WPX Buys Permian Basin Assets from RKI Exploration Back to Blog
Don’t count the Delaware Basin out just yet. Tulsa-based WPX has agreed to buy certain Permian Basin assets from Oklahoma City-based RKI Exploration & Production for $2.75 billion in cash, stock and debt. WPX executives said the company plans to keep RKI’s Oklahoma City and New Mexico offices and their employees. RKI has about 100 employees in Oklahoma City and 30 in Carlsbad, N.M. “RKI is highly attractive to WPX due to its core acreage, it’s substantial gas gathering water transfer infrastructure with excess capacity and a proven operational team that will remain in place,” WPX CEO Rick Muncrief said during a conference call Tuesday. “I simply can’t wait to get our hands on these assets.” The deal is expected to close in the third quarter. Most of RKI’s assets are in Loving County, Texas, and Eddy County, N.M, in the Permian Basin’s Delaware play. The assets produce 22,000 barrels of oil equivalent per day over 92,000 acres with more than 3,600 gross drilling locations. The production is about 53 percent oil, 16 percent natural gas liquids and 31 percent natural gas. “We weren’t looking for just any opportunity. We’ve been looking for the perfect fit,” Muncrief said. “We have charged our team with finding a new basin that could add the best returns to our portfolio, and everything pointed to the Permian, an incredibly hydrocarbon-rich environment characterized by stack play reservoirs, extensive production history, long lived reserves and high drilling success rates.” Under terms of the deal, WPX agreed to pay $2.35 billion in cash and stock and assume about $400 million of RKI debt. The deal comes at a time when much of the oil industry has been stalled by oil prices that are about half of what they were one year ago. “I said in last quarter’s conference call that opportunities will abound for well maintained, financially strong companies with a clear and compelling business strategy,” Muncrief said. “All the progress we’ve made focusing our business and strengthening our balance sheet has allowed us to be opportunistic. “Today, we’re a company out front. As with any business, the time to buy is when prices are down. When oil prices are strong again, we probably won’t be buying, we’ll be drilling.” RKI’s top three executives, including founder and CEO Ronnie K. Irani, will stay on as consultants during the transition, WPX said.