WPX farms out conventional assets

Farm out: WPX CEO Rick Muncrief applauds deal for conventional assets

Tulsa-based WPX Energy has finalised a farm-in agreement on its conventional Trail Ridge properties in western Colorado’s Piceance basin.

TRDC, a subsidiary of Houston-based G2X Energy, paid operator WPX $40 million in cash for 49% of its working interest in approximately 100 proved developed producing wells.

The working interest sold represents 27 billion cubic feet of proved developed reserves and 46 billion cubic feet of proved undeveloped reserves.

TRDC also committed to a $170 million drilling carry on nearly 400 future wells and will make additional investments for its 49% working interest, WPX said.

The operator will pay 28% of the Trail Ridge development and receive 51% of the production and reserves until TRDC has completed its $170 million funding commitment.

"We're bringing value forward by accelerating the development of what has been a quiet part of our Piceance holdings," said WPX chief executive Rick Muncrief.

"This is a creative way to generate returns that are among the best in our portfolio."

WPX and TRDC plan to jointly develop eight wells in 2014; 25 wells in 2015, 50 wells in 2016 and 100 wells per year in 2017 and beyond.

WPX has approximately 1300 remaining Trail Ridge drilling locations.

The joint development agreement is for the Williams Fork and Iles formations and does not include deeper opportunities in the Mancos and Niobrara shales.

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