Canadian-based oil and natural gas company Pengrowth Energy has reached an agreement to sell the remaining portion of its Swan Hills assets in North Central Alberta.
Valued at $185m, the transaction marks Pengrowth's exit from the Swan Hills area.
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The sales proceeds from this transaction, which is subject to customary closing conditions and adjustments, will be used by Pengrowth to reduce its level of debt.
Pengrowth will also use the proceeds to prepay the remaining outstanding $100m of the 6.35% senior term notes, which are scheduled to mature on 26 July this year.
During the fourth quarter of 2016, the divested assets generated an average daily production output of approximately 5,150 barrels of oil equivalent per day (boe per day), according to the independent reserve evaluators GLJ Petroleum Consultants.
The company expects the current year’s average production guidance to be impacted by approximately 3,400boe per day, following the sale of the remaining Swan Hills assets. The revised production target for this year is estimated to be between 43,500boe and 45,500boe per day.
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By GlobalDataIn March this year, the company announced the sale of a portion of Swan Hills for a cash consideration of $180m.
The company had raised a total combined sales proceeds of $707m to date in the current year, which includes proceeds worth $522m from the previously announced Lindbergh GORR, Swan Hills and Bernadet asset sales and proceeds from the sale of the remaining Swan Hills assets.
The latest transaction is expected to close on 31 May this year.
The company noted that after completing the announced sales and debt repayment, its debt would fall to approximately $516m, a decline of 60% since 31 December 2016.
