WPX Energy To Buy Delaware Basin-Based Felix Energy For $2.5B
Zacks Investment Research | Dec 16, 2019 09:20PM ET
WPX Energy (NYSE:WPX) announced that it intends to acquire Delaware Basin-based Felix Energy for $2.5 billion. The purchase consideration comprises $900 million in cash and $1.6 billion in WPX Energy shares. This acquisition is in sync with the company’s intention to further increase oil production.
Felix Energy has nearly 1,500 gross undeveloped locations in the eastern portion of the basin, with expected production of around 60 thousand barrels of oil equivalent per day. Out of the total production, 70% will be oil. The parties anticipate closing the transaction early in second-quarter 2020.
WPX Energy’s Delaware Assets
At present, WPX Energy has 131,000 net surface acres holdings in the Delaware Basin. Felix Energy has 58,500 net acres in an over-pressured, oily portion of the basin with six productive benches. This acquisition will strengthen WPX Energy’s position in the Delaware basin.
WPX Energy's oil production from the Delaware Basin improved 28% year over year in third-quarter 2019. In addition, the company is using new technology in the basin, which is lowering operating costs and contributing to margin improvement.
Other Benefits From the Acquisition
After the closure of this acquisition in 2020, WPX Energy expects to further increase cash flow, earnings per share, free cash flow, return on capital employed and cash margins. Management will use this opportunity to increase the value of its shareholders through share buybacks and maintaining the annual dividend.
Price Performance
Shares of WPX Energy have outperformed its Original post
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