UPDATE 2-Penn West says asset sales will help maintain debt covenant

Thu Nov 5, 2015 7:32am EST
 
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* Expects to create "additional headroom" in debt covenant

* Sees pipeline access issues impacting production volumes

* Posts much bigger quarterly loss (Adds details, background)

Nov 5 (Reuters) - Canadian oil producer Penn West Petroleum Ltd said on Thursday it expects to create "additional headroom" in a key debt covenant in the current quarter by using proceeds from asset sales to pay down debt.

Penn West amended some of its debt covenants earlier in the year after it had trouble meeting some terms related to its cash flow.

The company said on Thursday the ratio between its senior debt and EBITDA was 4.3 times, relative to a covenant that requires it to be 5 times or lower.

Besides asset sales, the company has also been monetizing foreign exchange hedges to remain within covenant levels.

"Given the progress we have made on our disposition program, we may no longer need to monetize our remaining foreign exchange hedges until next year," Chief Executive David Roberts said in a statement.

Penn West said last month it had sold its 9.5 percent stake in the Weyburn oil field in southeast Saskatchewan for C$205 million ($155.9 million).   Continued...