Since the massive purchase in May of Anadarko Petroleum by Occidental, the months have yawned without a large-scale E&P acquisition in what has become a punishing environment by money-backers checking their watches. But the end of the year is not without its surprises. RMR is following the latest news from WPX Energy which just bought themselves one heck of a shiny Christmas present.
WPX Energy, Inc. is a company engaged in hydrocarbon exploration. It is organized in Delaware and headquartered in Tulsa, Oklahoma. All of the company’s assets are in either the Williston Basin or the Permian Basin.
The Tulsa-based oil and gas producer announced today it will acquire Denver-based Felix Energy for $2.5 billion, further rounding out a year of consolidation in the Permian Basin. For WPX, the acquisition puts afterburners on its 2020 plan announced in October to generate free cash flow, improve shareholder returns, and build upon its presence in what is arguably the Permian’s hottest shale play—the Delaware.
But first, a little backstory. Five years ago, pipeline giant Williams spun off WPX after determining the subsidiary didn’t fit within its core business as a midstream company. But WPX was starting to show teeth as an E&P, which at the time was 80% gas weighted. Instead of selling, Williams let WPX fly on its own. WPX promptly acquired RKI Exploration & Production and with it an entry into the oil-rich Delaware that brought its portfolio 92,000 net acres, 22,000 BPD of existing production of which more than half was oil, 3,600 drilling locations across stacked pay intervals, and more than 375 miles of gas gathering and water infrastructure. The $1.6 billion deal transformed WPX into a serious Delaware player.
With today’s acquisition of Felix, WPX becomes 79% oil and NGL weighted, including its existing assets in the Bakken. The company gains an additional 58,500 net acres in the Delaware and an estimated 1,500 drillable locations with expected production of 60,000 BPD. WPX next year looks to drill half of approximately 25 wells required to hold nearly all Wolfcamp and Third Bone Springs rights.
What do you think?