WPX Energy is nearing a close to its $2.8 billion Permian deal, with the company saying it intends to wrap up the deal before the end of August.

Now comes the tricky part for WPX: paying for its giant acquisition from privately held RKI Exploration & Production LLC.

WPX has a multi-pronged strategy for clearing up its balance sheet, including selling up to $1 billion in assets by the end of 2016. But with oil prices fluctuating, what the assets command on the market is a question. A planned divestment for WPX in March, for instance, imploded because of the energy market.

Robert Du Boff, analyst, Oppenheimer & Co., said he likes the company’s shift to liquids long-term, including the RKI transaction. But he’s cautious because of the risks the company is faced with, including “integrating and ramping up the Permian assets and substantial divestments, particularly in the face of oil price uncertainty.”

In the third quarter of 2014, WPX signed an agreement to sell its coalbed methane holdings in the Powder River Basin for $155 million. However, the buyer was unable to raise the money needed because of the upheaval in the oil industry.

WPX now has the same asset on the table and a signed agreement to sell it for $80 million. The company said in an SEC filing that it expects a loss of up to $20 million on the transaction. It expects the deal to close by the end of 2015.

In connection with the Permian transaction, WPX wants to sell much more. It is targeting $400-$500 million in asset divestitures by the end of 2015 and another $400-$500 million in 2016.

The company also said it has several options to reduce leverage, including attractive midstream infrastructure in core basins. It has identified possible divestiture candidates such as the Williston Van Hook gathering system; San Juan oil, gas and water assets; and Piceance water system.

With about $2 billion in long-term debt, WPX will be using a variety of methods to pay for the acquisition, including cash, equity for RKI owners and equity. WPX said it would fund the acquisition by selling 40 million WPX shares for about $470 million. It also has cash on hand of about $300 million and $1.6 billion from new debt/equity offerings.

Second Quarter Earnings

For the second quarter of 2015, WPX reported a loss of $0.11 per share, in line with Du Boff’s estimates.

In June, WPX decided to ramp back up activity in the Williston Basin by working down its inventory of 14 uncompleted wells while reallocating a second rig from the Piceance in August and adding a third in November, Du Boff said.

“Despite greater frac intensity, well costs are down over 30% to about $8 million,” Du Boff said.

While WPX cut capex for the quarter by 47% compared to the same period last year, WPX increased its oil output by 37% in the second quarter of 2015. However, the increase in production couldn’t compensate for lower prices, with oil revenue falling $49 million in the second quarter, a 25% decrease from the second quarter of 2014.

WPX has plans to supersize the Permian after it closes with RKI. WPX wants to focus on drilling the Wolfcamp A, Second Bone Springs, and vertical Delaware Sands, particularly around the core Stateline field, Du Boff said.

The company will also test additional horizons and enhanced drilling and completion techniques. RKI is currently fracking with up to 1,000 pounds per foot of proppant on its completions while many peers are using double that.

WPX said it will ramp up from four rigs in the Permian, with six in 2015, eight in 2016 and 11 in 2017.

Du Boff said that would make it WPX’s most active play.

Contact the author, Darren Barbee, at dbarbee@hartenergy.com.