Oil and gas company WPX Energy Inc. WPX continues to monetize its Marcellus Shale assets, lower its long-term debts and concentrate on its core operations. The company completed its third divestiture of the year, selling a bundle of Marcellus Shale marketing contracts and releasing certain related firm transportation capacity to an undisclosed buyer. The agreement for sale of these assets was entered earlier this month.
Per the divesture, WPX Energy received more than $200 million in cash for various long-term natural gas purchase and sales agreements and was released from nearly $390 million in future demand payment obligations associated with 135 million Btu per day of firm transportation capacity on Transco’s Northeast Supply Link project.
The company has been streamlining its operations over the last 12 months including acquisition and divestiture deals exceeding $1.5 billion in transaction amount. In the first quarter, WPX Energy utilized the net proceeds from asset sale to replenish earlier borrowings on its $1.5 billion senior unsecured credit facility and to reduce its long-term debt by 12%. These initiatives will enhance the financial flexibility of the company.
WPX Energy entered 2015 with an intention of divesting its Marcellus Shale assets and focusing on developing its highest returning core oil and gas properties in North Dakota and New Mexico. In addition, the company is concentrating on its natural gas operations in Colorado.
WPX Energy has plans to make capital investment of nearly $725 million in 2015 in its core assets. Out of the planned expenditure, more than 50% will be directed toward boosting its oil operations.
The company’s remaining assets in the Marcellus Shale primarily consist of its physical operations in Westmoreland County in southwestern Pennsylvania. WPX Energy intends to divest these assets in due course.
During the first quarter, WPX Energy completed the sale of its operations in northeast Pennsylvania and released certain firm transportation capacity to Southwestern Energy Company SWN for nearly $300 million in cash.
WPX Energy currently carries a Zacks Rank #2 (Buy). Other stocks in the oil and gas space sharing the same rank with WPX Energy are Carrizo Oil & Gas Inc. CRZO and Linn Energy, LLC LINE.
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