Crescent Point Unloads Assets in $600 Million Deal with Saturn Oil & Gas
(P&GJ) — Crescent Point Energy Corp. has finalized an agreement with Saturn Oil & Gas Inc. to offload specific non-core assets in Saskatchewan for $600 million in cash.
"We've strategically reshaped our asset portfolio in recent years to bolster our long-term sustainability," stated Craig Bryksa, president and CEO of Crescent Point. "This deal enables us to unlock value for these non-core assets, which had limited impact on the company's future plans, while maintaining our focus on operational excellence, optimizing our balance sheet, and enhancing our return of capital."
Crescent Point is selling certain non-core properties in Saskatchewan, including Flat Lake and Battrum, to Saturn for $600 million in cash. The assets were projected to produce 13,500 barrels of oil equivalent per day (95% oil and liquids) over the next year, generating $210 million in net operating income at current strip commodity prices. Minimal development capital expenditures had been allocated to these assets for the remainder of 2024.
In the first quarter of 2024, Crescent Point also completed the previously announced sale of its Swan Hills and Turner Valley assets for $140 million, before closing adjustments. These non-core assets carried associated undiscounted asset retirement obligations of $180 million.
The net proceeds from these non-core divestitures have been or will be directed towards debt repayment. The company's pro-forma net debt is expected to reach $2.8 billion-, or 1.1-times adjusted funds flow, by the end of 2024, based on average commodity prices of US$80/bbl WTI and $2.10/Mcf AECO for the full year, down significantly from $3.7 billion at the close of 2023.
Following the transaction, Crescent Point has adjusted its 2024 annual average production guidance to a range of 191,000 to 199,000 barrels of oil equivalent per day, representing a decrease of 7,000 barrels of oil equivalent per day compared to the mid-point of its prior guidance range. The company's development capital expenditures guidance for 2024 remains unchanged at $1.4 billion to $1.5 billion, considering minimal development capital expenditures allocated to the assets for the remainder of the year.
The transaction is expected to close in the late second quarter of 2024, subject to the satisfaction of customary closing conditions. Scotiabank is serving as the financial advisor, and National Bank Financial Inc. is acting as the strategic advisor to Crescent Point for the sale of its Flat Lake asset in southeast Saskatchewan. TD Securities Inc. and TPH&Co., the energy business of Perella Weinberg Partners, are acting as financial advisors to Crescent Point for the sale of its Battrum asset in southwest Saskatchewan.
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