WPX Energy enters oil-rich Permian basin with $2.35 billion buy
By Shubhankar Chakravorty and Amrutha Gayathri
(Reuters) - Natural gas producer WPX Energy Inc (WPX.N: Quote) agreed to buy privately held RKI Exploration & Production LLC for $2.35 billion, snapping up oil-rich assets in the Permian basin on the cheap amid a steep drop in crude prices.
The acquisition will give WPX about 92,000 acres in Permian's Delaware Basin - spread across Texas and New Mexico - at about $12,500 per undeveloped acre.
Acreage in the basin - the biggest and fastest-growing U.S. shale oil field - was worth as much as $30,000-$35,000 per acre at $100 oil, said Imperial Capital analyst Bob Christensen.
WPX shares rose as much as 7 percent to $11.88 in morning trading on the New York Stock Exchange on Tuesday.
"The Delaware basin is a premier basin for operators and for WPX to enter in this manner (with billions of dollars looking for deals) is a huge win," Simmons & Co analysts said.
A near-50 percent drop in crude prices since highs of over $100 per barrel in June last year has led to several big-ticket acquisitions, including Royal Dutch Shell's (RDSa.L: Quote) $70 billion offer for BG Group BG.L.
WPX's Permian deal is the largest shale acquisition since Noble Energy Inc (NBL.N: Quote) announced its $2 billion deal for Rosetta Resources Inc ROSE.O in May.