WPX Energy Sells San Juan Gallup Holdings for $700 Million
Focuses Company on Permian and Williston Basins; Accelerates
TULSA, Okla.--(BUSINESS WIRE)--
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
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
“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
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
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
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
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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Source: WPX Energy Inc