WPX Energy sells Piceance assets to Terra Energy

February 9, 2016

Colorado, oil and gas drilling

WPX drilling rig near Rifle

WPX drilling rig near Rifle

Breaking news –

WPX Energy Sells Piceance Subsidiary for $910 Million

  • Marks nearly $1.5 billion in divestitures since RKI acquisition
  • Strengthens liquidity and financial flexibility
  • Piceance exit reinforces WPX’s oil focus led by its Permian Delaware development

TULSA, Okla.–(BUSINESS WIRE)– WPX Energy (NYSE: WPX) announced today that it has signed an agreement to sell its wholly owned subsidiary WPX Energy Rocky Mountain, LLC, to Terra Energy Partners LLC for $910 million. The parties expect to close the sale in the second quarter …

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Terra Energy is a brand new company formed in June 2015 in part by Kayne Anderson Capital Advisors LP’s energy fund, a Houston-based investment firm. The WPX acquisition is a first for the fledgling company. According to he company’s website, Terra Energy is not currently drilling in any basin in North America. They don’t own a drill rig. They’re in the business of buying assets.

Terra is an independent U.S onshore oil and gas exploration and production company growing through mergers and acquisitions to create value.

Headquartered in Houston, Terra pursues the acquisition and development of legacy producing oil and gas assets in North America. The team is led by Michael Land, an experienced E&P operations and commercial manager, and funded through Kayne Private Energy Income Fund, L.P.

So many questions. If they’re not a drilling operator what are their plans for existing wells and facilities? Will they be able to maintain the infrastructure already on the ground?

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WPX selling Piceance operation for $910 million

… WPX has about 215 employees in its Parachute office.

WPX’s chief executive officer, Rick Muncrief, said in a message to WPX employees today that for employees directly tied to the Piceance asset, “there will be a process to interview with the new owners.
“Terra Energy Partners is a relatively new, private equity-backed company that does not have the existing organization to work this asset and, therefore, it will need additional employees. We will provide detail about this process along with transition services as more information is known.”

Muncrief warned of layoffs that also will occur in the downsized WPX.

“With commodity prices at levels not seen in more than a decade and a current and future gas market that appears challenged, we must make further changes to live within our means. We will have to reduce our overall headcount in a post-Piceance environment. Piceance is an amazing asset, but has required a significant amount of support both in Colorado as well as in Tulsa.”

WPX already downsized its Denver office last year through layoffs and transfers of positions to Tulsa.

Muncrief said, “As for our Piceance employees, I have to take a moment to thank you for the tremendous energy and dedication you’ve given to this company over the years. You have been a flagship asset, and you’ve helped to keep this company moving forward when so many other basins were in distress.”

The Piceance long has been a core asset for WPX, but like other companies it began years ago to shift from gas to oil holdings due to local natural gas prices. But energy companies have been further squeezed by the subsequent drop in oil prices too …

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Terra Energy Partners LLC Agrees To Acquire Piceance Basin Assets From WPX Energy

HOUSTON, Feb. 9, 2016 /PRNewswire/ — Terra Energy Partners LLC (“Terra” or the “Company”), an independent oil and natural gas company headquartered in Houston, Texas, announced today that the Company has agreed to acquire WPX Energy Rocky Mountain, LLC from WPX Energy, Inc. (NYSE: WPX) (“WPX”) for $910 million in cash. In addition, Terra will receive natural gas hedges with a current in-the-money value of more than $90 million that will be used to support cash flow in 2016 and 2017. In exchange for these hedges, Terra has agreed to assume approximately $100 million of WPX’s future firm transportation obligations extending to 2022. The parties expect to close the transaction in the second quarter …

As part of this transaction, Terra has secured an increased equity commitment from existing investor Kayne Private Energy Income Fund, L.P. (“Kayne”) along with an equity commitment from affiliates of new investor Warburg Pincus LLC (“Warburg Pincus”). Terra’s aggregate equity commitment now totals $800 million, with Kayne and Warburg Pincus as equal partners.

“We are excited to announce our first acquisition since forming Terra last summer. The Piceance Basin is an area that we know well and one that we believe offers considerable upside potential through focused management,” commented Michael S. Land, Chief Executive Officer of Terra. “We are looking forward to working with our equity sponsors Kayne and Warburg Pincus to create value in the years to come” …

ABOUT TERRA ENERGY PARTNERS

Founded in 2015, Terra Energy Partners is a privately held oil and natural gas exploration and production company based in Houston, Texas. Terra is focused on the acquisition and development of large, long-lived producing oil and gas assets in North America. The Terra management team is led by Michael S. Land, the former President of the Permian and Mid-Continent Business Units at Occidental Petroleum Corp. (“Oxy”). Michael has assembled a deep management team with experience across multiple basins in North America, including the Piceance. Terra is a portfolio company of Kayne Anderson and Warburg Pincus and is backed by an $800 million equity commitment to pursue its strategy.

For more information, please visit Terra Energy Partners

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One Comment on “WPX Energy sells Piceance assets to Terra Energy”

  1. Fiona Lloyd Says:

    “Our bias for action and being opportunistic won’t change,” Muncrief said in a press release. “We will pursue our very best investment options and continually evaluate how to optimize our assets. We’ve created a balanced portfolio with an excellent runway for sustained value generation.”

    There speaks a man of the people – obviously worked on drill rigs all his life and clearly has the best interests of the health and safety of his workforce and local community at heart.

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