Birmingham, AL-based Energen Corp. said this week it has signed an agreement with an undisclosed buyer to sell its Black Warrior Basin coalbed methane (CBM) assets in Alabama for $160 million plus standard closing adjustments. The company expects the sale to close in early October with an effective date of July 1, 2013.

Energen, which had about 750 million boe proved, probable and possible reserves at year-end 2012 — primarily in the Permian and San Juan basins — said it plans to use proceeds to reduce short-term debt.

As of Dec. 31, proved reserves associated with Energen’s Black Warrior Basin properties totaled 97 Bcf. In addition to the CBM properties, the buyer, which is a limited liability corporation, will assume Energen’s third-party operating agreements.

Alabama CBM sales have decreased every year since 2004, and the annual declines have been accelerating more recently. After falling 0.8% and 0.7% in 2006 and 2007, respectively, Alabama CBM sales were down 2.6% in 2008, 3.6% in 2009, 4.7% in 2010, 5.9% in 2011, and 6.4% in 2012.

After adjusting fourth quarter production by about 0.4 million boe for the sale of the assets, Energen’s revised production guidance range from all operations for 2013 is 25.7-26.1 million boe. Energen’s preliminary estimates of 2013 production and income from discontinued operations (excluding a gain on the sale) are, respectively, 1.4 million boe and $11 million (15 cents/share).

In late July the company touted test results in sub-basins to the Permian Basin (see Shale Daily, Aug. 1). Energen Resources Corp., a unit of Energen, said its first well to test the upper Wolfcamp Shale in the Midland Basin and three upper Wolfcamp wells in the Delaware Basin have shown “excellent results.”

Energen Corp. CEO James McManus said the “outlook for success” in both basins has greatly improved. “Energen could well be a major driller in the Permian Basin for many years to come,” he said. “Large-scale success in multiple benches of the Wolfcamp could result in more than 5,300 unrisked locations based on 80-acre spacing and 4,400-foot laterals. Even heavily risked, Energen’s Wolfcamp potential is significant.”

The company’s plans for 2H2013 are to add a horizontal rig in the Midland Basin and increase the number of wells drilled during the year from six to nine.