Canada’s Zargon Oil & Gas Ltd. entered into a definitive agreement to sell all of its southeast Saskatchewan assets for CA$89.5 million cash consideration, the company said July 25.

The assets produce 1,211 barrels of oil equivalent per day (boe/d) of low-decline resources, 95% oil and liquids at first-half 2016 rates.

There are 5.14 MMboe of proven plus probable reserves, 96% oil and liquids, according to McDaniel & Associates Consultants Ltd. from Dec. 31, 2015.

The proceeds from the transaction will initially eliminate Zargon's bank debt. The net debt will be about CA$35 million following the transaction. On June 30, the bank debt and working capital was CA$65 million.

After closing adjustments, there will be CA$87.5 million in net sale proceeds, Zargon said.

When the southeast Saskatchewan asset sale is completed, Zargon's remaining assets will be highlighted by the Alberta Little Bow alkaline, surfactant and polymer tertiary recovery project; the Alberta Taber and Bellshill Lake low-decline oil properties, and the remaining North Dakota Williston Basin properties.

The asset sale is expected to close in early September, and its effective date is July 1.