CALGARY - Canada's Penn West Energy Trust said it agreed with a wholly owned unit of China Investment Corporation (CIC) to form a joint venture to develop the trust's bitumen assets at the Peace River area of northern Alberta.
Penn West will contribute assets valued at about C$1.8 billion, retaining a 55 per cent partnership interest, while the Chinese sovereign wealth fund CIC will invest C$817 million to acquire the remaining interest in the partnership.
The assets include about 237,000 net acres of oil-sands leases containing significant bitumen resources, and current production of about 2,700 barrels of oil equivalent per day of bitumen and associated gas, Penn West said in a statement.
A wholly owned subsidiary of Penn West will serve as the operator of the assets.
CIC also agreed to buy 23.5 million Penn West units -- about 5 percent of the trust's issued and outstanding units -- at C$18.48 a piece, for about C$435 million.
The offer price is at a 5 per cent discount to Penn West's Wednesday close.
The closing of the financing and formation of the joint venture is expected by June 1.
Units of Calgary, Alberta-based Penn West were up 5 percent at C$20.34 Thursday morning on the Toronto Stock Exchange.
