Penn West Petroleum Ltd retreats from one of its core areas, selling Slave Point in northern Alberta for $148M

CALGARY — Penn West Petroleum Ltd. says it has negotiated the sale of an additional $230 million of assets, including a formerly core property in the Slave Point section of northern Alberta.

The Slave Point transaction may be worth $148 million. The sale of non-core assets will prove to add an additional $80 million in cash.

Penn West says the sale of Slave Point will reduce its overall operating costs.

It also expects to have room to build up and grow through its Cardium play south of Slave Point and its Viking play on the Alberta-Saskatchewan border.

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It says the effective sale date for the Slave Point transaction is going to be Jan. 1 and also the deal is expected to close throughout the second quarter of 2016. The sale of non-core assets can also be to close during the second quarter.

Since the start of 2015, Penn West has completed or arranged $1 billion in cash asset sales.

“Although Slave Point is definitely our core assets, because of the current outlook for commodity prices, we’d no development activity planned for at least the balance of the year,” Penn West chief financial officer David Dyck said Monday.

“While we believe that Slave Point offers upside, the extension in our Viking play and recent Cardium performance provide us with ample development and growth opportunities and also the most attractive rates of return in our portfolio. We’re confident that our over 1,400 parts of land between the above plays will give us significant running room moving forward.”

The Canadian Press