OKLAHOMA CITY, Oct. 13, 2017 (GLOBE NEWSWIRE) — Chaparral Energy, Inc. (OTCQB:CHPE) announced today that it has entered into a definitive agreement to sell its North Burbank and Texas Panhandle enhanced oil recovery (EOR) assets for $170 million cash plus certain contingent payments, subject to customary closing adjustments, to an undisclosed buyer.
“The sale of these assets marks a major milestone in the transition of Chaparral to a premiere pure-play STACK operator. Our teams will now be able to further focus our capital, activity and operational knowledge exclusively on accelerating development of our highly economic STACK inventory,” said Chief Executive Officer Earl Reynolds. “In addition, the proceeds from this transaction will allow us to further reduce our debt, increase liquidity and strengthen our already strong balance sheet. The sale will also materially lower our overall total operating cost structure, which we view as critical in this volatile commodity price environment.”
Closing is expected in November 2017 and is subject to satisfaction of certain customary closing conditions. In addition to the cash consideration at closing, the agreement provides for contingent payments to Chaparral 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, 2017, and contain customary representations, warranties, covenants and indemnities by the parties, Chaparral has received an $11.9 million performance deposit.
Chaparral’s previously stated 2017 production guidance, including its EOR assets, was 8.3 to 8.7 million barrels of oil equivalent, which includes an anticipated 45 percent year-over-year increase in STACK production ranging from 9,100 to 9,500 barrels of oil equivalent per day(Boe/d). Estimated current production associated with the EOR assets is approximately 5,700 Boe/d.
The company will provide more details about this transaction, year-end expectations and future development plans on its third quarter earnings call in early November.
Chaparral is an independent oil and natural gas exploration and production company headquartered in Oklahoma City. Founded in 1988, Chaparral is a leading Mid-Continent operator with focused operations in Oklahoma’s fast-growing STACK Play. The company has potential production reserves of more than 1 billion barrels of oil equivalent and approximately 400,000 net surface acres, of which approximately 110,000 acres are in the highly economic STACK Play. For more information, please visit chaparralenergy.com.