Penn West Exploration sells all its Saskatchewan assets to Teine Energy for US$767 million

Penn West is selling all of its Saskatchewan assets, including its Dodsland Viking properties, for cash consideration of US$767m. This price represents a small discount to the value that Wood Mackenzie places on these assets. The assets currently produce approximately 13,610 boe/d (87% liquids). The purchaser is Teine Energy Ltd., a pure play Viking producer backed by the Canada Pension Plan Investment Board. In a separate transaction, Penn West concurrently announced the sale of non-core assets for US$110m. Significant capital constraints prohibited Penn West from rapidly developing its Saskatchewan assets. We believe that an established and well capitalised Viking producer like Teine is a strong candidate to develop these assets sooner. It is likely that they will realize significant cost saving synergies by adding these assets to its existing Viking portfolio and infrastructure network.