NEW YORK (TheStreet) -- WPX Energy (WPX) - Get Report stock is up by 6.98% to $5.52 in mid-morning trading on Thursday, after the company sold its San Juan Basin gathering system for about $309 million.
The Tulsa, OK-based energy company sold the gathering system to a portfolio company of ISQ Global InfrastructureFund, which is a fund managed by I Squared Capital, WPX said in a statement on Thursday.
The agreement is expected to close in the first quarter of 2016.
WPX will operate the gathering system in San Juan, which is located in New Mexico, for at least two more years.
"I'm pleased with the success of our asset sales," WPX CEO Rick Muncrief said in a statement on Thursday. "We exceeded our 2015 target and will continue to prioritize debt reduction in 2016."
Separately, recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate WPX ENERGY INC as a Sell with a ratings score of D+. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its unimpressive growth in net income, generally high debt management risk, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 471.0% when compared to the same quarter one year ago, falling from $62.00 million to -$230.00 million.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 50.55%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 291.30% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- WPX's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that WPX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.52 is low and demonstrates weak liquidity.
- Net operating cash flow has decreased to $199.00 million or 23.16% when compared to the same quarter last year. Despite a decrease in cash flow of 23.16%, WPX ENERGY INC is in line with the industry average cash flow growth rate of -26.85%.
- WPX ENERGY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WPX ENERGY INC turned its bottom line around by earning $0.62 versus -$5.43 in the prior year. For the next year, the market is expecting a contraction of 154.8% in earnings (-$0.34 versus $0.62).
- You can view the full analysis from the report here: WPX