Crescent Point Energy has entered into an agreement with a private operator to sell its North Dakota assets for US$500 million (approx. $675 million) in cash.
'Over the last few years, we have taken several strategic steps to optimize our portfolio,' said Craig Bryksa, President and CEO of Crescent Point. 'This transaction allows us to realize future value for an area with limited scalability while immediately enhancing our financial position and increasing our focus on our core operating areas.'
NORTH DAKOTA DISPOSITION
Crescent Point has agreed to sell its North Dakota assets to a private operator for US$500 million (approx. $675 million) in cash. This Transaction allows Crescent Point to bring forward the expected future value of the Assets, as the proceeds equate to over five years of the cumulative excess cash flow that was expected from these Assets within the Company’s long-term development plan at current commodity prices.
In the second quarter of 2023, these Assets had gross production of approx. 23,500 boe/d (89% oil and liquids) with annualized net operating income of approx. $375 million at a WTI price of approximately US$75/bbl. Given the limited drilling inventory associated with these Assets, production in North Dakota was expected to decrease to 18,000 boe/d by 2027 and decline further in future years.
Crescent Point is accelerating its debt repayment with proceeds from this Transaction. The Company’s pro-forma net debt is expected to total less than $2.2 billion, or less than 1.0 times adjusted funds flow, at year-end 2023 at current commodity prices, down from $3.0 billion at the end of second quarter.
Since 2018, the Company has acquired $3.0 billion of high-quality assets in the Kaybob Duvernay and Alberta Montney that were primarily funded through approx. $2.7 billion of non-core dispositions. These transactions have enhanced Crescent Point’s long-term per share metrics and are consistent with its strategy of focusing on high-return assets with significant inventory depth.
2023 GUIDANCE AND OUTLOOK
Crescent Point is lowering its 2023 annual average production guidance to a range of 156,000 to 161,000 boe/d, which represents a reduction of approx. 4,500 boe/d in comparison to the mid-point of its prior guidance range. The Company’s revised annual forecast includes the production impact associated with the Transaction, net of approx. 1,000 boe/d of production outperformance from its remaining assets throughout the year.
Crescent Point is also decreasing its development capital expenditures guidance for 2023 by approximately $100 million, to a range of $1.05 to $1.15 billion. This reflects the Company’s ongoing discipline and the removal of capital that was expected to be spent on the North Dakota assets following closing of the Transaction.
Crescent Point plans to release its preliminary 2024 budget along with an updated five-year plan this fall.
TRANSACTION DETAILS
The Transaction is anticipated to close in fourth quarter 2023, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.
TPH&Co., the energy business of Perella Weinberg Partners, and TD Securities Inc. are acting as financial advisors to Crescent Point on the Transaction. BMO Capital Markets and RBC Capital Markets acted as strategic advisors.
Source: Crescent Point Energy
