Tulsa-based WPX Energy has agreed to sell its interests in the Gallup oil play in the San Juan Basin in the US state of New Mexico for $700m to an undisclosed buyer.
The transaction marks the exit of WPX from the San Juan Basin as it plans to focus on its two remaining core positions in the Delaware (Permian) and Williston basins. WPX said that the capital it had allocated for the Gallup oil play in 2018 will be reallocated for its operations in the two basins.
WPX disclosed that the Gallup oil production averaged 10.8Mbbl/d in the third-quarter of 2017. It further said that the Gallup position represented less than 5% of its gross undeveloped locations.
The company said that the buyer of its Gallup assets will also take over the associated transportation commitments. Post transaction, WPX will not have any commercial obligations in the San Juan Basin in the future.
WPX chairman and CEO Rick Muncrief said: “WPX is now completely focused on our outstanding assets in the top two oil-prone basins in North America– the Permian’s Delaware Basin and North Dakota’s Williston Basin.
“Our bias for action has completely reshaped our story and our outlook, evidenced by the positive trends in our financial results. WPX is opportunistic, disciplined and committed to a strong balance sheet, ample liquidity and ongoing value creation.”
The transaction is expected to be closed in the first quarter of this year.
WPX had previously sold its natural gas assets in the San Juan Basin for $175m and a gathering system in the basin for $309m.
In December 2017, the gas assets, which include nearly 900 producing wells, were agreed to be sold to Logos Resources II. The deal made at that time also included the undeveloped Mancos acreage where Logos expects to add over 200 potential horizontal gas drilling locations.