The Calgary, Alberta-based company said in a statement late yesterday that the assets it is acquiring are free cash flowing, producing some 3,300 barrels of oil equivalent per day, and come with 76 net sections of land adjacent to its existing land base in the area. It valued those assets at C$328 million.
Crescent Point will also receive 44 net sections of undeveloped freehold interests, worth about C$50 million, as part of the mostly cash deal.
It said capital spending will increase by C$200 million to C$2 billion, with cash flows from operations expected to climb 3 percent to C$2.6 billion from C$2.5 billion.
Shares were down 3.1 percent at C$43.15 at 1:36 p.m. in Toronto after touching C$42.98, the lowest intraday price since August 15.
The Lightstream deal and increased spending plans prompted Crescent Point to turn to the market for financing. It has entered into a $750-million bought deal that could stretch up to $863-million depending on demand. The banks in the bought deal purchased roughly 17.29 million shares of Crescent Point at $43.40 each. The underwriters, co-led by Bank of Montreal and the Bank of Nova Scotia, have the option to purchase roughly 2.59 million more shares, driving the deal’s value up to $863-million.
Crescent Point said the deal is “consistent with its strategy of maintaining a disciplined balance sheet.”
The deal is expected to close by Sept. 30.
The company also raised its 2014 forecast, based on the Lightstream deal and other acquisitions made so far this year, along with successful drilling results at its Torquay resource play in Saskatchewan.
“We’ve been very active this year on the acquisitions front but we remain disciplined. We continue to balance our debt levels with our growth prospects,” Scott Saxberg, Crescent Point’s chief executive, said in the statement.
“The opportunities we have pursued allow us to capitalize on our success in the Uinta Basin and our expanding Torquay discovery, and position us well for long-term growth in production and cash flow.”Source: Motley Fool with files from