WPX to Buy Permian Producer RKI

WPX Energy will buy privately-held RKI Exploration & Production LLC for $2.35 billion in a move to step up oil production.

Last year, Tulsa-based WPX—spun off in 2011 from pipeline operator Williams Cos.—said it would transition its gas-weighted portfolio production and increase oil inventory. Chief executive Rick Muncrief on Tuesday said the RKI deal fits with that strategy to drive oil growth and strengthens the company's position in the western U.S.

The majority of Oklahoma City-based RKI's leaseholds are located in Loving County, Texas and Eddy County, N.M. Assets in the Permian Basin—one of Texas' oldest oil fields—include about 22,000 barrels of energy per day of existing production, roughly half of which is oil; about 92,000 net acres in the core of the Permian's Delaware Basin; and about 375 miles of gas gathering and water infrastructure.

To help fund the deal, WPX said it would sell $1.2 billion in debt, 27 million shares in common stock and $300 million in preferred stock.

With the RKI purchase, the company said oil will account for about 22% of equivalent production this year, 30% next year and 36% in 2017. Oil output grew to 20% from 8% over the last three years, the company said.

WPX forecasts 160 million to 165 million barrels of energy production a day this year, 180 million to 190 million barrels next year and 190 million barrels to 210 million barrels by 2017.

RKI's operations in Wyoming's Powder River Basin were not included in the transaction.

The companies expect to complete the deal by the end of the third quarter, according to WPX.

Write to Lisa Beilfuss at [e-mail]

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