WPX Energy (NYSE: WPX) has signed an agreement to sell its San Juan Basin gathering system for consideration of $309 million to a portfolio company of ISQ Global Infrastructure Fund, a fund managed by I Squared Capital.
WPX is receiving $285 million cash subject to closing adjustments and a commitment estimated at $24 million in capital designated by the purchaser to expand the system to support WPX’s development in the Gallup oil play.
The agreement increases the amount of WPX’s recent divestitures to nearly $575 million. WPX originally targeted $400–$500 million in activity for the latter half of the year.
The sales are part of WPX’s deleveraging plan following its acquisition of Permian Basin properties in August. WPX also continues to evaluate options to accelerate value from its Piceance Basin holdings.
Currently, WPX has net debt of $3.2 billion consisting of $3 billion in notes and the remainder primarily in revolver borrowings.
Under the terms of the agreement, WPX will continue to operate the gathering system for at least two years with the opportunity to continue in ensuing years. The parties expect to close in first-quarter 2016.
Upon closing, the gathering system will consist of more than 220 miles of oil, gas, and water gathering lines that WPX installed in conjunction with its drilling in the Gallup oil play where it made a discovery in 2013.
JP Morgan Securities LLC acted as the exclusive financial advisor to WPX. Deutsche Bank Securities advised I Squared Capital on the transaction.