Long considered a front-runner in the race to build Canada's first LNG export project, the consortium behind Pacific NorthWest pledged last June to start construction as soon as it was approved by regulators, eyeing the end of 2015.
Proceeds from the sale of Slave Point and other noncore assets will help to strengthen the Calgary, Alberta-based company's balance sheet. It will also improve its financial flexibility and overall corporate metrics.
Consulting firm Deloitte has warned that a third of oil and gas producers could go bankrupt this year, prompting some observers to voice concerns the program may not have enough funds to cover the clean-up costs of the wells currently on the OWA's books.
Deputy Governor Lynn Patterson said a simulation run by the bank suggested it would be several years before the economy found a new balance.
Other noncore asset sales are expected to close by the end of the second quarter. Penn West's asset disposition program has now raised more than CA$1 billion in cash proceeds since the beginning of 2015.
Wood Mackenzie predicts the oil market will continue to tighten in 2016, eventually boosting prices in the second half and leading to a pickup in M&A activity.
The deal, which involves assets spanning about 5.4 million acres in Western Canada and representing about 6,700 barrels of oil equivalent per day.
Penn West amended some of its debt covenants earlier in the year after it had trouble meeting some terms related to its cash flow.