Obsidian Energy (TSE:OBE) (NYSE:OBE), the intermediate oil producer, formerly known as Penn West Petroleum, saw shares rise Friday as the company revealed it is poised to sell its 55% working interest in the Peace River oil partnership (PROP) for around C$97million.
At Peace river, the Calgary-headquartered firm has extensive acreage, containing large resource in place, within the heart of the oilsands region in Alberta.
Shares in New York pre-market trade, were up over 13% to US$0.33 each.
The firm says it is selling the non-core asset, which will reduce costs and allow it to focus on its Cardium assets in Western Alberta.
"Along with the sale of PROP, the company will be divesting other non-producing assets in the area, which reduces our total decommissioning liabilities. Proceeds will be used to strengthen our balance sheet by paying down debt, with additional consideration going towards growing our fast-cycle primary oil development program," it said in a statement
The Peace River asset brings with it production of 4,160 boe/d (barrels of oil equivalent per day) with an estimated net operating income of $15 million over the next 12 months.
The total consideration of $97 million, includes $85.8 million in cash and cash equivalents, with the remainder comprised of purchasers' shares and the present value of additional liabilities.
The effective date of the transaction was February 1 this year and is expected to close on or about July 31.
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