Penn West CEO criticizes Alberta's stricter energy asset sale rules

Thu Jun 23, 2016 6:57pm EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - New rules from Alberta's energy regulator determining which companies are deemed strong enough to buy assets are off the mark in terms of fairness and transparency, Penn West Petroleum Ltd's (PWT.TO: Quote) chief executive said on Thursday.

Penn West has been selling assets to shore up its balance sheet, and the rules, Chief Executive Officer Dave Roberts says, will impact Penn West's activities.

"They have probably focused too much on some bad actors and I am not a big fan of lowest common denominator solutions," Roberts told reporters after Penn West's annual general meeting.

"Ultimately I think as they listen to their constituents, which are the 500 companies that are now frozen out of the asset transfer market, that they will come to a solution we can all live with."

The Alberta Energy Regulator (AER) announced a rule on Monday that companies seeking to buy oil and gas assets will need to show the deemed value of their production will exceed the deemed cost of cleaning up their inactive wells by a ratio of 2.0 or more after purchase, from 1.0 previously.

The AER made the change to stop weak companies from buying wells they may not be able to afford to decommission.

In a statement on Thursday, the AER said it "needed to ensure that Albertans were protected, that companies fulfill their obligations and that we prevent any opportunistic use of the decision to disclaim liabilities."

Around 200 companies are affected by the stricter rules, in addition to the 362 that did not qualify for asset purchases under the prior test.   Continued...