Penn West Petroleum Ltd. (NYSE: PWE) said on June 10 it would sell its Saskatchewan assets, which include holdings in the Viking region, for C$975 million (US$762.7 million) to Teine Energy, which is backed by the Canada Pension Plan Investment Board.
Penn West, which has come under financial pressure in recent weeks over its large debt burden, will also sell some of its assets in Alberta for about C$140 million.
The Calgary, Alberta-based energy producer said the cash obtained from the sale of its assets would lower its pro forma net debt to about C$600 million. It had C$1.86 billion (US$1.46 billion) in debt as of March 31.
Last month, Penn West said it might default on its debt at the end of the second quarter, as a slump in oil prices over the past two years have hurt highly leveraged companies.
Reuters reported this week that Penn West had received at least four bids from companies for its Viking light oil assets, including Teine Energy.
Teine Energy said the deal would be funded by the Canada Pension Plan Investment Board and its existing credit facilities, according to a statement.
The Canada Pension Plan Investment Board owns 77% of Teine Energy, a Saskatchewan-focused energy producer, and has been an investor since 2010.
J.P. Morgan Securities acted as Teine's financial adviser, while RBC Capital Markets advised Penn West. (US$1 = 1.2777 Canadian dollars)
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