Under the terms of the deal, Chaparral Energy will sell the EOR assets in the North Burbank play in north Oklahoma and in the Texas Panhandle for $170m cash plus certain contingent payments.
Chaparral Energy CEO Earl Reynolds said: “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.”
The proceeds from the sale will be used by the firm to further reduce its debt, increase liquidity and strengthen balance sheet.
Reynolds added: “The sale will also materially lower our overall total operating cost structure, which we view as critical in this volatile commodity price environment.”
The agreement, which is subject to satisfaction of certain customary closing conditions, is planned to be completed in November 2017.
Chaparral said that its 2017 production guidance, including its EOR assets, was 8.3 to 8.7 million barrels of oil equivalent. This included an anticipated 45% year-over-year increase in STACK production ranging from 9,100 to 9,500 barrels of oil equivalent per day (Boe/d).
The EOR assets are currently estimated to have production capacity of approximately 5,700 Boe/d.
As per the joint development agreement, BCE agreed to fund 100% of the drilling, completion and equipping costs associated with 30 joint venture STACK wells.
