WPX stock is sinking today after US-based energy producer WPX Energy (NYSE:WPX) announced that it completed its acquisition of Delaware Basin-based operator Felix Energy.
Felix Deal Completed Ahead of Schedule
The US$2.5 billion acquisition was first announced back in December and brings an additional 60,000 barrels of oil equivalent per day (boepd) to WPX’s production capacity, which now totals more than 150,000 boepd across assets in the Delaware and Williston basins. The cash-and-stock takeover will see Felix Energy financial sponsor EnCap Investments receive around 153 million shares of WPX stock and a cash consideration of US$900 million. D Martin Philips and Douglas E Swanson Jr of EnCap Investments will also join the board at WPX.
WPX Energy Chairman and CEO Rick Muncrief said, “I want to thank the Felix team for working with us to complete the transaction a month ahead of schedule while still hitting our expectations for production at the time of closing. We remain absolutely convinced about the accretive nature of the transaction and the outstanding quality of these assets. They overlie a tremendous resource that clearly gives us the means for accelerating our ability to achieve our five-year targets for shareholders.” WPX stock is currently trading for $3.77.
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Oil Price War Leads to Collapse in WPX Stock
While the takeover complements the energy firm’s operations in the eastern portion of the Permian’s Delaware Basin, WPX shares are down a massive 40% as oil prices see their largest fall since 1991 amid an escalating price war between Saudi Arabia and Russia. The declining oil prices, coupled with the spreading coronavirus, have led to a massive market meltdown today, which prompted a 15-minute suspension in trading on the NYSE after a “circuit breaker” was tripped to prevent further losses.
WPX stock had been enjoying a relatively prosperous few months, gaining almost 60% in the latter half of 2019. However, having been valued as high as $14.14 in early January, the stuttering global economy has seen the energy stock fall to its lowest valuation in four years with no sign of a halt in the decline.
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