Canada’s Crescent Point Energy Corp. has entered into an agreement with a private operator to sell its North Dakota assets for $500 million (approximately CA$675 million) in cash, the company said on Aug. 24.
The private buyer was not named. Crescent Point said that the assets’ gross production in the second quarter averaged approximately 23,500 boe/d (89% oil and liquids). Annualized net operating income was anticipated to be approximately $375 million at a WTI price of 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,” the company said in a press release.
The divestiture continues the company’s portfolio optimization, with CA$2.7 billion (US$2 billion) in sales including leasehold in the Uinta Basin, conventional assets in Saskatchewan, infrastructure and other assets.
Crescent Point will use proceeds from the transaction to accelerate its debt repayment. Pro forma for the deal, the company’s net debt is expected to total less than CA$2.2 billion, or less than 1.0x adjusted funds flow at year-end 2023 based on at current commodity prices. Crescent Point’s debt was CA$3 billion at the end of second quarter.
"Over the last few years, we have taken several strategic steps to optimize our portfolio," said Craig Bryksa, Crescent Point president and CEO. “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.”
Since 2018, the company has acquired CA$3 billion of high-quality assets in the Kaybob Duvernay and Alberta Montney that were primarily funded through non-core asset divestitures. The transactions have enhanced Crescent Point's long-term per share metrics, the company said, and are consistent with its strategy of focusing on high-return assets with significant inventory depth.
The transaction is anticipated to close in fourth quarter 2023, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.
Crescent Point lowered its 2023 annual average production guidance to a range of 156,000 boe/d to 161,000 boe/d, which represents a reduction of approximately 4,500 boe/d at the mid-point of its prior guidance.
TPH&Co., the energy business of Perella Weinberg Partners, and TD Securities Inc. are acting as financial advisers to Crescent Point on the transaction. BMO Capital Markets and RBC Capital Markets acted as strategic advisers.