We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
WPX Energy Prices Notes, Proceeds to Fund Felix Energy Buyout
Read MoreHide Full Article
WPX Energy announced that it has priced its previously declared offering of 4.5% senior unsecured notes due 2030. The total principal amount of the offering will be $900 million. This offering will close on Jan 10, 2020.
Net proceeds from the offering will be nearly $888.75 million, after deducting underwriting discounts and commissions, and before estimated offering expenses payable by WPX Energy. The net proceeds will be initially kept in an escrow account, and then be utilized to fund the acquisition of Felix Energy Holdings II, LLC, and pay related fees and expenses.
In December 2019, the company announced its intention to acquire Felix Energy for $2.5 billion to expand operations in the Delaware basin. Felix Energy has 58,500 net acres in an over-pressured, oily portion of the basin with six productive benches. This acquisition in a way will support the company’s goal of producing more oil from organic and inorganic assets.
Low-Interest Environment Helps
The Federal Reserve lowered interest rates thrice during 2019 and this development actually helped companies belonging to capital-intensive industries to fund their acquisitions and long-term projects by borrowing funds from the market at a comparatively cheaper rate than before.
As of Sep 30, 2019, long-term debt of WPX Energy was $2.2 billion, lower than $2.5 billion recorded on Dec 31, 2018. Its existing debt bears an annual interest rate ranging from 5.25% to 8.25%. This clearly indicates that the new notes will allow the company to make savings in interest payments.
Companies like Black Hills Corporation (BKH - Free Report) and Noble Energy , among others, took advantage of the current low-interest environment to refinance their old high interest-bearing debts from the issuance of low-interest-bearing notes.
Debt Level Lower Than Industry
WPX Energy’s current debt-to-capital ratio stands at 32.16%, lower than its industry’s average of 37.45% and the Zacks S&P composite’s 42.92%. The company’s interest expenses in the first nine months of 2019 were $119 million, down 3.3% from the year-ago period.
The company has managed and restructured debts in such a manner that it has no significant debt maturity till 2023. The existing operations of WPX Energy and the addition of new assets will further increase free cash flow and cash margins. This in a way will allow the company to accommodate new debts, and service its old and new debts efficiently.
Price Performance
Shares of WPX Energy have outperformed its industry in the past six months.
CNX Resources delivered average positive earnings surprise of 34.8% in the last four quarters.
CNX Resources’ Zacks Consensus Estimate for 2020 earnings has moved up 127.3% to 25 cents in the past 60 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
WPX Energy Prices Notes, Proceeds to Fund Felix Energy Buyout
WPX Energy announced that it has priced its previously declared offering of 4.5% senior unsecured notes due 2030. The total principal amount of the offering will be $900 million. This offering will close on Jan 10, 2020.
Net proceeds from the offering will be nearly $888.75 million, after deducting underwriting discounts and commissions, and before estimated offering expenses payable by WPX Energy. The net proceeds will be initially kept in an escrow account, and then be utilized to fund the acquisition of Felix Energy Holdings II, LLC, and pay related fees and expenses.
In December 2019, the company announced its intention to acquire Felix Energy for $2.5 billion to expand operations in the Delaware basin. Felix Energy has 58,500 net acres in an over-pressured, oily portion of the basin with six productive benches. This acquisition in a way will support the company’s goal of producing more oil from organic and inorganic assets.
Low-Interest Environment Helps
The Federal Reserve lowered interest rates thrice during 2019 and this development actually helped companies belonging to capital-intensive industries to fund their acquisitions and long-term projects by borrowing funds from the market at a comparatively cheaper rate than before.
As of Sep 30, 2019, long-term debt of WPX Energy was $2.2 billion, lower than $2.5 billion recorded on Dec 31, 2018. Its existing debt bears an annual interest rate ranging from 5.25% to 8.25%. This clearly indicates that the new notes will allow the company to make savings in interest payments.
Companies like Black Hills Corporation (BKH - Free Report) and Noble Energy , among others, took advantage of the current low-interest environment to refinance their old high interest-bearing debts from the issuance of low-interest-bearing notes.
Debt Level Lower Than Industry
WPX Energy’s current debt-to-capital ratio stands at 32.16%, lower than its industry’s average of 37.45% and the Zacks S&P composite’s 42.92%. The company’s interest expenses in the first nine months of 2019 were $119 million, down 3.3% from the year-ago period.
The company has managed and restructured debts in such a manner that it has no significant debt maturity till 2023. The existing operations of WPX Energy and the addition of new assets will further increase free cash flow and cash margins. This in a way will allow the company to accommodate new debts, and service its old and new debts efficiently.
Price Performance
Shares of WPX Energy have outperformed its industry in the past six months.
Zacks Rank & Another Key Pick
WPX Energy currently has a Zacks Rank #2 (Buy). Another top-ranked stock in the same industry is CNX Resources Corporation (CNX - Free Report) , carrying the same rank as WPX Energy. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CNX Resources delivered average positive earnings surprise of 34.8% in the last four quarters.
CNX Resources’ Zacks Consensus Estimate for 2020 earnings has moved up 127.3% to 25 cents in the past 60 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>