BY Fraser Tennant
Despite current volatility in oil prices, oil and gas company Crescent Point Energy Corp. is to acquire the oil and liquids-rich Montney assets in Alberta of fellow energy company Spartan Delta Corp. in a deal valued at $1.7bn.
Under the terms of the definitive agreement, Spartan shareholders are expected to receive $9.50 per common share through the deal with Crescent Point, which is the second sizeable acquisition among Canadian explorers and producers this year after 2022 saw a drop in deals due to volatile oil prices.
The all-cash deal will see Calgary-based Crescent Point acquire 600 drilling locations in the Montney region, adding 38,000 barrels of oil equivalent per day to the company's production inventory.
The transaction also significantly grows Crescent Point’s presence in what is one of North America's largest unconventional petroleum resources, and immediately boosts excess cash flow per share by 20 percent.
“Over the past five years, we have fundamentally rebuilt and strengthened Crescent Point,” said Craig Bryksa, president and chief executive of Crescent Point. “As a result of our efforts, and after closing this transaction, our asset base will include significant inventory depth in both the Kaybob Duvernay and the Montney, while also maintaining significant low-decline assets in Saskatchewan that provide additional excess cash flow.”
Following the sale, Spartan intends to develop its remaining Alberta Deep Basin assets and spin off a portion of its remaining production to build a new growth-focused Montney junior company called Logan Energy Corp. with assets in Alberta and British Columbia.
“This transaction sees the successful conclusion of our strategic repositioning process with our core Montney development asset sale, the creation of a new growth-focused Montney junior company and the retention of our sustainable Free Funds Flow and dividend generating assets in the Deep Basin,” said Fotis Kalantzis, president and chief executive of Spartan. “I thank our shareholders, employees, board, stakeholders, and other supporters who helped cultivate this successful outcome.”
The transaction is anticipated to close during second quarter 2023, subject to regulatory approvals and customary closing conditions.
Mr Bryska concluded: “The Montney acquisition is immediately accretive to our per share metrics, enhances our return of capital to shareholders and is aligned with our long-term strategy to focus on high quality, scalable resource plays that meet our defined asset criteria.”
News: Crescent Point Energy to buy Spartan Delta's Montney assets for $1.2 bln