WPX Energy will buy privately-held RKI Exploration &
Production LLC for $2.35 billion in a move to step up oil
production.
Last year, Tulsa-based WPX—spun off in 2011 from pipeline
operator Williams Cos.—said it would transition its gas-weighted
portfolio production and increase oil inventory. Chief executive
Rick Muncrief on Tuesday said the RKI deal fits with that strategy
to drive oil growth and strengthens the company's position in the
western U.S.
The majority of Oklahoma City-based RKI's leaseholds are located
in Loving County, Texas and Eddy County, N.M. Assets in the Permian
Basin—one of Texas' oldest oil fields—include about 22,000 barrels
of energy per day of existing production, roughly half of which is
oil; about 92,000 net acres in the core of the Permian's Delaware
Basin; and about 375 miles of gas gathering and water
infrastructure.
To help fund the deal, WPX said it would sell $1.2 billion in
debt, 27 million shares in common stock and $300 million in
preferred stock.
With the RKI purchase, the company said oil will account for
about 22% of equivalent production this year, 30% next year and 36%
in 2017. Oil output grew to 20% from 8% over the last three years,
the company said.
WPX forecasts 160 million to 165 million barrels of energy
production a day this year, 180 million to 190 million barrels next
year and 190 million barrels to 210 million barrels by 2017.
RKI's operations in Wyoming's Powder River Basin were not
included in the transaction.
The companies expect to complete the deal by the end of the
third quarter, according to WPX.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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