Penn West Petroleum signed an agreement to sell non-core assets located in south central Alberta for expected proceeds of approximately USD 355M to a private company. The assets are currently producing approximately 7,500 barrels of oil equivalent (boe) per day. The disposition represents less than 5% of the company’s proved and probable reserve base. The company expects the transaction to close in early December 2014.
The sale provides attractive sale metrics of approximately USD 47,000 per flowing barrel. The disposition further reduces Penn West’s well bore count by approximately 2,250 gross wells, which is expected to have a favourable impact on the company’s asset retirement obligation. These assets are considered non-core to Penn West and were not allocated any current or future development capital under the company’s long-term plan.
Dave Roberts, president and CEO commented, “Following closing of this sale, Penn West will have completed over $1 billion in asset sales within the first year of our long-term plan. Further, as a result of these combined divestments, a favourable commodity price environment early in the year and strong operational improvements, we will have reduced our debt position by over $1.2 billion during that same period – a positive step forward in our improvement story.”