Crescent Point Energy sells North Dakota assets for $500 million as oil production declines
(WO) – Crescent Point Energy Corp. has entered into an agreement with a private operator to sell its North Dakota assets for $500 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 approximately 23,500 boed (89% oil and liquids), with annualized net operating income of approximately $375 million at a WTI price of approximately $75/bbl. Given the limited drilling inventory associated with these assets, production in North Dakota was expected to decrease to 18,000 boed by 2027 and decline further in future years.
Since 2018, the company has acquired $3 billion of high-quality assets in the Kaybob Duvernay and Alberta Montney that were primarily funded through approximately $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.
Crescent Point is lowering its 2023 annual average production guidance to a range of 156,000 to 161,000 boed, which represents a reduction of approximately 4,500 boed. The company's revised annual forecast includes the production impact associated with the transaction, net of approximately 1,000 boed 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.
"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."