Pending Felix Acquisition

12 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

Pending Felix Acquisition

On December 15, 2019, we entered into a Securities Purchase Agreement (the "Purchase Agreement") with Felix Investments Holdings II, LLC ("Felix Parent") to acquire all of the issued and outstanding membership interests of Felix Energy ("Felix") (collectively, the "Felix Acquisition"), for consideration of approximately $2.5 billion (the "Unadjusted Purchase Price"), consisting of $900 million in cash (the "Unadjusted Cash Purchase Price"), and 152,963,671 unregistered shares of our common stock (the "Unadjusted Equity Consideration") determined by dividing $1.6 billion by $10.46, the volume weighted average per share price of the Company for the ten consecutive trading days ending on December 13, 2019. The Unadjusted Purchase Price is subject to certain customary closing adjustments set forth in the Purchase Agreement. If certain closing adjustments are positive, the Unadjusted Cash Purchase Price is adjusted and if certain closing adjustments are negative, the Unadjusted Equity Consideration is adjusted. WPX plans to fund the cash portion through the issuance of $900 million of senior notes (see "Financing Transaction" below). We expect to close the Felix Acquisition in the first quarter of 2020, subject to satisfaction of customary closing conditions and pending shareholder approval. As of December 31, 2019, we have accrued approximately $3 million of acquisition bridge facility fees, included in interest expense, and approximately $3 million of acquisition costs, primarily related to legal and advisory fees, reflected on a separate line item on the Consolidated Statement of Operations. Additional expenses will be incurred upon closing.

Felix Parent has a senior secured notes facility pursuant to that certain Note Purchase Agreement, dated as of August 9, 2017 (as amended, restated, amended and restated, supplemented and otherwise modified prior to the date hereof, the "Felix Parent Notes Facility"), and Felix has a reserve-based revolving credit facility pursuant to that certain Credit Agreement dated as of July 1, 2016 (as amended, restated, amended and restated, supplemented and otherwise modified prior the date hereof, the "Felix Revolving Credit Facility" and together with the Felix Parent Notes Facility, the "Felix Debt Facilities"). The Felix Parent Notes Facility is secured by a lien on the equity of Felix and certain of Felix's assets. As a condition to and simultaneous with the closing of the Felix Acquisition, all remaining amounts outstanding under the Felix Debt Facilities are to be repaid in order to cause the release of such liens and terminate the facilities. Any amounts outstanding under the Felix Debt Facilities that are repaid from the Unadjusted Cash Purchase Price in connection with and simultaneous with the closing of the Felix Acquisition will result in a reduction in the Unadjusted Cash Purchase Price received by Felix Parent. Furthermore, in connection with entering into the Purchase Agreement, Felix Parent received commitments from certain of its affiliates to finance the repayment of any amounts outstanding under the Felix Debt Facilities to the extent such amounts outstanding exceed the Unadjusted Cash Purchase Price subject to certain adjustments.

Pursuant to the Purchase Agreement, Felix Parent will receive our common stock as consideration and Felix Parent (and/or certain of Felix Parent's direct or indirect equity holders) will have registration rights with respect to such common stock. Following the acquisition, Felix will be our wholly-owned subsidiary.

Felix is engaged in the acquisition, development and production of oil and gas properties in the Permian Basin, and more specifically in the Delaware Basin sub-area. All of Felix's Permian properties are located in the Delaware Basin and include approximately 58,500 net acres with six productive benches, with core operations located in Loving, Reeves, Ward and Winkler counties in Texas. Felix has assembled a multi-year inventory of approximately 1,500 gross drillable locations.

Financing Transaction

On January 10, 2020, we completed our debt offering of $900 million aggregate principal amount of 4.50% senior unsecured notes due 2030 (the "2030 Notes"). The proceeds were deposited into an escrow account upon the closing of the offering. Upon release from escrow, WPX intends to use the proceeds to finance a portion of the cash consideration of the Felix Acquisition and to pay certain fees and expenses.

The Notes are the Company’s senior unsecured obligations ranking equally with the Company’s other existing and future senior unsecured indebtedness. The 2030 Notes bear interest at a rate of 4.50% per annum and were priced at 100.0% of par. Interest is payable on the 2030 Notes semi-annually in arrears on January 15 and July 15 of each year commencing on July 15, 2020. The 2030 Notes will mature on January 15, 2030. At any time prior to January 15, 2023, the Company may, on one or more occasions and subject to certain conditions described in the Indenture, redeem up to 35% of the aggregate principal amount of the Notes at a redemption price equal to 104.5% of the principal amount of the Notes redeemed with an amount of cash not greater than the net proceeds that the Company raises in certain equity offerings, as described in the Indenture. The Company also has the option, at any time prior to January 15, 2025, on one or more occasions, to redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus a specified “make whole” premium as described in the Indenture. At any time on or after January 15, 2025, the Company may, on one or more occasions, redeem the Notes, in whole or in part, at the applicable redemption prices set forth in the Indenture. The Indenture contains covenants that, among other things, restrict the Company’s ability to grant liens on its assets and merge, consolidate or transfer or lease all or substantially all of its assets, subject to certain qualifications and exceptions.