Crescent Point (CPG) Update - Mar 28

[dan_s]

Canada's Crescent Point to buy Spartan Delta assets for $1.2 billion to boost Montney presence.

Canada's Crescent Point Energy Corp said on Tuesday it would acquire Spartan Delta Corp's oil and gas assets in Alberta's Montney region for C$1.7 billion ($1.24US billion).

Reuters:
Oil prices have been volatile since Russia's invasion of Ukraine more than a year ago, making it difficult for potential buyers and sellers to agree on price. In 2022, Canadian upstream deals amounted to C$15.6 billion ($11.43US billion), down 14% from the previous year, according to Sayer Energy Advisors.

Crescent Point shares dipped 0.7% in Toronto, while Spartan stock gained nearly 8%.

Calgary, Alberta-based Crescent Point said its 600 new Montney locations are adjacent to its Kaybob Duvernay assets which it bought over the past two years, and provide 20 years of drilling inventory. The assets add production capacity worth 38,000 barrels of oil equivalent per day (boepd).

The Montney is one of Canada's most attractive oil plays due to its strong economics and CEO Craig Bryksa said Crescent Point's new wells would be profitable even if West Texas Intermediate crude prices fall below $40 per barrel.

They currently trade around $73.

Crescent Point said it is looking to reduce net debt by about C$1 billion over the next 12 months and may also sell assets.

Assets in North Dakota's Bakken play could be under consideration for sale, said National Bank of Canada analyst Travis Wood. Crescent Point also produces oil in the province of Saskatchewan.

Crescent Point raised its production outlook to 160,000 to 166,000 boepd from the earlier forecast of 138,000 to 142,000 boepd.

The deal is expected to close during the second quarter.

After the sale, Spartan said it will focus on its remaining assets in Alberta's Deep Basin and spin out some Alberta and British Columbia assets in a new subsidiary, Logan Energy Corp.

($1 = 1.3648 Canadian dollars)

[dan_s]

I will be updating my forecast/valuation model for CPG this afternoon.