Penn West Announces The Sale Of Its Non-Operated 9.5% Working Interest In The Weyburn Unit For $205 Million And UpDates Its Annual Production Guidance
CALGARY, Oct 1, 2015 /PRNewswire/ - PENN WEST PETROLEUM LTD. (TSX - PWT; NYSE - PWE) ("Penn West", "we", "us" or "our") is pleased to announce that it has entered into a definitive agreement for the sale of its non-operated 9.5% working interest in the Weyburn Unit in Southeast Saskatchewan for cash consideration of $205 million, subject to closing adjustments customary in transactions of this nature. We intend to use the proceeds from this disposition to reduce our senior debt. Upon the completion of the sale of our Weyburn Unit working interest, we will have raised approximately $810 million in total proceeds this year through our non-core asset disposition program.
David Dyck, Senior Vice President and Chief Financial Officer of Penn West, commented, "This disposition further demonstrates the continued success of our non-core asset disposition program. With this transaction, we have surpassed our $650 million non-core asset disposition target. We believe that our dispositions this year evidence the quality of our non-core asset base, our ongoing commitment to reduce our debt, and our ability to successfully execute meaningful transactions in a challenging commodity price environment. We will continue to pursue additional non-core asset divestitures in order to further reduce our leverage and we will continue to focus on our core operations."
The following are some of the key metrics and implied transaction multiples for the Weyburn Unit working interest for first half 2015:
| Production |
2,500 bbl/d |
| Liquids Weighting |
100% |
| Operating Cost |
$11.50/bbl |
| Normalized Operating Cost(1) |
$25.50/bbl |
| Normalized Field Netback(1) |
$17.50/bbl |
| Implied Production Multiple |
$82,000/bbl/d |
| Implied Normalized Net Operating Income Multiple |
13x |
(1) Normalized Operating Cost and Field Netback reflect impact of capitalized CO2 injection costs.
The effective date of the sale of our Weyburn Unit working interest will be July 1, 2015 and closing is expected to occur during the fourth quarter, subject to the receipt of all necessary regulatory approvals and the satisfaction of closing conditions customary in transactions of this nature. RBC Capital Markets acted as our exclusive financial advisor on this disposition.
Updated 2015 Production Guidance
As a result of the divestiture of both our Weyburn Unit working interest and our Mitsue properties, previously announced on September 15, we have updated our annual production guidance range to 84,000 – 88,000 boe/d from 86,000 – 90,000 boe/d. Our capital budget for the year remains unchanged at $500 million. We continue to expect our operating costs for the year to be between $19.25/boe and $19.75/boe with our G&A for the year to be between $2.80/boe and $3.05/boe.
About Penn West
Penn West is one of the largest conventional oil and natural gas producers in Canada. Our goal is to be the company that redefines oil and gas excellence in western Canada. Based in Calgary, Alberta, Penn West operates a significant portfolio of opportunities with a dominant position in light oil in Canada on a land base encompassing approximately 4.3 million acres.
Penn West shares are listed on the Toronto Stock Exchange under the symbol "PWT" and on the New York Stock Exchange under the symbol "PWE". All dollar amounts herein are in Canadian dollars.
Oil and Gas Information Advisory
Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.
Forward-Looking Statements
Certain statements contained in this document constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "budget", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "objective", "aim", "potential", "target", "pursue" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: our intention to use the proceeds from the sale of our Weyburn Unit working interest to reduce our senior debt, that upon the completion of the sale of our Weyburn Unit working interest, we will have raised approximately $810 million in total proceeds this year through our non-core asset disposition program, our intention to continue to pursue non-core asset divestitures and other alternatives in order to further reduce our leverage, our intention to continue to focus on our core operations, our expectation that the closing of the sale of our Weyburn Unit working interest will occur during the fourth quarter, and our expected 2015 production guidance and controllable costs for the year (including operating costs and general and administrative costs).
Although we believe that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations and assumptions will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results and events to differ from those described in the forward‑looking statements can be found in our public filings (including our Annual Information Form) available in Canada at www.sedar.com and in the United States at www.sec.gov. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
SOURCE Penn West
Share this article