Canadian oil sands producer MEG Energy (MEG.TO) said on Thursday it had agreed to sell some pipeline and storage assets in Alberta to Wolf Midstream Inc for $1.61 billion  to pay down debt and fund its flagship project in Athabasca.

MEG said it would sell its 50 per cent interest in the Access Pipeline for $1.4 billion and its full interest in the 900,000-barrel Stonefell oil storage facility for $210 million.

The announcement sent the company's shares up in early trading Thursday. 

MEG said it will get $1.52 billion in cash when the deal closes, and a credit of $90 million toward future expansions of the Access Pipeline.

The company said it plans to use the deal proceeds to repay about $1.23 billion in senior secured term loans and the rest to fund the expansion of its Christina Lake project in Athabasca.

The bitumen miner also intends to raise its 2018 capital budget to $700 million from $510 million to fund the expansion.

BMO Capital Markets and Credit Suisse are MEG's financial advisers, while Burnet, Duckworth and Palmer LLP and Latham & Watkins LLP gave legal advice.

MEG also reported a 48 per cent jump in fourth quarter revenue, benefiting from higher volumes sold at the U.S. Gulf Coast.

MEG managed to cut its costs per barrel by nearly half in the quarter. That helped its adjusted profit of 15 cents per share blow past the expectations of analysts, who estimated the company would break even.