Equity issuance boosts development in Delaware Basin

 

This week's US Upstream Week in Brief reports on activity in the Delaware Basin — an area buzzing with activity in recent weeks. One notable transaction was WPX Energy issuing US$485 million in equity to help invest in a crude gathering infrastructure system in the Delaware Basin, where the company has focused development. Our upstream analysts examine the numbers and acreage around the deal using our Well Analysis Tool.

The Delaware Basin remains a high-activity region as operators continue to invest in infrastructure, development activity and M&A deals. Of recent note is WPX Energy issuing US$485 million in equity to build a crude gathering infrastructure system, suggesting  the company's long-term commitment to the basin.

The company's investment will provide upside to our current valuation of WPX Delaware Basin, given that gathering systems in the basin charge up to US$2 per barrel in fees. The line would complement WPX's existing natural gas and water gathering facilities in the Delaware that it acquired in a deal with RKI in July 2015.

WPX wells and permits in the Permian Delaware BasinWPX wells and permits in the Delaware Basin
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Investors are reacting favourably to this latest move, as it supports WPX's continued shift toward a more liquids-weighted portfolio. The company also announced plans to allocate approximately 50% of its 2016 capital budget to the Delaware Basin, where it has recently added a third rig. Strong well results and higher oil prices prompted the addition, bolstering WPX's presence in the area.

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You can purchase our full US Upstream Week In Brief on demand to read this week's top stories in the North America Upstream sector, including Devon energy's divestiture of US$974 billion in assets; a Moody's debt downgrade after the failed Halliburton/Baker Hughes merger; Shell sanctioning a US$5 billion petrochemical plant to produce ethane from the Marcellus and Utica plays; and our latest supply update and rig-count dashboard.

Top US upstream stories this week

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