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WPX Sells Van Hook Gathering System for $185M

WPX Energy Inc., which has been retooling its onshore portfolio for the past two years, on Monday agreed to take $185 million for a North Dakota system in the Van Hook peninsula area that gathers natural gas, oil and water.

A private equity fund managed by the Ares EIF Group, a subsidiary of Ares Management LP, is buying the expandable system, which now gathers 6,500 Mcf/d of natural gas, 11,000 b/d of oil and 5,000 barrels/day of water. WPX would continue to operate the system.

"We are excited to make this acquisition since it fits the type of investment that the Ares EIF Group targets -- a strong performing asset with stable and capable management and the potential for future expansion," said Ares EIF co-head Terence Darby. The sale is set to be completed within two months.

Ares EIF incorporates the former Energy Investors Funds, which Los Angeles-based Ares acquired in January. Ares EIF's investment strategy is to create "geographically and technologically diversified portfolios of energy infrastructure investments via acquisitions as well as development and construction across the power generation, transmission and midstream sectors."

Tulsa-based WPX has been working to reduce debt after completing its transformational $2.75 billion purchase in August of RKI Exploration & Production LLC’s Permian Basin operations (see Shale DailyJuly 14).

"We are aggressively moving on our delevering plan just as we said we would do," WPX CEO Rick Muncrief said.

The Tulsa explorer's delevering plan is targeting $400-500 million of asset sales by the end of this year. Another $400-500 million of properties within the portfolio are set to be sold in 2016.

"Other portfolio rationalization opportunities include the monetization of additional midstream infrastructure, non-operated properties or other asset sales, along with evaluating creative options to unlock Piceance Basin value," WPX management said. Since Muncrief took the helm in late 2013, he has turned WPX's attention to the West and added more oil and liquids to the gassy portfolio (see Shale Daily, June 25; Dec. 3, 2014; Oct. 9, 2014; Dec. 19, 2013).

WPX produced an average of 22,600 b/d of oil in the Williston Basin during 2Q2015, 20% higher year/year.

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