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WPX president and CEO Rick Muncrief. Image courtesy of WPX Energy/Facebook.

WPX Energy said Tuesday it has agreed to to sell its wholly owned subsidiary, WPX Energy Rocky Mountain, to Terra Energy Partners LLC for $910 million.

As part of the deal, Terra will assume about $100 million in transportation obligations in exchange for more than $90 million of WPX’s natural gas hedge value.

Oklahoma-based WPX will retain more than $110 million in additional hedge gains that will be realized throughout the year.

The deal marks WPX’s exit from Colorado’s Piceance Basin and is expected to close in the second quarter of 2016.

“The divestiture will greatly enhance WPX’s liquidity, significantly improve its capital efficiency and returns, and materially lower general and administrative expenses going forward,” WPX said.

On a per-barrel equivalent basis, WPX said its 2016 cash operating costs are not expected to change materially following the divestiture.

Upon closing, WPX will hold acreage in the Delaware Basin, located in the Permian Basin, and North Dakota’s Williston Basin along with a leading position in the San Juan Basin.

WPX said it has “a variety of options” for the Piceance proceeds, including leverage reduction, additional drilling, infrastructure investments such as expanding its Permian gathering system and buying out of any retained transportation obligations, including obligations associated with Piceance operations.

The sale follows WPX’s acquisition of assets in the Permian Basin last August where it now holds 94,000 acres representing more than 670,000 prospective net effective acres.

WPX said it expects oil to comprise about half of its future production volumes, up from about 20 percent during 2015.

“Our bias for action and being opportunistic won’t change. We will pursue our very best investment options and continually evaluate how to optimize our assets. We’ve created a balanced portfolio with an excellent runway for sustained value generation,” WPX president and CEO Rick Muncrief said.