Out of the total consideration being paid to RKI, approximately $1.1bn is for the existing production at $50,000 per flowing barrel, and approximately $500m for the established midstream infrastructure, which equates to $1.15bn for the undeveloped locations.
Under the terms of the deal, shareholders of RKI will receive 40 million shares of WPX stock, valued at approximately $470m.
Assets of RKI in the Permian Basin include approximately 22,000 barrel of oil equivalent per day (boe/d) of existing production; approximately 92,000 net acres; more than 3,600 gross risked drilling locations across stacked pay intervals as well as more than 375 miles of scalable gas gathering and water infrastructure.
RKI’s assets, including four rigs, are mostly located in Loving County, Texas, and Eddy County, New Mexico, US.
WPX president and CEO Rick Muncrief said: "RKI’s asset scale and concentrated acreage position allows for efficient, low-cost, multi-decade development in a world-class oil play.
"RKI’s wells generate 30% returns and we look forward to capturing upside beyond that by employing additional completion technology."
The deal excludes RKI’s operations in Wyoming’s Powder River Basin.
The transaction allows WPX to establish long-term oil visibility, develop de-risked stacked pay acreage, pursue substantial upside, add scalable infrastructure and further diversify its asset portfolio.
WPX estimates oil, on a pro forma basis, to account for approximately 22% of equivalent production in 2015, 30% in 2016, and 36% in 2017, upon completion of the transaction.
The transaction, which is subject to customary closing conditions, is planned to be completed by the end of the third quarter.
