WPX Tapping Public Markets to Pay for RKI Acquisition

The second WPX announcement reported the beginning of concurrent public offerings of $1.2 billion in senior aggregate unsecured notes, 27 million shares of common stock and $300 million aggregate liquidation preference of its series A mandatory convertible preferred stock. At Monday’s closing price of $11.12, the offered shares could raise about $300 million, giving WPX a total of around $1.8 billion to help pay for the RKI acquisition. RKI unitholders also will receive 40 million shares of WPX stock, which WPX valued at $470 million.

At the end of the first quarter, WPX reported cash and equivalents of $100 million and other current assets valued at $591 million. At the time, the company also reported long-term debt of $2 billion. In Tuesday’s announcement, the company said it had $320 million in unrestricted cash and equivalents as of June 30. WPX said that Barclays has committed to the financing for the transaction and is the book-running manager for the stock offering.

WPX is acquiring 22,000 barrels of oil equivalent per day from approximately 92,000 net acres in the Permian’s Delaware Basin. The company said the purchase price comprises about $50,000 per flowing barrel and $500 million for the established midstream infrastructure.

Shares of WPX traded up nearly 5% in the noon hour on Tuesday, at $11.65 in a 52-week range of $10.01 to $26.79.

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