Southwestern Energy buys Marcellus acreage from WPX Energy
Southwestern Energy Co. agreed to buy 46,700 net acres in northeast Pennsylvania and also some firm transportation capacity from WPX Energy Inc. for $300 million.
The transaction hinges upon the Federal Energy Regulatory Commission granting a waiver regarding transfer of firm transportation capacity for 260 MMcfd, predominantly on the Millennium pipeline. Closing was expected in early 2015.
As of Dec. 31, 2014, the acreage in the transaction produced 50 MMcfd net from 63 operated horizontal wells. WPX will be released from $24 million/year in obligations associated with the firm transportation capacity.
Steve Mueller, Southwestern Energy president and chief executive officer, said the acreage complements Southwestern's existing acreage in northern Susquehanna County, Pa. After closing, the transportation capacity will enable Southwestern to provide 1.3 bcfd of capacity total.
"The immediate availability of this firm transportation provides the pathway for ongoing growth in production over the next 3 years and the added acreage solidifies future value through a growing well inventory," Mueller said.
Rick Muncrief, WPX president and chief executive officer, said his company is refocusing assets.
"We're heading into 2015 reshaped, refocused, and ready to grow margins, develop our highest returning assets and build the long-term value of the company," Muncrief said.
Muncrief said WPX's remaining interests in the Marcellus shale primarily involve operations in Westmoreland County in southwestern Pennsylvania and additional firm transport capacity on Transco's Northeast Supply Link line. These assets also are targeted for divestiture.
WPX Energy develops and operates oil and gas producing properties in North Dakota, New Mexico, and Colorado.
Muncrief said WPX was established primarily as a gas-focused company with an emphasis on the Piceance basin, but over time WPX also entered the Arkoma, Barnett, Bakken, and then the Marcellus.
"We have been very active over the last few months cleaning our story up. We have a strong balance sheet and liquidity position," Muncrief said during a December presentation. "We've simplified our story." He said WPX wants to triple the size of the company over 5-6 years.