Clayton Williams Energy, Inc. (CWEI) announced that it had entered into a transaction with a financial investor to monetize 95 percent of its Wolfberry oil and gas reserves, leasehold interests and facilities located in Andrews County, Texas for $214 million, subject to customary closing adjustments.
These assets accounted for approximately 21 percent of the company's total proved reserves at December 31, 2012 and approximately 16 percent of its total oil and gas production for the quarter ended December 31, 2012.
The company plans to use this transaction proceeds to reduce the amount outstanding on its revolving bank credit facility. At closing of the transaction, the borrowing base under the facility will be reduced from $585 million to $470 million to account for the release of collateral, providing the company with approximately $99 million of additional availability under the facility.
In connection with the transaction, the company will contribute 5 percent of these assets to a newly formed limited partnership in exchange for a 5 percent general partner interest, and the partnership will purchase the remaining 95 percent of the assets.
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