Chaparral Energy Inc. agreed to sell its North Burbank and Texas Panhandle enhanced oil recovery assets to an undisclosed buyer for $170 million, plus certain contingent payments, in a deal that "marks a major milestone" in the company's transition to a pure-play STACK operator.
The deal is expected to close in November, subject to customary closing conditions.
Aside from the cash consideration at closing, Chaparral Energy will receive contingent payments through December 2020 on a portion of the buyer's unhedged production volumes, where the price received is higher than the buyer's hedged prices. Under the terms of the agreement, which include an effective sale date of June 1, Chaparral Energy has received an $11.9 million performance deposit, according to an Oct. 13 news release.
Chaparral Energy CEO Earl Reynolds said the proceeds from the deal would help reduce debt, increase liquidity, strengthen the company's balance sheet and lower its total operating cost structure.
The company's previously stated 2017 production guidance, including its enhanced oil recovery assets, was 8.3 million to 8.7 million barrels of oil equivalent, which includes an anticipated 45% year-over-year increase in STACK production ranging from 9.1 Mboe/d to 9.5 Mboe/d. Estimated current production associated with the enhanced oil recovery assets is approximately 5.7 Mboe/d.
Chaparral Energy is an independent oil and natural gas exploration and production company with focused operations in Oklahoma's fast-growing STACK Play.