Clayton Williams Energy, Inc. reported that it had recently closed two asset sales. On April 25, 2008, the Company and its affiliates sold all of their interests in 16 producing wells in South Louisiana to EnergyQuest II, LLC, a Quantum Energy Partners IV, LP portfolio company, for approximately $95 million, based on an effective date of March 1, 2008 and subject to customary closing adjustments. The assets that were sold in this transaction represented about half of the Company's proved developed reserves in South Louisiana.
The Company retained its interests in the Floyd, Alabama and Fleur prospects, as well as all of its holdings in other undeveloped prospects in South Louisiana. None of the Company's holdings in North Louisiana were included in this sale. The Company expects to record a gain of approximately $33 million in the second quarter of 2008 in connection with this transaction. Proceeds from the sale were used to repay indebtedness on the Company's revolving credit facility, reducing the balance outstanding on the facility to approximately $60 million on the closing date.
Also, on April 23, 2008 the Company sold a surplus well servicing unit to an undisclosed buyer for $1.8 million. In 2007, the Company recorded a loss on impairment of $1.1 million to reduce the carrying value of this asset to its estimated fair value of $1.5 million. The Company will record a gain of approximately $300,000 on the sale of this asset in the second quarter of 2008.
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