The agreement also provides WPX with 10 percent ownership in a newly created class of incentive distribution rights (IDR) with Legacy. WPX has the opportunity to increase its ownership to 30 percent, contingent upon completing other transactions in the future. This would include the potential to partner on third-party acquisitions.
The parties expect to close the sale during the second quarter, with an effective date of
The average production for the working interest over the next five years is expected to be 71 million cubic feet equivalent per day. WPX’s full-year 2013 Piceance production average was 727 MMcfe/d.
“We see tremendous benefits here on multiple fronts that are all accretive to our outlook,” said
“First, the sales price reflects an attractive valuation of our company’s most important and largest asset – our
“The nature of the transaction also effectively accomplishes the same outcome as pursuing the formation of our own master limited partnership without increasing the complexity of our corporate structure. This allows us to stay focused on WPX and keep our story simple.
“And strategically, the agreement provides upside incentives for WPX to work with Legacy on future deals if there are mutual benefits for both parties. They are an attractive partner with a proven record,” Bender added.
The agreement provides Legacy with 30 percent of WPX’s working interest in proved developed producing (PDP) Piceance wells that were drilled prior to 2009. The working interest increases to 37.5 percent in 2015 and 42 percent in 2016.
WPX’s undeveloped locations in western Colorado’s
WPX continues to expect to invest
Barclays provided a fairness opinion to
Management will discuss the transaction and its first-quarter results during a webcast at
A limited number of phone lines also will be available at 877-299-4454. International callers should dial 617-597-5447. The conference identification code for both phone numbers is 48955215. A replay of the webcast will be available on WPX’s website for one year following the event.
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company.Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas.These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes.Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by
The SEC’s rules prohibit us from filing resource estimates. Our resource estimations include estimates of hydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or even possible reserves, (ii) other areas to take into account the low level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Resource estimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon. Resource estimates might never be recovered and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.