WPX Energy has partnered with Howard Energy Partners to form a joint venture to develop midstream assets in the Permian basin.

The 50/50 joint venture between WPX and Howard Energy Partners will be designed to develop crude oil gathering assets already under construction and a planned natural gas processing complex in the Stateline area of the Permian’s Delaware Basin.

Howard Energy Partners will be responsible for the completion of the construction of the JV assets and act as an operator of those assets.

The joint venture will support WPX’s drilling operations in the Stateline area, representing 37% of WPX’s total acreage in the Delaware.

While the transaction value of the new joint venture $863m, WPX will receive $300m upfront from Howard Energy Partners.

Howard Energy Partners will fund $263m to capital expenditures initially required by the joint venture.

The joint venture will be responsible for finishing a new crude oil gathering system, already started by WPX in the basin. Besides, it will develop a new cryogenic natural gas processing complex with a planned initial capacity of 400 MMcf/d.

However, WPX will continue to remain the sole owner of its Stateline natural gas and water gathering systems that comprise over 375 miles of scalable existing infrastructure.

WPX’s chairman, president and chief executive officer said: “Our approach to supporting our growth plans in the Delaware Basin uniquely differentiates WPX.

“As a producer, this is a bold and innovative way to lay a well-defined path for our expected volumes and create an additional platform for generating shareholder value. Today’s agreement breaks new ground on both fronts.”

The transaction is expected to be completed in the third quarter subject to certain closing conditions.

While Barclays served as financial advisor to WPX on the transaction, Holland and Hart served as the legal advisor.

In January, WPX Energy agreed to acquire oil and gas assets in the Delaware basin from Panther Energy Company II and Carrier Energy Partners for $775m to a bid to boost its position in the oil-rich Permian region.

Image: The joint venture will support WPX’s drilling operations in the Stateline area, Texas, US. Photo: courtesy of suwatpo/FreeDigitalPhotos.net.