Exclusive: Penn West asset sale draws at least four bids
By John Tilak and Matt Scuffham
TORONTO (Reuters) - Canadian energy producer Penn West Petroleum Ltd has received at least four bids from companies for its Viking light oil assets as it races to avoid a default, according to sources familiar with the matter.
Bidders include Raging River Exploration Inc, Crescent Point Energy Corp, Whitecap Resources Inc and Teine Energy, said the sources, who declined to be named because they were not authorized to comment on the process.
The Calgary-based company, which is working with Royal Bank of Canada on the sale, is seeing strong demand for the assets, which could fetch more than C$500 million ($395 million), according to the sources.
Shares of Penn West, already up more than 6 percent due to stronger oil prices, shot up another 4 percentage points after the news of the bidders was published. As of 11:50 a.m. ET (1550 GMT) they traded 8 percent higher at C$1.30 in Toronto.
Penn West has been under enormous financial pressure in recent weeks over its large debt burden, and said last month it might default on its debt at the end of the second quarter. At the time, it also raised doubts about its ability to continue as a going concern.
A slump in oil prices over the past two years has hit energy producers, and highly leveraged companies such as Penn West have struggled as a result.
Penn West's Viking assets, which produce almost 20,000 barrels of oil equivalent daily, are important to the company, and its willingness to sell them highlights the financial state the company is in. It has reported net losses in the past three years and carries net debt of about C$1.9 billion.
The company is trying to sell other assets as well. Continued...