WPX Energy to acquire Delaware Basin operator Felix Energy for $2.5bn

WPX Energy acquisition of Felix Energy : WPX Energy, an Oklahoma-based natural gas liquids company, has signed a $2.5 billion deal to acquire Delaware Basin operator Felix Energy.

Based in Denver, Colorado, Felix Energy was founded in 2013. The Delaware Basin operator is financially backed by EnCap Investments and JP Morgan.

Felix Energy, which has around 1,500 gross undeveloped locations in the eastern part of the Delaware Basin, is estimated to produce close to 60 MBoe/d (70% oil) at the time of closing of the deal.

Doug Swanson – Managing Partner of EnCap, commenting on WPX Energy acquisition of Felix Energy, said: “This is an exciting day for both Felix Energy and EnCap. Over the past four years, the Felix team has worked tirelessly to build what we consider to be a world-class Delaware Basin asset. Given the current market environment, we are strong believers in consolidation and feel that the Felix asset base is a clear strategic fit for WPX.”

The acquisition of the Delaware Basin operator gives WPX Energy around 1,500 gross drillable locations in the Stateline area of the basin.

Felix Energy holds 58,500 net acres in an over-pressured, oily portion of the Delaware Basin with six productive benches. According to WPX Energy, nearly 25 more wells are needed to hold almost all Wolfcamp and Third Bone Springs rights, with about half of those wells likely to be drilled next year.

The recent multi-well pads of Felix Energy with more than 12 months of cumulative gross production are averaging around 240,000 barrels of oil per well, with pad averages in the range of 213,000-260,000 barrels of oil per well.

WPX Energy has core positions in the Permian and Williston basins. Its Permian Basin position is said to have been consolidated by acquisitions of RKI Exploration & Production and Panther Energy, apart from grassroots leasing and a midstream joint venture with Howard Energy Partners.

Commenting on WPX Energy acquisition of Felix Energy, Rick Muncrief – chairman and CEO, said: “Meeting the five-year targets we communicated is the absolute standard and benchmark for any investment we make.

“Now we can accomplish these objectives for shareholders more quickly and efficiently with the irrefutable benefits of the Felix transaction.

“Delivering on our plan ahead of schedule in a highly de-risked, leverage-neutral manner is consistent with our opportunistic approach.”

As per the terms of WPX Energy acquisition of Felix Energy, the purchase price is made up of $900 million cash and $1.6 billion worth shares of the former.

WPX Energy acquisition of Felix Energy is expected to be wrapped up early in Q2 2020.