Penn West completes sale of Saskatchewan assets for $747m

Penn West Petroleum has completed the previously announced sale of its Saskatchewan assets, including its Dodsland Viking area in Canada to Teine Energy for approximately C$975m ($747m).

The assets are split almost evenly between medium, as well as heavy, oil properties in the west and the Dodsland light-oil properties in the east.

Penn West Petroleum senior vice-president and chief financial officer David Dyck said: "We expect to be in full compliance with all of our financial covenants at the end of the second quarter and anticipate the removal of the going concern note from our financial statements in the near future.

"As the benefits of our improved capital structure become more visible to investors over the coming months, we believe the market will close the valuation gap in our stock price."

The company further plans to continue to execute on the second phase of its asset disposition programme over the coming months.

As part of the deal, Teine Energy acquired a core position within the Saskatchewan Viking light oil play, as well as low decline conventional Bakken heavy oil properties.

Teine Energy president and CEO Jason Denney said: "This was an increasingly rare opportunity to acquire a scalable high netback oil position within one of North America’s most economic light oil plays."

The company has identified more than 1,000 undeveloped Viking horizontal drilling locations, which include extended reach horizontal opportunities within the acquired lands.

The asset includes about 7,000 bbl/d of low decline conventional Bakken heavy oil pools, of which 98% are under water flood.

Teine said that the acquisition will add to the company’s infrastructure and increase its owned and operated oil treating capacity to about 55,000 bbl/d and water treating and injection capability to more than 200,000 bbl/d.