Chaparral Energy Inc. closed the sale of its North Burbank and Texas Panhandle EOR assets as the company transitions into a pure-play Stack operator, the company said Nov. 20.

Chaparral, based in Oklahoma City, sold the assets and average production of about 5,700 barrels of oil equivalent per day (boe/d) to Perdue Petroleum for $170 million. The deal includes contingency payments through December 2020.

The sale represents 23% of Chaparral’s total production, which averages 24,500 boe/d.

“We are pleased to announce that the close of this sale effectively completes Chaparral’s transition to a pure-play Stack operator,” said Chaparral CEO Earl Reynolds said in a news release. “Our transition away from EOR operations will allow us to focus our capital and operational activity almost exclusively on accelerating the development of our more than 3,500 Stack drilling locations across our 110,000 net acre position in Kingfisher, Garfield and Canadian counties.”

The company used the proceeds from the sale to fully repay the outstanding $149.2 million balance on its term loan and will also repay a portion of its credit facility.

In addition, the company’s bank lending group has confirmed its $225 million borrowing base under its bank credit facility following the sale and associated monetization of certain commodity derivatives.

Pro forma for the divestiture, the company’s liquidity is about $105 million.

“Chaparral remains focused on maintaining a strong balance sheet through capital discipline, spending within cash flow and potential future noncore asset sales,” said Reynolds. “By fully repaying our term loan and a portion of our credit facility balance, we are able to secure the financial flexibility necessary to position us for future growth and ensure our ability to thrive even in a $40 to $60 oil environment.”

CIBC Griffis Small served as financial advisor for this transaction.