Repsol is selling its gas producing assets in Canada’s Alberta province to Peyto for US$468 million as part the Spanish oil major’s optimisation and transformation plan to reduce is global presence.

The agreement encompasses all the mineral rights, related facilities and infrastructure in Repsol’s Canadian upstream oil and gas business.

This includes the assets in the Greater Edson area — Edson Heritage, Bigstone and Wild River — with a net production of 23,000 barrels of oil equivalent per day, most of which is gas.

Repsol reported hydrocarbon output of 596,000 barrels per day in the second quarter of this year. This latest deal will cull about 4% of the company’s total production.

However, it is a major boost for Canadian player Peyto’s upstream ambitions as its total production before the acquisition was reported at about 100,000 boepd.

Peyto said that the acquired assets hold about 306 million boe of proven and probable hydrocarbon reserves and may realise a fourfold growth to 100,000 boepd.

The assets also include five operated gas processing plants that are only 35% utilised today, and some 2200 kilometres of pipeline infrastructure including the Central Foothills gas gathering system, Peyto said.

Peyto added that Repsol’s assets will support its ambitions to grow production to 123,000 boepd next year and to over 160,000 boepd by the end of 2026 at estimated annual capital expenditure of between US$450 million and US$500 million.

Repsol said it is high-grading its upstream portfolio through the rotation of assets to concentrate and consolidate production in key areas — preferentially OECD countries — with a special focus on the US where the Spanish major has built a material position that benefits from synergies that generate greater competitive advantages.

The streamlining of the company’s portfolio has been achieved through a series of divestments in non-core countries, reducing Repsol’s exploration and production presence from 25 to 14 countries following the sale of assets in Vietnam, Malaysia, Papua New Guinea, Australia, Greece, Morocco, Iraq, Bulgaria, Ecuador and Russia.

Repsol has been focusing new development in key areas such as the US and Brazil, as well as carrying out targeted acquisitions in US shale and offshore plays, it said.

However, it will retain commercial and logistic operations in Canada through its St John LNG facility and trading business, Repsol added.

The Alberta asset deal is expected to close in mid-October, subject to customary closing conditions, including the receipt of necessary regulatory approvals, Repsol said.