$775 Million Transaction to Add More than 900 Gross Locations
WPX Energy (NYSE: WPX) announced today that it has agreed to acquire
assets that would increase its Permian operations to more than 120,000
net acres and deepen its drilling inventory of top-tier Delaware
locations while enhancing key financial metrics and margin expansion.
The acquisition includes approximately 6,500 Boe/d (55% oil) of existing
production from 23 producing wells (17 horizontals), two drilled but
uncompleted horizontal laterals, 18,100 net acres in Reeves, Loving,
Ward and Winkler counties in Texas and 920 gross undeveloped locations
in the geologic sweet spot of the Delaware Basin.
WPX expects the acquisition to be immediately accretive and accelerate
its deleveraging progress without increasing its projected 2017 capital
outspend. WPX expects the incremental cash flow from the purchase to
fund the existing two-rig program on the acquired acreage. This will
bring WPX’s rig count in the Permian to seven.
The sellers are Panther Energy Company II, LLC and Carrier Energy
Partners, LLC. WPX plans to close the $775 million cash transaction in
approximately 60 days using a combination of proceeds from an equity
issuance and cash on hand.
Expected to be immediately accretive to WPX shareholders on a cash
flow and NAV basis
Projected IRR on wells ranging from 55%-95% at current strip pricing
Estimated acreage cost excluding flowing production is ~ $28,500 per
Transaction valued primarily on three zones with upside in five
EUR’s of ~ 1.0 MMBoe for Wolfcamp A and X/Y 1-mile laterals (55% oil)
Increases WPX’s total gross drillable Delaware locations from ~5,500
New drillable locations include more than 150 long laterals (1.5-2
Increases WPX’s growth trajectory for 2017-2020
Offset operators: RSP Permian, Anadarko, Shell, Matador, Cimarex,
Concho and Centennial.
Including the Panther transaction, WPX has added approximately 32,000
net acres in the core of the Delaware Basin at an average cost of
$18,600 per acre since its transformative purchase of RKI Exploration
and Production in August 2015. The average cost excludes flowing
“In just 18 months, WPX has firmly established itself as a leader in the
Delaware Basin,” said Rick Muncrief, WPX chairman, president and chief
“The acquisition leverages our experience to create long-term
shareholder value, further builds our inventory of core acreage and
accelerates our oil growth with cash on hand and operating cash flow
without adding incremental debt,” Muncrief added.
On a pro forma basis, WPX is now targeting 30 percent oil growth and 25
percent overall production growth in 2017, along with a targeted net
debt/EBITDAX ratio at the lower end of the company’s previously
announced range of 2.0x to 2.5x by year-end 2018.
A presentation with pro forma guidance, capital spending and operating
plans is available at www.wpxenergy.com.
The forecast targets 52,000-56,000 barrels of oil per day in 2017. This
estimate includes nine months of production associated with the bolt-on
WPX also is reaffirming its full-year 2016 production guidance and
announcing that its fourth-quarter 2016 oil production is expected to
exceed the company’s 42-44 Mbbl/d range, despite recent weather
conditions in North Dakota’s Williston Basin. Additionally, WPX’s 2017
guidance remains unchanged prior to the pro forma impact of the bolt-on
Tudor, Pickering, Holt & Co. acted as financial advisor to WPX on the
Panther and Carrier bolt-on transaction.
Panther is a Tulsa-based E&P company run by Chief Executive Officer
Berry Mullennix and Chief Operating Officer Roy Grossman.
About WPX Energy, Inc.
WPX is an oil-focused energy company with operations in the Permian,
Williston and San Juan basins. The company is one of the 20 largest U.S.
producers based on total assets and market capitalization. WPX has eight
rigs deployed and has engaged in more than $6 billion of transactions
since mid-2014 to high-grade the company’s portfolio.
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 and expectations regarding future performance are subject to
all of the risks and uncertainties normally incident to the exploration
for and development and production of oil and gas. These
statements are also based on management’s beliefs and assumptions and on
information currently available to management, including assumptions on
the amount and nature of future capital expenditures, oil, natural gas
and natural gas liquids (“NGLs”) prices, expansion and growth of our
business and operations, estimates of proved natural gas and oil
reserves and acquisitions or divestitures, including the consummation of
the Acquisition and its effects on us. Specific factors that could cause
actual results to differ from results contemplated by the
forward-looking statements include, among others, 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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