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.
"Penn West continues to pursue multiple avenues to both reduce its absolute debt levels and to negotiate with its lenders to amend its financial covenants," Penn West spokesman Paul Surmanowicz said. He declined to comment on the bids.
All four bidders have a presence in the Viking area of Saskatchewan, a light oil region that is attractive to energy producers because of its low costs to recover crude and competitive production costs.
Crescent Point is one of the most-active investors in the Canadian oil industry. While the company has made about 20 acquisitions in the last decade, it has slowed its dealmaking pace in recent months. Its most-recent acquisition was Coral Hill Energy in August 2015.
Whitecap in May said it plans to buy some assets in southwest Saskatchewan from Husky Energy for C$595 million.
The Canada Pension Plan Investment Board owns 77 percent of Teine Energy, a Saskatchewan-focused energy producer.
Raging River and RBC declined comment. Crescent Point, Whitecap and Teine did not respond to requests for comment.
($1 = 1.2656 Canadian dollars)
Reporting by John Tilak, Matt Scuffham and Nia Williams; Editing by Alan Crosby