No. 2 Canadian trust acquires assets

Penn West Energy Trust, Canada’s second largest energy income trust, is paying C$339 million to buy conventional oil and natural gas properties from an unidentified seller.

The deal will generate an additional 3,200 barrels per day of light oil and 10.2 million cubic feet per day of gas, as well as increasing Penn West’s land holdings by 190,000 net acres.

Although it did not specify the reserves involved in the transaction, Penn West estimated the value of the acquisition at C$61,500 per daily flowing barrel of production, comfortably below the average prices being paid a few months ago before the Canadian government decided to end the tax-free status of trusts in 2011.

In it most recent quarterly report, Penn West listed its production at almost 70,000 bpd of crude oil and liquids and 360 million cubic feet per day of gas.

The bulk of the new properties are concentrated in and around its Peace River oil sands project in northwestern Alberta, where it is evaluating options for developing 6.8 billion barrels of potential reserves.

Penn West said it plans to spend C$100 million this year on the Peace River properties, drilling up to 65 wells and building associated production facilities.

—Gary Park