What WPX Energy Wants with a JV in the Delaware
WPX Energy’s joint venture
On June 13, WPX Energy (WPX) announced that it had signed an agreement with Howard Energy Partners to form a JV (joint venture). The 50-50 joint venture will support 37% or 50,000 net acres of WPX’s drilling operations in the Delaware basin and will include crude oil gathering assets already under construction as well as a planned natural gas processing complex.
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WPX will receive $300 million from Howard Energy Partners as a part of the deal, and Howard Energy will fund the first $263 million of the JV’s capital expenditure.
The JV includes no minimum volume or drilling commitments. WPX’s press release noted the following: “The joint venture will complete the buildout of a new crude oil gathering system, already started by WPX in the basin, and begin constructing a new cryogenic natural gas processing complex with a planned initial capacity of 400 MMcfd.”
The transaction is expected to close in 3Q17.
More takeaway capacity in the Delaware
WPX is focusing on securing long-term takeaway capacity in the Delaware basin for its related gas production. The JV’s details include the following:
- WPX signed an agreement to ship up to 200,000 MMBtu (million British thermal units) per day of gas from the Waha Hub to Katy, Texas, starting November 2017.
- WPX also completed a long-term agreement with WhiteWater Midstream, which owns the Agua Blanca Pipeline in the Delaware basin. WPX has 10% ownership in the Pipeline.
- WhiteWater Midstream also provides WPX with 300,000 MMBtu per day of natural gas transportation capacity from the Stateline area to the Waha Hub.