Canadian oil and natural gas production company Obsidian Energy has reached an agreement to sell its 55% working interest in the Peace River Oil Partnership (PROP) to an unidentified buyer.
The deal is in line with the company’s strategy of divesting non-core, lower netback assets.
In addition to reducing overall corporate operating costs, the sale will enable Obsidian to focus on its Cardium assets in Western Alberta.
The transaction will raise Obsidian a total sum of C$97m ($72.02m), including C$85.8m ($63.11m) in cash and cash equivalents.
The remaining consideration comprises purchasers’ shares and the additional liabilities’ present value.
According to Obsidian, PROP assets will have a production of 4,160 barrels of oil equivalent per day (boe/d) and a net operating income of C$15m ($11.13m) over the next 12 months.
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By GlobalDataIn a statement, Obsidian said: “The agreement is subject to financing and the terms of the partnership agreement, which provides for a 30-day right of first refusal with an additional 15-day tag-along right to our partner.”
The completion of the transaction is expected to take place on or about 31 July.
Obsidian has stated that along with the sale of PROP, it will divest other non-producing assets in the area. The move will help reduce the firm’s total decommissioning liabilities.
The Canadian company intends to use proceeds from the transaction to reduce debt and fund the growth of its fast-cycle primary oil development programme.
Scotiabank served as Obsidian’s financial adviser for the transaction.
Obsidian Energy operates a contiguous acreage within the heart of the Peace River Oilsands region in northwest-central Alberta.
