WPX Energy is joining the ranks of oil and gas companies buying further into West Texas’ ultra-hot Delaware Basin.
Not a week ago, the Tulsa company announced it was buying 18,000 net acres in the Delaware, the Permian Basin’s western half, for $775 million in cash from Tulsa-based Panther Energy Company II and Sugar Land-based Carrier Energy Partners.
WPX valued the deal, excluding production, at $28,500 per acre.
The purchase increases WPX’s Permian operations to more than 120,000 net acres and its “top tier” drillable Delaware locations from 5,500 to 6,400, the company said.
The purchase includes 23 producing wells, existing production of about 6,500 barrels of oil and gas per day, two drilled but uncompleted horizontal laterals, and 920 undeveloped well locations “in the geologic sweet spot of the Delaware Basin.”
WPX has added about 32,000 net acres in the core of the Delaware Basin at an average cost of $18,600 per acre since it remade itself, shedding acreage and pipelines in Colorado, Pennsylvania and international territory and buying Oklahoma City-based RKI Exploration and Production in 2015.
WPX was ahead of the curve then. “What we were looking for, as a new basin entry, was an amazing stack of rocks that was generally underappreciated by the market,” Clay Gaspar, senior vice president and chief operating officer for WPX, said on Tuesday. “We had a lot of eyebrows raised — you know, what are you guys doing?”
“Fast forward 12 months later, and everyone sees it.”