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What happened

Shares of Clayton Williams Energy (NYSE: CWEI) rocketed higher on Tuesday, closing up 26%. Fueling the surge was news of the sale of its Giddings Area assets, as well as the hiring of a Noble Energy (NBL) senior executive as its COO.

So what

Clayton Williams Energy announced it is selling all of its Giddings Area assets in East Central Texas for $400 million. It plans to use the proceeds to repay some debt, and to fund the development of its Delaware Basin assets.

With this move, the company will have completed a stunning transformation since the start of the year. The company has slowly stepped away from the precipice, and is now a well-capitalized driller, focused on the development of a substantial acreage position in the hottest oil play in the country.

Clayton Williams started the year in disarray, so much so that it's leadership initiated a strategic review to enhance shareholder value  -- and to keep it from going under after oil prices plunged in the second half of 2015. Conditions were so tenuous that the company initially only had the financial resources to drill a handful of wells. However, it was able to secure a term loan from a private equity fund, which -- combined with non-core asset sales, an equity issuance, and improving oil prices -- enabled the company to get back on solid ground.

Further, amid all the troubles it was enduring at the start of the year, the company was able to strengthen its position in the Southern Delaware Basin by swapping acreage with Concho Resources (CXO). Under the terms of that deal, Clayton Williams traded all of its acreage -- subject to a farm out agreement with Chesapeake Energy (CHKA.Q) -- for additional working interests in leases owned by Concho. The net result was that Clayton Williams increased its working interest in its core acreage, which gave it more operational control, while Concho will work with Chesapeake on those farm-out leases.

Now, the company is planning to retake control of its destiny by reinvesting capital into its prime Delaware Basin acreage to accelerate production growth. To steer that development, the company hired Patrick Cooke away from Noble Energy to serve as its new COO. That is noteworthy because Cooke's previous position gave him direct management responsibility for the development of Noble's emerging Delaware Basin position.

Now what

Clayton Williams Energy has transformed itself from a deeply indebted driller with limited resources into a cash-rich company targeting the best oil growth play in the country. Because of that, the company is poised to deliver substantial production growth as the oil market continues its recovery.