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Repsol SA has agreed to sell about 38,000 hectares of oil and gas producing land in Alberta to Canada Pension Plan Investments Board-backed Teine Energy, three sources familiar with the plan told Reuters on Tuesday.

The Spanish oil major will fetch up to $400-million from the sale, one of the sources said.

Repsol and Teine have applied for regulatory approvals for the deal, and anticipate receiving those by the end of September, the sources said. They cautioned that there is no certainty that the Alberta regulators will allow the proposed transaction, and the deal could still fall apart.

CPPIB declined to comment while Repsol and Teine Energy did not respond to requests for comment.

The potential sale includes Repsol’s heavy oil and gas producing assets and the midstream infrastructure supporting these, like a network of about 1,800 kilometres of pipelines, the sources added. They requested anonymity to discuss confidential negotiations.

Reuters reported in February that Repsol was considering the sale of some of its Canadian assets, aiming to cash in on an oil and gas bonanza.

The sale would also allow Repsol to divert cash and efforts in more prolific shale regions, like the Eagle Ford shale play in the United States, or boost renewables investments, the sources said.

Energy prices have receded in recent weeks but remain elevated. Global benchmark Brent crude is up more than 20 per cent so far this year, trading at around US$93 a barrel on Tuesday.

That surge has encouraged oil majors to sell assets in Canada, the fourth-biggest oil-producing nation.

Exxon Mobil Corp. and its Canadian unit Imperial Oil Ltd. sold their XTO Energy Canada joint venture to Whitecap Resources Inc for $1.9-billion in June, while Japan’s JAPEX sold its stake in the Hangingstone oil sands project last year.

Repsol’s website calls Chauvin one of its foundational heavy oil assets, although the company last conducted new drilling in the field at least four years ago, the sources said. Repsol’s production from the field ranges around 6,800 barrels of oil equivalent per day, according to the sources.

After a sale of the Chauvin asset, Repsol will still own land in other gas producing fields across Canada and power infrastructure, among other assets.

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