January 25, 2012 / 7:33 AM / in 6 years

UPDATE 3-Crescent Point to buy Wild Stream for C$770 mln

* Deal to add assets near Crescent’s existing acreage in Saskatchewan

* Crescent expects 2012 average daily production to rise about 4 pct

* Expects production of more than 15,000 boe/d in the Shaunavon area (Adds details, analyst comments; updates shares)

By Bhaswati Mukhopadhyay

Jan 25 (Reuters) - Crescent Point Energy will buy Wild Stream Exploration in a deal valued at C$770 million ($761.8 million) to boost output and add assets near its existing acreage in the oil-rich southwest Saskatchewan.

The deal will make Crescent Point, which has light and medium oil and natural gas assets in Shaunavon and Battrum/Cantuar areas of Saskatchewan and central and southern Alberta, one of the Top 4 Canadian independent oil producers by market value.

Wild Stream Exploration, with operations mainly in Shaunavon and Dodsland in southwest Saskatchewan, is a 90 percent oil-weighted company with production of about 6,400 barrels of oil equivalent per day (boe/d).

“The focus is on Shaunavon because there are lots of medium gravity crude oil down there  lots of opportunity to add oil production using new drilling technology and water floods,” said Salman Partners analyst Gordon Currie.

The total oil in place in the Shaunavon play is estimated to be about 2.96 billion barrels, of which only 57 percent has been discovered, according to an independent federal agency report.

Crescent, one of the first Canadian companies to tap the Bakken shale, has been using hydraulic fracturing techniques to unlock once inaccessible supplies.

Currie, who sees Wild Stream’s assets a good fit for Crescent in southwest Saskatchewan and central Alberta, expects the company to make more such acquisitions.

HIGHER 2012 OUTPUT

Crescent raised its 2012 average daily production forecast by about 4 percent to 83,500 boe/d following the deal.

The company said it expects to buy about 5,400 boe/d of Wild Stream’s production, 91 percent of which shares a border with its own assets in the Shaunavon and Battrum/Cantuar areas.

The balance of Wild Stream’s production will be transferred into a new junior exploration company in which Crescent Point will hold 2.65 million shares.

Crescent said it will pay $109,800 per barrel of oil equivalent for buying 5,400 boe/d from Wild Stream.

“It is a high (offer), but Crescent Point is probably the only company that can afford to pay that much because as a primarily light oil producer they have higher netbacks to almost anybody else in the industry right now,” analyst Currie said.

“They are probably the only company that could pay that much and still make it accretive to cash flow.”

The acquisition is expected to add to its reserves on a per share basis, production and cash flow, said Crescent Point, which has acquired large positions in prospective tight oil regions like the Beaverhill field.

Under the deal, Wild Stream said each of its share will be exchanged for 0.17 shares of Crescent Point, 1.0 share of the new company and 0.2 of a common share purchase warrant.

The deal is expected to close on or before March 15 and includes a breakup fee of C$20 million. BMO Capital Markets was Crescent’s financial adviser.

Wild Stream shares were up 2 Canadian cents at C$9.82 on Wednesday on the Toronto Venture Exchange, while Crescent Point shares were down 23 Canadian cents at C$46.42 on the Toronto Stock Exchange. ($1 = 1.0108 Canadian dollars) (Reporting by Kavyanjali Kaushik and Bhaswati Mukhopadhyay in Bangalore and Scott Haggett in Calgary, Editing by Mark Potter, Sriraj Kalluvila)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below