US-based oil and gas firm Ring Energy has signed a purchase and sale agreement to sell its Delaware Basin asset located in Culberson and Reeves Counties, Texas, for $31.5m.

The property comprising approximately 20,000 net acres, with a net daily production of  approximately 575 barrels of oil per day (bpd) and 2,000 thousand cubic feet of natural gas per day (mcf/d), equaling approximately 908 barrels of oil equivalent per day (boepd).

Ring CEO Kelly Hoffman said: “Since formally announcing the marketing of our Delaware property in early November 2019, we have worked very hard to bring about a fair and equitable transaction. As we have stated in the past, the proceeds from this transaction will be used to reduce the current balance on the Company’s senior credit facility.

“The current environment mandates a cautious, conservative approach going forward, and strengthening our balance sheet is a step in the right direction.”

Ring Energy is currently operating in Texas and New Mexico

According to the Cawley, Gillespie and Associates, an independent engineering firm, the property’s 2019 year-end Proved Developed Producing (PDP) reserve estimates, are 3.48 million barrels of oil and 10,055  million cubic feet (mmcf) of natural gas.

The estimates are equivalent to approximately 5,156 million BOE with a PV-10 value of approximately $43m.  The report was completed using average pricing of $52.41 per barrel of oil and $1.47 per MCF of gas.

The company said that it has received a $500,000 non-refundable deposit and is anticipated to complete the transaction in approximately 60 days.

Ring Energy is a US-based oil and gas exploration, development and production company, currently operating in Texas and New Mexico regions.

In April last year, Ring Energy closed its transaction with Wishbone Energy Partners, Wishbone Texas Operating Company and WB WaterWorks (Wishbone) to acquire their Northwest Shelf assets located primarily in southwest Yoakum County, Texas and eastern Lea County, New Mexico.