Oil and gas producer WPX Energy Inc (WPX.N) said on Tuesday it has agreed to sell natural gas assets in Colorado's Piceance Basin for $910 million to a private firm, in a deal viewed by investors as a bright spot in the sluggish market for oil and gas properties.
WPX said its unit, WPX Energy Rocky Mountain LLC, will be bought by Terra Energy Partners LLC, a private company owned by investment manger Kayne Anderson and private equity firm Warburg Pincus.
A few private equity funds have stepped forward to buy assets from U.S. shale oil producers struggling to stay afloat after a more than 70 percent slide in crude oil prices since the middle of 2014, but many deals have been put on hold.
WPX's transaction offers hope the stalemate between buyers and sellers may be coming to an end.
Shares of WPX, which said proceeds from the deal will boost liquidity and may be used to pay down debt, rose 2.7 percent to $4.64 on the New York Stock Exchange.
Analysts at energy-focused investment bank Tudor Pickering Holt said the deal "bodes well for (exploration and production companies) in divestiture mode."
WPX Energy Rocky Mountain holds assets that include about 200,000 net acres, with net production of about 500 million cubic feet equivalent per day.
WPX Energy, which is focused on its operations in Texas's Permian basin, expects oil to comprise about half of its production volumes going forward, up from roughly 20 percent during 2015.
Terra will also get more than $90 million of natural gas hedges and, in exchange, assume about $100 million of WPX Energy's transportation obligations.
Terra has secured an equity commitment of $800 million from existing investor Kayne and new investor Warburg Pincus, to fund the deal, which is expected to close in the second quarter.
(Reporting by Anet Josline Pinto in Bengaluru and Anna Driver in Houston; Editing by Don Sebastian, Savio D'Souza and Paul Simao)