Athabasca oil sands NASA Earth Observatory image. Credit: NASA Earth Observatory.

Canadian light oil and oil sands development company Athabasca Oil has signed a C$265m ($197.74m) agreement to sell its Leismer pipelines and Cheecham storage terminal to Enbridge.

The transaction builds on the company’s relationship with Enbridge across its Thermal Oil business unit.

The infrastructure assets being sold serve the Leismer oil sands and Corner projects in Athabasca’s thermal oil business in Alberta.

Enbridge expects the acquisition will offer synergies as the assets are connected with its existing terminal and pipeline assets in the region.

Athabasca will use the proceeds from the transaction to enhance liquidity, reduce net debt and improve financial resilience.

“Significant damage has already been done to both the Canadian economy and investor confidence.”

The company acquired the Leismer and Corner assets from Equinor last year in a C$435m ($324.59m) transaction comprising cash, shares and other contingent payments.

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Each asset has regulatory approval in place for expansion up to 40,000bbl/d.

Athabasca has also unveiled several measures in order to improve competitiveness and resilience in the North American market.

These actions include a 25% reduction in head office staff with immediate effect, executive pay cuts, and a C$95-110m ($70.88m-82.08m) decrease in total capital spending for next year.

The company attributed the moves to ‘unprecedented differential and basis spread volatility across light and heavy product streams due to pipeline capacity constraints’.

The Alberta government recently asked companies to reduce production from next month to address the high differential situation.

Athabasca Oil president and CEO Robert Broen said: “While we are encouraged by the recent short-term steps taken by the Alberta government, significant damage has already been done to both the Canadian economy and investor confidence.

“The sector is still a long way away from permanent solutions. This environment has forced us to make several challenging decisions to ensure our resiliency as a company, including a 50% reduction in 2019 capital spend and a 25% reduction in our Calgary office staff.”