WPX Energy to sell San Juan Basin assets in US for $700m

US-based energy producer WPX Energy has entered an agreement to divest its holdings in the San Juan Basin’s Gallup oil play to an undisclosed firm for $700m, in an attempt to reduce its debt.

The proposed sale is aimed at expediting the company’s stated deleveraging efforts, with a debt reduction target level of 1.5 times during the next year.

A major share of the proceeds will be directed towards debt reduction.

The transaction marks WPX’s exit from the San Juan Basin, allowing the company to focus on its two remaining core positions in the Delaware (Permian) and Williston basins.

WPX Energy chairman and CEO Rick Muncrief said: “WPX is now completely focused on our outstanding assets in the top two oil-prone basins in North America – the Permian’s Delaware Basin and North Dakota’s Williston Basin.

“Our bias for action has completely reshaped our story and our outlook, evidenced by the positive trends in our financial results. WPX is opportunistic, disciplined and committed to a strong balance sheet, ample liquidity and ongoing value creation.”

The company previously offloaded its natural gas assets in the San Juan Basin for $175m and a gathering system in the basin for a total consideration of $309m.

During the third quarter of last year, Gallup oil production averaged at 10.8 million barrels a day (mmbld).

WPX expects the sale will result in 75mmbld-80mmbld of oil and 117mmboed-126mmboed of production this year.

The company’s allocated capital budget for this year remains unchanged at $1.1bn-$1.2bn.