CALGARY—Penn West Petroleum Ltd. has announced it will sell its assets in the Greater Mitsue area of Central Alberta for $192.5 million. The company plans to use the proceeds from the all-cash deal to reduce its senior debt.
“This disposition marks another critical milestone in our ongoing strategic focus to reduce debt,” David Dyck, senior vice-president and CFO of Penn West, said. “Despite the current weakness in commodity prices, we continue to demonstrate the ability to complete non-core asset dispositions at attractive deal metrics. We believe that our non-core assets offer value to buyers who are better positioned to realize their potential.”
Penn West said upon completion of the Mitsue sale, the company will have raised approximately $605 million this year as it combats lower commodity prices. The Calgary-based company had already announced it would cut 35 per cent of its workforce, put off capital spending and suspend its dividend earlier this month.
“In addition, since the end of Q2 2013, we will have divested an estimated 34,000 barrels of oil per day of non-core assets for proceeds of approximately $1.7 billion, which has allowed us to reduce our debt by approximately $1.4 billion, representing a reduction of more than 40 per cent,” the company said.
The sale is subject to customary conditions and is expected to close in the fourth quarter of 2015.