Crescent Point to buy Spartan Delta Corp.'s Montney assets in $1.7B deal
Calgary company has drilling operations in Alberta, Saskatchewan and North Dakota
Crescent Point Energy Corp. has reached a deal to buy Spartan Delta Corp.'s Montney oilfield assets in Alberta for $1.7 billion, a deal that will see the Calgary-based company significantly grow its presence in what is one of North America's largest unconventional petroleum plays.
The all-cash deal announced Tuesday will see Crescent Point acquire 600 drilling locations in the Montney region, adding 38,000 barrels of oil equivalent per day (boe/d) to the company's production capacity.
The company said the assets — which are adjacent to the Kaybob Duvernay assets it acquired last year — will increase Crescent Point's excess cash flow by 20 per cent within the first year of its closing.
"Over the past five years, we have fundamentally rebuilt and strengthened Crescent Point," said CEO Craig Bryksa in a news release.
"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 provide additional excess cash flow."
Crescent Point has drilling operations in Alberta, Saskatchewan and North Dakota. In 2021, it acquired Shell Canada's Kaybob Duvernay assets for $900 million and has since been fortifying its position in that region, with additional purchases last year.
Last month, the company said its Kaybob assets have performed so well that they will have paid for themselves by the end of the first quarter of 2023.
Bryksa said the newly acquired Montney assets have similar resource characteristics to the Kaybob lands.
Firm plans to drill 25 wells per year
Crescent Point plans to manage the Montney assets by drilling approximately 25 wells per year, which it said will require approximately $250 million of annual capital expenditures.
The company's production forecast in its five-year plan is now expected to grow to 195,000 boe/d by 2027.
Spartan Delta Corp.'s disposition of the bulk of its Montney assets was not unexpected. The company, also based in Calgary, announced in November a plan to evaluate strategic alternatives in an effort to enhance shareholder value.
In addition to the deal with Crescent Point, Spartan announced on Tuesday it will transfer 4,000 boe/d of production in the Pouce Coupe and Simonette areas of northwest Alberta, as well as about 56,000 boe/d of production in northeast B.C. to a newly-formed subsidiary called Logan Energy Corp.
Spartan said it will retain and continue to develop its assets in the Deep Basin area of Alberta.
The deal with Crescent Point is subject to regulatory approvals and is expected to close in the second quarter.