S&P rates WPX Energy notes BB, view positive

Standard & Poor's said it revised its outlook on WPX Energy Inc. to positive from stable and affirmed its BB corporate credit rating on the company.

The outlook revision follows the announcement of WPX's proposed acquisition of RKI Exploration & Production LLC.

At the same time, the agency assigned its BB issue-level and 3 recovery rating to the company's proposed senior unsecured notes. The 3 recovery rating indicates an expectation of meaningful (50% to 70%) recovery to lenders in the event of a payment default. The recovery expectations are in the lower half of the 50% to 70% range.

The assigned ratings are the same as the company's existing rated senior unsecured debt, including its unsecured credit facility.

"The positive outlook on WPX reflects the potential for profitability to improve over the next one to two years as the company accelerates its shift to higher value crude oil," S&P credit analyst John Rogers said in a news release.

"The acquisition of RKI provides WPX with a foothold in the oil-rich Permian Basin, more specifically the Delaware Basin sub-area, where it will acquire approximately 92,000 net acres, 22,000 barrels of oil equivalent (boe) per day of production (53% oil), and about 102 million boe of proved reserves (39% oil)."

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