Penn West Petroleum Ltd. (PWE) was upgraded to outperform from under perform at Raymond James after announcing the sale of its Saskatchewan assets, including those in the Dodsland Viking area.

Subsequently after the Canadian oil and gas company accepted to sell assets for about C$1.1 billion to lower its debt, Penn West Petroleum Stock surged by 46.21% advancement to $1.35 on magnitude trading.

As the company was behind in time with defaulting on its debt stipulation, Penn West Petroleum was left with not a lot of options, but to put one of its two remaining core assets on the auction block. But however, out of a blue, the assets turn out to be appealing to manifold bidders, with Canadian Pension Plan Investment Board-backed Teine Energy turning in the winning bid at a stunning $C975 million. By the result of that, the valuation of the assets was placed well above recent comparable sales, which will help West Petroleum pointedly reduce its outstanding debt. Beforehand, analysts estimated that the Viking assets would fetch at least C$400 million given their high margins and growth potentials, but howbeit, the final valuation turned out to be variant.

On the other hand, The Saskatchewan assets will be sold for C$975 million in cash to Teine Energy. The deal is expected to close in the second quarter.Penn West will also sell certain assets in Alberta for about C$140 million in a transaction that will also be completed in the second quarter.

“While we have made significant progress over the past three years in reducing our total debt, this asset sale results in a markedly improved capital structure and positions the company in the top tier of our peers in terms of all significant debt metrics,” CFO David Dyck said in a statement.

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In point of fact, high margins and growth potentials of at least C$400 on Viking assets, alongside the aforementioned additional C$140 million non-core asset sales, will curtail the net debt by $1.1 billion once these transactions close. Moreover, this will consolidate company’s amenability with its debt covenant as of the end of the current quarter.

Separately, As the hunger for oil assets escalate up, and as, in particular Pengrowth Energy could stand to benefit from the deal because of its desire to sell assets to clean up its own balance sheet, Penn West Petroleum’s asset sale progress augur well with other beleaguered drillers.

Pengrowth Energy, wishing to sell upwards of $300 million in assets to withdraw the advancing debt constituent of $1.7 billion in debt outstanding and $527 million maturing next year.

About 9.84 million shares of Penn West have been traded today, compared with its average daily volume of 1.63 million shares.

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As Penn West Petroleum abolish the risks of defaulting on its debt this year by the virtue of asset sales, investors can let out a breath hadn’t realized been holding. Withal, it brings out a closure on turnaround plan, and it will now be able to turn the page and focus on growing from its now-shrunken core.