Cardinal Energy Ltd. has entered into an agreement to purchase high quality, low decline light oil assets in Western Canada for cash consideration of $330 million before closing adjustments.

U.S. oil and gas producer Apache Corporation is reportedly the seller, according to Reuters, so it can focus on high-growth areas like the Permian basin shale play, an Apache spokesman said on Thursday.

The assets to be acquired are in the Weyburn/Midale area of southeast Saskatchewan and in the House Mountain area of Alberta. The assets will add 5,000 boe per day (100 per cent oil and NGL's) of low decline light oil production (99 per cent operated) that generate significant free cash flow and include a significant light oil development drilling inventory.

The acquisition will be funded with a $170 million bought deal financing and by Cardinal's credit facilities. Cardinal expects that the available lending limit under its credit facilities will be increased to $325 million following the closing of the acquisition.

“This asset fits nicely with our long term strategy of acquiring high quality, low decline light oil assets,” said Laurence Broos, Cardinal’s VP of finance, told the DOB. “Also consistent with our previous acquisitions we believe there are opportunities to optimize these asset and bring down the operating cost structure while adding to our drilling inventory. Overall these assets are a good fit in our portfolio from a location, product mix and future development opportunity perspective.”

The acquisition will be funded with a $170 million bought deal financing and by Cardinal's credit facilities. Cardinal expects that the available lending limit under its credit facilities will be increased to $325 million following the closing of the acquisition.

Apache's Canadian production has been on a steady decline.