An oilfield pump jack, belonging to Penn West ExplorationLARRY MACDOUGAL/The Canadian Press
Penn West Petroleum Ltd. has struck a deal to sell Saskatchewan oil assets for $975-million, easing the risk of default for the debt-saddled producer.
Penn West said late on Friday the buyer is Teine Energy Ltd., which is backed by the Canada Pension Plan Investment Board.
The assets, which include properties in Penn West's Dodsland Viking area, produce about 13,600 barrels of oil equivalent per day. The deal is expected to close in the second quarter.
Penn West has been selling assets to raise cash as it seeks breaks from its lenders on debt terms. The company had earlier warned it is a going-concern risk and that it could default on various debt obligations by the end of June without concessions.
However, it now expects to be in compliance with its financial covenants at the end of the second quarter and for the remainder of the year, it said in a release.
In a separate deal, the company said it sold some Alberta properties with production of 3,100 boe/d for $140-million. So far this year, the company has generated about $1.3-billion in cash from asset sales.
RBC Capital Markets acted as the sole financial advisor for Penn West on the transactions.