The Federal Trade Commission has given early clearance to the acquisition of WPX Energy Inc.’s (NYSE: WPX) San Juan Basin gathering system.

On Dec. 31, WPX said it would sell the gathering system for about $309 million to a portfolio company of ISQ Global Infrastructure Fund, a fund managed by I Squared Capital. The company has also increased its hedge position and paid off debt due in 2017 as it seeks to decrease its leverage.

The San Juan Basin deal calls for WPX to receive $285 million cash and an estimated $24 million in capital designated by ISQ to expand the system supporting the company’s development in the Gallup oil play.

At closing, expected in the first quarter of 2016, the gathering system will consist of more than 220 miles of oil, gas and water gathering lines installed in conjunction with WPX’s drilling in the Gallup oil play.

WPX has said it will use the proceeds to improve its leverage. In August, WPX purchased RKI Exploration & Production LLC’s Permian holdings for $2.75 million.

The company held net debt of $3.2 billion as of Dec. 31, consisting of $3 billion in notes and the remainder primarily in revolver borrowings. It has since embarked on a campaign to divest up to $1 billion in assets through 2016.

With its last deal of 2015, the San Juan Basin midstream assets would increase WPX’s divestitures to $575 million for the year.

Hedges, Deals, Debts

On Jan. 20, the company said it reduced its long-term debt by repurchasing $68 million in notes or about 17% of a $400 million maturity due in early 2017 at a discount to par. The company’s next debt maturity does not occur until 2020.

With its 2017 notes in mind, WPX Energy also added more hedges to prop up cash flows.

About three-fourths of WPX’s 2016 anticipated oil volumes are hedged well above current prices, the company said. The company now has 29,380 barrels per day (bbl/d) of oil hedged at $60.85/bbl in 2016. This includes another 2,000 bbl/d added since the company’s most recent quarterly report.

Roughly two-thirds of WPX’s anticipated 2016 natural gas production is hedged at $3.63 per million British thermal units (MMBtu). For 2017, WPX has 9,304 bbl/d of oil hedged at $61.66 per barrel and 92,500 MMBtu/d of natural gas hedged at $3.22.

WPX said it remains engaged in discussions with third parties relating to the disposition of all or a portion of its assets in the Piceance Basin, where it holds 200,000 acres and about 11,000 gross drilling locations.

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