TULSA, OK – WPX Energy, a domestic producer with operations in the western United States, announced a definitive merger agreement to acquire privately held RKI Exploration & Production for $2.35 billion plus the assumption of $400 million of debt.
The majority of RKI’s leasehold is located in Loving County, TX and Eddy County, NM, where the company has four rigs deployed.
RKI’s liquids-rich assets in the Permian Basin include:
• 22,000 barrels a day production of energy equivalent, more than half of which is oil
• 92,000 net acres in the core of the Permian’s Delaware Basin – about 98 percent of which is held by production
• More than 3,600 gross risked drilling locations across stacked pay intervals
• More than 375 miles of scalable gas gathering and water infrastructure
The acquisition metrics include about $1.1 billion for the existing production at $50,000 per flowing barrel, about $500 million for the established midstream infrastructure, which equates to an average of $12,500 per acre – or $1.15 billion – for the undeveloped locations.
“This is a transformative opportunity that fits perfectly with our strategy to increase our oil production and high-quality oil inventory,” said Rick Muncrief, WPX president and CEO. “RKI’s asset scale and concentrated acreage position allows for efficient, low-cost, multi-decade development in a world-class oil play.”
The Permian Basin is characterized by numerous stacked reservoirs, extensive production history, long-lived reserves and high drilling success rates. All of RKI’s Permian properties are located in the Delaware Basin.
RKI also operates in Wyoming’s Powder River Basin, which are are not included in WPX’s purchase. RKI will divest or transfer out its Powder River Basin assets before completing the merger with WPX.
WPX said it plans to increase the rig count on the Permian assets from four to six by the end of this year.