Amplify Energy Corp. has signed a definitive agreement to sell its interest in properties located in South Texas to an undisclosed buyer for a contract price of $20 million, the company said on March 13.

The net proceeds from the sale are expected to be used to reduce outstanding borrowings under the company’s existing revolving credit facility. Pro forma for this sale, the company expects to have net debt of approximately $320 million under its revolving credit facility. Additionally, the divestiture of these mature gas assets will significantly reduce the company’s future abandonment liabilities.

The South Texas properties consist of 98,000 net acres in Live Oak, McMullen, Webb, and Duval counties. Fourth-quarter net production for the South Texas properties was 16 million cubic feet per day of oil equivalent coming from over 500 gross producing wells with proved developed producing reserves of 52.4 billion cubic feet of oil equivalent (88% natural gas), based on SEC proved developed producing reserves as of year-end 2017. At current strip, proved developed producing PV10 is approximately $21.8 million.

“This sale of noncore assets is a step forward in the ongoing transformation of Amplify Energy to a low-cost, streamlined, growth-oriented enterprise. The company continues to execute on its business plan by reducing debt, accelerating investment in our East Texas properties, and driving capital and operational efficiencies across all areas of our business,” Bill Scarff, Amplify’s CEO, said.

The sale is expected to close in the second-quarter of 2018.

TenOaks Energy Advisors LLC acted as Amplify Energy’s sole financial advisor and Kirkland & Ellis LLP acted as its sole legal counsel during the transaction.