Penn West Petroleum Ltd., Calgary, has agreed to sell its properties in the Slave Point area of northern Alberta to an undisclosed buyer for $148 million in cash.
The firm says the sale is expected to lower its corporate per barrel operating costs and reduce corporate decline rates.
The assets are forecast to produce 3,900 boe/d during 2016. Due to limited development capital allocated to the area during 2015-16, expected output declines from Slave Point are expected to reach 35%, and operating costs are estimated to increase to $24/boe over the rest of the year.
“Although Slave Point has long been one of our core assets, given the current outlook for commodity prices, we had no development activity planned for at least the balance of this year,” commented David Dyck, Penn West senior vice-president and chief financial officer.
“While we believe that Slave Point offers upside, the extension of our Viking play and recent Cardium performance provide us with ample development and growth opportunities and the most attractive rates of return in our portfolio,” Dyck said.
The deal, effective Jan. 1, is expected to close by the end of the second quarter. Penn West’s asset disposition program has now raised more than $1 billion in cash proceeds since the beginning of 2015.