legal or regulatory investigations, delays or
other factors beyond the control of the Company; and other risks
described in the Company’s SEC filings. The forward-looking statements
in this communication speak only as of the date of this
communication. Under no circumstances should the inclusion of the
forward-looking statements or information be regarded as a
representation, undertaking, warranty or prediction by the Company or
any other person with respect to the accuracy thereof or the accuracy of
the underlying assumptions, or that the Company will achieve or is
likely to achieve any particular results.
The forward-looking statements or information are made as of the date
hereof and the Company disclaims any intent or obligation to update
publicly or to revise any of the forward-looking statements or
information, whether as a result of new information, future events or
otherwise. Recipients are cautioned that forward-looking statements or
information are not guarantees of future performance and, accordingly,
recipients are expressly cautioned not to put undue reliance on
forward-looking statements or information due to the inherent
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 regarding our
business 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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Source: WPX Energy Inc