WPX Energy Inc. plans to sell its North Dakota gathering system for nearly $185 million to Ares EIF Group, a subsidiary of Ares Management LP. WPX of Tulsa continues selling assets to lower outstanding debt.
The sale involves an oil, natural gas, and water gathering system. WPX previously installed the infrastructure in association with its Williston basin drilling program. The system supports WPX's development in the Van Hook peninsula area.
WPX produced an average of 22,600 b/d oil in the Williston basin during the second quarter, up 20% from the same period a year earlier.
Terms call for WPX to continue operating the system, which gathers nearly 11,000 b/d of oil, about 6,500 Mcfd of natural gas, and about 5,000 b/d water. The system can be expanded if required.
This gathering system divesture is part of WPX Energy's target of divesting $400-500 million worth of assets in 2015. WPX also plans to divest another $400-500 million in 2016, and it intends to use proceeds from the sales to strengthen its operations in oil basins.
Having outlined its long-term strategy in October 2014, WPX plans to increase oil production to more than 25% of its total output by scaling down its previously gas-weighted assets.
In August, WPX Energy entered the Permian basin by closing its acquisition of privately held RKI Exploration & Production LLC for $2.35 billion plus the assumption of $400 million of debt. (UOGR July-August 2015, p. 4)
Coalbed methane divestiture
Separately, WPX Energy Inc. announced it completed the divestiture of its remaining mature coalbed methane properties in Wyoming's Powder River basin for $80 million to Moriah Power River LLC in early September.
In addition, WPX scheduled a related sale of its membership interest in Fort Union Gas Gathering LLC to close in November.
"We will remain diligent in our debt reduction efforts," said Rick Muncrief, WPX president and chief executive officer.
Results from WPX's Powder River Basin assets in Wyoming were classified as discontinued operations before the divestiture. WPX had not drilled in the basin since 2011.
WPX's other rationalization opportunities include the monetization of additional midstream infrastructure, non-operated properties, and evaluating options to unlock Piceance basin value, the company said.
