WPX to sell Colorado assets

WPX Energy will sell its WPX Energy Rocky Mountain subsidiary to US oilfield operator Terra Energy for USD 910 million, the Oklahoma-based independent said today.

The subsidiary works mainly on the Piceance Basin in Colorado, one of North America’s biggest gasfields. The assets consist of 809 sq.km and a net production of around 14.2 mcm (500 mcf) per day. Terra believes the wells located in Rio Blanco, Garfield and Mesa counties contain 56.6 bcm (2 tcf) of reserves in low-risk drilling locations. The sale also includes 607 sq.km of rights on the Mancos-Niobrara play.

Terra will take on USD 100 million in transportation commitments in exchange for more than USD 90 million of WPX’s natural gas hedge profit. WPX will keep over USD 110 million in further hedge gains that will be handed out throughout the year.

The deal is expected to pass in Q2 of this year. Before the sale, WPX spent between USD 150 million and USD 165 million to develop the site.

The sale is positioned to pay off debt incurred by acquisition of US independent RKI Exploration & Production in July. In late January, the company announced a USD 309-million sale of gathering-system assets.