Crescent Point Energy Corp., Calgary, has agreed to acquire the oil and liquids-rich Montney assets of Spartan Delta Corp., Calgary, for $1.7 billion (Can.) (US $1.25 billion).
With the deal, the company’s asset base will include inventory in both the Kaybob Duvernay and the Montney, while also maintaining low-decline assets in Saskatchewan that provide additional cash flow, said Craig Bryksa, president and chief executive officer of Crescent Point in a release Mar. 28.
The acquired assets include about 38,000 boe/d (55% oil and liquids), total drilling inventory of 600 net Montney locations, and some 235,000 net acres of contiguous land with Montney rights in Alberta within the Gold Creek and Karr area, Crescent Point said.
Updated guidance
Crescent Point's revised 2023 annual guidance, which incorporates the impact of the acquisition, includes annual average production of 160,000-166,000 boe/d and development capital expenditures of $1.15-1.25 billion (Can.).
The revised 2023 capex budget incorporates some $150 million of development capex associated with the newly acquired assets. Crescent Point plans to manage the Montney assets by drilling 25 wells per year, which requires $250 million of annual capital expenditures, inclusive of infrastructure spending, it said.
The 5-year production forecast is now expected to grow to 195,000 boe/d by 2027. The company’s Kaybob Duvernay and Montney assets are expected to represent about 45% of its pro-forma total production at closing, increasing to about 60% within its 5-year plan.
The purchase price will be paid in cash, which is expected to be funded through existing credit facilities. Crescent Point has also implemented a new 2-year revolving credit facility for $400 million (Can.). At closing, the company's unutilized credit capacity is expected to total about $850 million.
Going forward, the company expects to pay down debt with cash flow generation and will pursue the potential sale of one or more of its assets. In aggregate, Crescent Point is looking to reduce its net debt by about $1 billion over the next 12 months.
The acquisition is expected to close on May 10, 2023, subject to regulatory approvals and customary closing conditions.
