WPX Energy Inc. moved to fully exit the San Juan Basin of New Mexico and Colorado with an agreement to sell its holdings in the basin's Gallup oil play for $700 million.
WPX previously divested legacy natural gas assets in the San Juan Basin for $175 million after closing adjustments, as well as a gathering system in the basin for $309 million. With the Gallup sale, WPX focuses its operations in its two core positions in the Delaware and Williston basins, according to a Feb. 5 news release. Capital previously budgeted for the Gallup oil play would be reallocated to these positions.
The oil and gas producer plans to use a significant part of the proceeds from the sale to pay down debt, which is expected to cut net debt to EBITDAX to WPX's target level of 1.5x in 2019.
In five years, WPX has transformed its portfolio through almost $8 billion in transactions to become 80% oil and NGLs and 20% natural gas on a pro forma basis, from 80% gas and 20% liquids.
CIBC Griffis & Small provided advisory services to WPX, while Holland & Hart LLP served as legal counsel for the deal, which WPX expects to close later in the first quarter.
