Crescent Point Energy Corporation (TSX:CPG) recently announced that it will sell all its Uinta Basin assets in Utah and part of its southeast Saskatchewan conventional assets for a consideration of C$912 million.
Deal in Detail
The all-cash deal value comprises C$700 million for the Uinta Basin assets and C$212 million for the Saskatchewan conventional assets.
Uinta Basin assets consist of nearly 350 net sections of land yet to be developed, 123.1 million barrels of oil equivalent (boe) of proved and probable reserves plus 29.5 million boe of proved developed producing reserves.
Combined with 7,000 barrels of oil equivalent per day (boed) of current production, the portion of Saskatchewan’s conventional assets to be sold includes 49.2 million boe of proved and probable reserves.
The Canadian player now expects its annual average production in the range of 160,000-164,000 boed, marginally lower than its former prediction of 168,000-172,000 boepd.
The transaction is estimated to be completed by this September and is contingent on pending approvals.
Deal Motive
The key purpose is to improve Crescent Point’s balance sheet with much focus on its debt reduction. Craig Bryksa, chief executive, Crescent Point Energy states that this deal will help the company concentrate more on its asset base.
Deal Benefit
The company is expected to sell off 27,000 boed of its upstream assets to undisclosed buyers.
The transaction will help this Calgary-based entity to lower its net-debt to almost C$2.75 billion by the end of this year from C$4.40 billion in 2018.
Further, the assets’ sale will lead to an 11% rise in the company’s debt-adjusted funds flow per share.
The strategic move will strengthen Crescent Point’s ability to conduct its share buyback program and further aid it to repurchase stock worth another C$100 million by this year-end.
Stock Performance
The deal announcement perked up Crescent Point’s shares by almost 7% to $4.48 per share. This upsurge resulted from the company’s capability to strike a deal at an equitable price despite a complicated environment for snapping up energy industry pacts.
Crescent Point Energy Corporation Price
Crescent Point Energy Corporation price | Crescent Point Energy Corporation Quote
Zacks Rank & Key Picks
Crescent Point carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP (LON:BP) Midstream Partners (NYSE:BPMP) , Dril-Quip, Inc. (NYSE:DRQ) and World Fuel Services Corporation (NYSE:INT) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.
Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.
World Fuel Services earnings beat the Zacks Consensus Estimate in all the last four quarters.
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