The $3.6 billion sale of Permian Basin pipeline operator Oryx means $350 million in net proceeds for Tulsa-based WPX Energy.
One of WPX’s subsidiaries was a joint venture partner in the Oryx II pipeline and signed agreements to sell the project in the acquisition by New York private equity firm Stonepeak Infrastructure Partners.
The WPX subsidiary had a 25 percent equity interest in the pipeline. WPX indicated afterward that it anticipates savings of $40 million in planned equity investments for the balance of the year as a result of the sale.
However, WPX stated that it retained its contractual rights as a shipper on Oryx and plans to deploy proceeds from the transaction to its balance sheet.
WPX also is reevaluating the timetable for its plan to return capital to shareholders, originally targeted for 2021. Projected free cash flow from WPX’s operations in 2019 may accelerate action, with a decision expected in the latter half of this year.
“WPX’s opportunistic approach continues to create significant value for shareholders and generate handsome returns on our capital employed,” said Rick Muncrief, chairman and chief executive officer.
“We secured flow assurance and ownership interests in critical midstream projects in the Delaware Basin before constraints ever occurred. That strategy also has protected the pricing for our production in the basin,” said Muncrief.
The Oryx system is a regional crude oil pipeline transport network that supports the Northern Delaware Basin. It consists of more than 500 miles of pipe that include a significant presence in the Stateline area of Texas and New Mexico. Oryx II is one component of the overall system.
The Oryx II transaction is WPX’s second midstream monetization this year. WPX already closed on the previously announced sale of its 20 percent equity interest in WhiteWater Midstream’s Agua Blanca natural gas pipeline system. WPX remains a shipper on that system, as well.
WPX invested approximately $125 million in its equity positions in the Oryx and Whitewater midstream systems, primarily in 2017 and 2018. The investments generated approximately half of a billion dollars in net proceeds this year, pending the close of the Oryx II sale.