Current WPX Stock Info

WPX Energy acquires 6.5 MBOEPD of production and 120,000 net acres in the Delaware Basin
WPX Energy (ticker: WPX) announced today that the company has acquired Panther Energy Company II, LLC and Carrier Energy Partners, LLC, expanding its footprint in the Delaware Basin. The acquisitions includes approximately 6.5 MBOEPD (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 locat...

Analyst Commentary

KLR Group
This announcement should have a negligible value impact as the acceleration of our forecasted drilling activity (incremental two Permian rigs in ’17 forward) is offset by the equity issuance, although the improvement in net-debt-to-EBITDA metric and 40%+ increase in the company’s Wolfcamp X/Y and Wolfcamp A inventory (we believe this is WPX’s most economic inventory in the Permian) could be viewed as a positive optic by the market.

BMO Capital Markets
WPX announced the acquisition of 18,100 net acres in the Delaware Basin for $775mm. While equity financing results in a 12-14% increase to share count, we estimate the transaction at $29,000 per acre is accretive to where WPX trades ($42,000), while 2018EV/EBITDAX is reduced by 0.6x, and 2018 Debt/EBITDAX is lowered by 0.1x. We view acreage quality to be in line with the Delaware average and WPX’s existing State Line position.

SunTrust Robinson Humphrey
The new deal adds core Delaware Basin acreage (contiguous to existing company position) that should help de-lever the company given the incremental current/upcoming cash flow. ~85% of the deal was financed with an equity offering (~15% dilution) with the remainder of the $775mm paid with cash on hand. The $28,500/acre (after backing out production) is at the low end versus recent Permian transactions. WPX is now targeting higher 2017 production growth that should lead to lower than previous estimated year-end 2018 leverage. The company also suggested 4Q16 production should top prior guidance.

Wunderlich WPX Energy (WPX) started the year with a sizable land grab. After the close last night, WPX announced that it has agreed to acquire 18,100 net acres for $775 million. The acreage is located in Reeves, Loving, Ward, and Winkler counties in Texas, expanding the company’s footprint and inventory count. The company provided detailed guidance for 2017 to reflect nine months of incremental activities reflecting the acquisitions. WPX issued 45 million shares concurrently and raised $600.8 million. The company has cash on hand to finance the remainder. We revised our estimates and NAV and the impact is neutral. We reiterate our Buy rating on WPX Energy.  

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