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WPX Energy (WPX) Sells San Juan Natural Gas Assets for $169M

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WPX Energy Inc. announced the divestiture of natural gas assets in northern San Juan basin for $169 million. The company will continue oil operations in the Gallup play, as the transaction only included non-operated properties in the basin.  

The divestiture of non-core assets will help the company focus on core operation, strengthen balance sheet and expand operation in resource rich regions.

Transformation of WPX Energy

WPX Energy has transformed itself from a natural gas focused company to an oil focused company. At the end of 2015, natural gas contributed 67% of its product volumes. At the end of third-quarter 2017, oil and NGL volumes contributed nearly 70% of total production.

In less than two years, WPX Energy completed more than 10 major transactions, including $2.7 billion in divestitures. WPX Energy exited the Piceance Basin, the Marcellus Shale, the Powder River Basin and South America,. The company sold several firm transportation agreements to focus on oil development in the Delaware, Williston Basin and San Juan Gallup Sandstone.

The current divestiture is a part of the company’s plan to monetize non-core assets and focus more on productive oil business. WPX Energy aims to triple operating margin and increase oil production five-fold through the transformation strategy.

Oil Prices Recovering

Oil Prices are recovering gradually from the historic low and expected to improve from the current levels. The upward revision in the energy prices will have a positive on the performance of Chevron Corporation (CVX - Free Report) and Exxon Mobil Corporation (XOM - Free Report) . The  companies are currently displaying a positive revision in earnings estimates in 2017 and 2018.

Price Movement

Shares of WPX Energy have gained 47.2% in the last six months outperforming the industry's rally of 15.2%.

 


 

WPX Energy’s strong portfolio of assets, systematic acquisitions, improvement in it existing cost structure and expansion in the oil-rich Delaware Basin continue to bolster the company's performance.

Zacks Rank & Key Pick

WPX Energy currently carries a Zacks Rank #3 (Hold). A better-ranked stock worth considering in the same space is Concho Resources Inc. , carrying a Zacks Rank #2 (Buy).  You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Concho Resources reported positive earnings surprise in last four quarters resulting in an average surprise of 118.57%. The company’s 2017 and 2018 earnings estimates increased 14.9% and 36.9%, respectively in last 60 days.

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