Divesting San Juan Basin Gathering System to I Squared Capital for
More Than $300 Million in Consideration
WPX Energy (NYSE:WPX) announced today that it signed an agreement to
sell its San Juan Basin gathering system for consideration of
approximately $309 million to a portfolio company of ISQ Global
Infrastructure Fund, a fund managed by I Squared Capital.
WPX is receiving $285 million cash subject to closing adjustments and a
commitment estimated at $24 million in capital designated by the
purchaser to expand the system to support WPX’s development in the
Gallup oil play.
The agreement increases the amount of WPX’s recent divestitures to
nearly $575 million. WPX originally targeted $400-$500 million in
activity for the latter half of the year.
The sales are part of WPX’s deleveraging plan following its acquisition
of Permian Basin properties in August. WPX also continues to evaluate
options to accelerate value from its Piceance Basin holdings.
Currently, WPX has net debt of $3.2 billion consisting of $3 billion in
notes and the remainder primarily in revolver borrowings.
“I’m pleased with the success of our asset sales,” stated Rick Muncrief,
WPX president and chief executive officer. “We exceeded our 2015 target
and will continue to prioritize debt reduction in 2016.”
Adil Rahmathulla, Partner at I Squared Capital, added, “We are excited
about the opportunity to invest in the San Juan Basin and look forward
to collaborating with WPX in the build-out of the gathering system.”
Under the terms of the agreement, WPX will continue to operate the
gathering system for at least two years with the opportunity to continue
in ensuing years. The parties expect to close in first-quarter 2016.
Upon closing, the gathering system will consist of more than 220 miles
of oil, gas and water gathering lines that WPX installed in conjunction
with its drilling in the Gallup oil play where it made a discovery in
Over the past two years, WPX has rapidly grown its footprint in the
Gallup play to approximately 100,000 acres with oil production exceeding
10,000 barrels per day in third-quarter 2015.
Subsequent to the close of the third quarter, WPX initiated production
on a three-well Gallup pad that produced approximately 2,500 barrels per
day of oil over the first 30 days. This represents an increase of more
than 85 percent vs. the company’s previous IP rates on its Gallup wells.
The improvement is driven by four changes WPX made to its Gallup
drilling and completion design.
In November, WPX also divested a North Dakota gathering system that it
built in conjunction with its drilling in the Williston Basin. These
sales are examples of how WPX leveraged its investments in
infrastructure to add value for shareholders.
JP Morgan Securities LLC acted as the exclusive financial advisor to
WPX. Deutsche Bank Securities advised I Squared Capital on the
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 is reshaping its portfolio through more than
$4.5 billion of acquisitions and divestitures over the past 20 months.
About I Squared Capital
I Squared Capital is an independent global infrastructure investment
manager focusing on energy, utilities and transport in North America,
Europe and select high growth economies. The firm has offices in New
York, Houston, London, New Delhi, Hong Kong and Singapore.
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.
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