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WPX to use revolver debt for part of $2.35 billion RKI acquisition
By Wendy Van Sickle
Columbus, Ohio July 14 – WPX Energy, Inc. will use borrowings under its revolving credit facility to partially fund its acquisition of RKI Exploration & Production, LLC, the company said in a Tuesday press release.
WPX signed a merger agreement Monday to acquire the energy company for $2.35 billion plus the assumption of $400 million of debt, according to filings with the Securities and Exchange Commission.
WPX will amend its existing unsecured credit facility in connection with the transaction, according to the filing. The company said it has obtained committed financing from Barclays for the transaction.
Additionally, WPX said it will also use cash on hand and proceeds from a $1.2 billion note offering, a $300 million convertible preferred stock offering and a 27 million share common stock offering to fund the deal.
WPX said the majority of RKI’s leasehold is in Loving County, Texas, and Eddy County, N.M., where RKI has four rigs deployed.
The acquisition fits within WPX’s strategy of maximizing returns and margins by transitioning its historically gas-weighted portfolio to more oil production and oil inventory, the company said.
The company said it has grown its oil output from 8% of equivalent production to 20% over the past three years. With the RKI transaction, it expects oil to account for about 22% of equivalent production this year, 30% in 2016, and 36% in 2017 on a pro forma basis.
“All of the progress we’ve made focusing our business and strengthening our balance sheet has positioned us to be opportunistic,” WPX chief executive officer Rick Moncrief said.
WPX is a Tulsa, Okla.-based natural gas and oil exploration and production company. RKI is based in Oklahoma City.
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