Another pure play Permian Basin company is born.

Clayton Williams Energy Inc. (NYSE: CWEI) said Oct. 24 that it will sell its oily East Central Texas Giddings asset to an undisclosed party for $400 million.

The transaction will free up capital for the company’s Delaware Basin holdings in Reeves and Ward counties in Texas. Some of the proceeds will also be used to pay debt.

The Giddings Field produces about 3,900 barrels of oil equivalent per day (boe/d), 80% of which is oil. The deal will lop off about one-third of the company’s second-quarter 2016 production; Giddings’ proved reserves were 9.7 MMboe as of Sept. 30.

The company has about 160,000 net acres in the field.

Clayton Williams sold its acreage for $1,500 per acre at an assumed price of $40,000 per flowing boe/d, Seaport Global Securities said in an Oct. 25 report.

Clayton Williams’ focus will now turn to the Permian Basin, where it holds 170,000 net acres. The company had one rig drilling in Reeves as of Sept. 22.

“We are glad to see CWEI making a move in divesting the Giddings Field to focus on the Permian, especially in light of how much costs have come down in the Delaware Basin and drilling in the area has largely de-risked CWEI’s acreage,” said Irene O. Haas, an analyst at Wunderlich Securities Inc.

And more changes are afoot for Clayton Williams.

The company said Oct. 24 that it has hired a new COO, Patrick G. Cooke. Cooke most recently managed Noble Energy Inc.’s (NYSE: NBL) Texas business unit, where he had direct management responsibilities over Noble’s Delaware assets.

With a new team in place and a deal to sell an asset, which Haas put little value in, it’s still not clear how Clayton Williams will get back to growth.

“There is still a long list of unknowns,” Haas said. “We don’t know how much of the proceeds from the sale will go toward debt reduction and funding 2017 drilling. We don’t know what the new team has planned for 2017, such as capex, rig counts and production profile, and how fast the company can ramp up production in Reeves County to replace the Giddings production.”

Seaport Global said a two-rig program in second-half 2017 will help Clayton Williams de-lever faster. The firm also said it foresees more asset sales of noncore Permian acreage and a potential pipeline joint venture.

Goldman Sachs & Co. served as exclusive financial adviser and Vinson & Elkins served as legal adviser to the company on the transaction.

Darren Barbee can be reached at