WPX adds Permian acreage for $2.35 billion

By The Bakken Magazine Staff | August 14, 2015

Well-known Bakken producer WPX Energy is branching out from the Bakken. Through its $2.35 billion purchase of RKI Exploration & Production Inc., WPX will soon be recognized in the Permian Basin. Less than one month after announcing it would ramp up its Bakken activity in 2015 by adding two drilling rigs to its Bakken operations, the Tulsa-based company revealed its 2015 growth plans are just getting started.

Through the acquisition, WPX will receive 22,000 barrels of oil equivalent per day of existing production along with 92,000 net acres in the core of the Permian Basin. The transaction did not include RKI’s Wyoming assets, but it did include $400 million in RKI debt. The deal will be funded through the combination of long-term debt, additional equity and cash on hand. Financing was provided by Barclays.

According to WPX’s information on the acquisition, the company paid roughly $50,000 per flowing barrel and $12,500 per acre. The Permian move will not be new to some at WPX, as the current executive team has experience operating in the basin. The current Permian rig count is four, but by the end of the year, WPX expects to add an additional two rigs.

Rick Muncrief, president and CEO of WPX, said the transaction was transformative for the company. The purchase he said, “drives high-margin oil growth, accelerates our portfolio transition to more liquids and solidifies our premier position in the western U.S., which enjoys the advantages of established infrastructure and higher realized commodity prices.”

RKI was formed in 2005 and has primarily focused on the Permian and Power River Basins. Last year, the company doubled its net production to an average of 24,000 boe/d. It was also recognized as one of Oklahoma City’s fastest growing employers with more than 145 employees.