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Calgary-based oil producer Obsidian Energy Ltd. says it’s starting a strategic review that could result in the sale of the company.
The alternatives being considered also include mergers, recapitalization, refinancing or combinations of those concepts, the company said in a statement. It’s the largest producer and land holder in the Cardium shale structure in Alberta.
“The initiation of the strategic review process will allow for consideration of consolidation within the Cardium play in Alberta,” the company said. “Furthermore, such consolidation if possible, may allow for the creation of additional scale, efficiency and financial strength.”
Shares in the company were trading up 3.7 per cent at $1.40 in Toronto Tuesday morning.
Obsidian, formerly knows as Penn West Petroleum Ltd., hired Tudor, Pickering, Holt & Co. as its financial adviser for the review. It’s unlikely there will be updates until the oil company’s board decides on a course of action, it said.
The move comes after a deal to sell Obsidian’s 55 per cent stake in the Peace River Oil Project to Highwood Oil Co. Ltd. for $97 million fell through last month when the Chinese partner nixed approval. The sale had required the go-ahead of China Investment Corp., a Chinese government sovereign wealth fund that owned 45 per cent of the project.
Obisdian said it wants to sell its stake in the heavy oil venture to concentrate on its Cardium light oil production.