Proceeds from WPX Energy Inc.’s (NYSE: WPX) agreement to sell its gas-producing properties in the San Juan Basin and its Permian Basin midstream joint venture (JV) will add more than $500 million to the company’s coffers, the company said in November.

WPX agreed to sell about 130,000 net acres in the San Juan in northern New Mexico and southern Colorado to an undisclosed buyer for $169 million, the company said Nov. 2. WPX’s oil operations in the San Juan Basin’s Gallup oil play are not included in the sale.

The company’s board of directors previously determined it only would sell the assets at a minimum price, which was not disclosed. Revenues in the San Juan Basin assets, which have been held for sale, were about $58 million for the nine months ending Sept. 30.

“We’ve been checking a lot of boxes on our to-do list,” Rick Muncrief, WPX chairman, president and CEO said during Nov. 2 earnings call.

He said the company had set out to divest the San Juan asset by the end of the year and closing is set for December.

“With that transaction, we'll be approximately 80% liquids,” he said, referring to the company’s production mix.  The San Juan assets sold produce about 75 million cubic feet of natural gas per day.

“WPX is positioned to decrease net leverage to [less than] 2.5x by fourth-quarter 2018 and be free cash flow positive in 2019,” said Charles Robertson II, an analyst at Cowen and Co.

WPX executives said they are also contemplating selling some Delaware assets that branch off from their core areas.

Bryan Guderian, WPX’s senior vice president of development, said on the conference call that the company is at a point where it is ready to high-grade its portfolio.

“We have a few areas that are somewhat extensional or step-outs from our core footprint, but still very much in the core of the basin. And so, without telegraphing too specifically what we intend to do, we do see opportunities to bring some cash forward” for areas that don’t generate EBITDA.

“We’re actually seeing a number of our peers do a similar thing,” he said. “There continues to be a pretty deep market on the buy side for quality assets in the Delaware.”

WPX also said it had closed its 50/50 JV with Howard Energy Partners to develop oil and natural gas gathering and processing infrastructure in the Stateline area of Delaware Basin.  In October, WPX received a special cash distribution of $300 million and reimbursement for $49 million of 2017 capital expenditures. Howard will fund the first $263 million of the JV’s capital expenditures, including a $132 million carry for WPX.

“We also completed our Permian Midstream JV transaction, receiving $349 million in cash and setting up a vehicle to create even more future value for investors,” Muncrief said. “We’re looking forward to working closely with the Howard team.”

WPX will dedicate current and future leasehold interest in the Stateline area to the partnership—about 50,000 net acres in the Delaware Basin. The company entered 20-year, fixed-fee oil gathering and natural gas processing agreements but is not committed to producing minimum volumes for the infrastructure.

Barclays’ analyst Thomas Driscoll noted that the company has completely transformed its asset base from gas to oil within the past three to four years through roughly $6 billion of A&D activity from the Marcellus, Powder River and Piceance basins to its $2.7 billion entry into the Delaware in 2015.

“WPX’s oil cut has shifted from 46% to 58% and the mix will only become oilier after it divests its San Juan gas acreage later this quarter,” Driscoll said in a Nov. 7 report. In its third-quarter earnings report, WPX also raised oil growth guidance for the year to 45%, up five percentage points.

Darren Barbee can be reached at dbarbee@hartenergy.com.