WPX Energy, an Oklahoma-based oil and gas company, has agreed to acquire Felix Energy, a Delaware Basin operator, for $2.5bn in a cash-cum-stock deal.
As per the terms of the transaction, WPX Energy will pay $900m in cash plus $1.6bn in the form of its shares to Felix Energy.
Based in Colorado, Felix Energy has nearly 1,500 gross undeveloped drillable locations in the eastern portion of the Delaware Basin, that are said to compete with the returns from WPX Energy’s existing position in the core Stateline area of the onshore basin.
The expected production from Felix Energy’s acreage will be about 60MBoe/d (70% oil) at the time of closing of the transaction, said WPX Energy.
The Oklahoma-based company said that the acquisition is in line with all of the main points in its five-year vision for shareholders, which was introduced last month at its third-quarter report. WPX Energy currently has positions across the Permian and Williston basins.
Felix Energy, which was founded by EnCap Investments, has 58,500 net acres in an over-pressured, oily part of the Delaware Basin with six productive benches. WPX Energy expects nearly 25 additional wells to hold almost all Wolfcamp and Third Bone Springs rights, with approximately half of the wells likely to be drilled in 2020.
Felix Energy’s recent multi-well pads with at least 12 months of cumulative gross production nearly average 240,000 barrels of oil per well, with pad averages in the range of 213,000-260,000 barrels of oil per well.
WPX CEO comments on Felix Energy acquisition
WPX chairman and CEO Rick Muncrief said: “Meeting the five-year targets we communicated is the absolute standard and benchmark for any investment we make.
“Now we can accomplish these objectives for shareholders more quickly and efficiently with the irrefutable benefits of the Felix transaction.
“Delivering on our plan ahead of schedule in a highly de-risked, leverage-neutral manner is consistent with our opportunistic approach.”
EnCap managing partner Doug Swanson said: “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.”
The deal is expected to be closed early in the second quarter of 2020.
