Penn West Petroleum Ltd., a Calgary-based producer of conventional oil, says it will sell $1.5 to $2 billion of assets over the next two years to reduce its debt levels.

In a strategy note released  with its third quarter results, the company said it would focus on light-oil development in  in its Cardium, Slave Point and Viking blocks, southwest of Edmonton.

About $485 million of assets will be sold by the end of this year, the company said.

Like Encana, which announced a 20 per cent reduction in its workforce on Tuesday, Penn West is struggling with weak gas prices.

In June, former Marathon Oil executive David Roberts was appointed Penn West CEO and  began a strategy to move to more liquid products, including oil and liquefied natural gas.

There have been cost improvements at the Cardium, Viking and Slave Point fields and staff reductions of about 25 per cent this year.

As a result, Penn West’s 2013 annual average production target fell to between 135,000 and 137,000 barrels of oil equivalent per day from 135,000 to 145,000.

“In the last four months we have taken meaningful steps to improve our cost structure, continued to increase our capital performance and begun rationalizing our asset base through both sales activities and shutting production with marginal economic returns,” Roberts said in a note to shareholders.

“We clearly have a lot of work yet to do, but the new Penn West is committed to our ideals and excited to pursue our new business plan."

The company recorded net income of $27 million or 6 cents per share in the third quarter, compared to a net loss of $40 million or 8 cents per share in the second quarter of 2013. An increase in crude oil prices helped improve profitability, as well as foreign exchange gains related to a rise in the Canadian dollar compared to the U.S. dollar.

Penn West said its capital budget for 2014 would be $900 million, 40 per cent of which would be spent on Cardium.

The stock dropped more than 17 per cent on the Toronto Stock Exchange to as low at $9.63 before recovering slightly at the close to $9.75, still down $1.88, or 16.1 per cent