WPX bolsters Delaware presence for $2.5B

By Luke Geiver | December 17, 2019

By investing roughly $2.5 billion in the Delaware Basin, WPX Energy has added more than 1,500 new drilling locations, created greater cashflow certainty and sped up its 5-year plan. Tulsa-based WPX announced this week a transaction with Denver-based Felix Energy that will provide WPX with all of Felix’s assets in return for $900 million in cash and $1.6 billion in WPX stock. Post-closing, WPX also said it intends to implement a dividend of $0.10 per share. Consent by the Board of Directors at WPX was unanimous and the deal could be done in mid-2020.

The total asset package of Felix includes 1,500 gross undeveloped locations on the eastern portion of the basin along with production of roughly 60 MBoe/d (70 percent oil).

According to WPX, the deal was created based on the assumption of $50/b oil prices and the absence of any perceived development costs or yet-to-realized synergies of greater scale.

The Felix acreage position includes six productive benches. For Wolfcamp and Third Bone Springs, another 25 wells need to be drilled to hold production of the benches. Felix’s recent multi-well pads with at least 12 months of cumulative gross production are averaging approximately 240,000 barrels of oil per well, with pad averages ranging from 213,000 to 260,000 barrels of oil per well. Felix’s average lateral length is 9,200 feet per well.

EnCap Investments LP, a private equity company that founded Felix Energy, will add two directors to the WPX board following the transaction.

Doug Swanson, managing partner of EnCap, stated, “This is an exciting day for both Felix Energy and EnCap. Over the past four years, the Felix team has worked tirelessly to build what we consider to be a world-class Delaware Basin asset. Given the current market environment, we are strong believers in consolidation and feel that the Felix asset base is a clear strategic fit for WPX.”

Following the acquisition, cash flow per share, earnings per share, free cash flow per share, return on capital employed, and cash margins are all expected to increase, according to WPX.