Crescent Point to buy Shell's Duvernay shale assets

Canadian oil and gas producer Crescent Point Energy Corp. said it has agreed to buy Duvernay shale light oil assets in Alberta from oil major Royal Dutch Shell's Canadian unit for $900 million.

The deal comprises $550 million in cash and 50 million shares (valued at $157 million) in Crescent Point Energy common stock. Subject to regulatory approvals, the transaction is expected to close in April 2021.

“Divesting these assets underpins Shell's effort to focus the Upstream portfolio to deliver cash,” said Wael Sawan, upstream director at Shell. “While we believe these assets hold value, the divestment allows us to focus on our core Upstream positions like the Permian Basin, with integrated value chains, thereby building a resilient, lower-risk and less complex portfolio.”

The assets generate around 30,000 barrels of oil equivalent per day, with 57-per-cent condensate, 35-per-cent shale gas and eight-per-cent natural gas liquids.

“We are excited to add the Kaybob Duvernay asset as a strategic core area to our portfolio, as its significant inventory of high-return locations and free cash flow profile provide an attractive and return-enhancing opportunity for our shareholders,” said Craig Bryksa, president and CEO of Calgary-based Crescent Point.

“The Acquisition is aligned with our core principles to focus on strategic initiatives that enhance our balance sheet strength and sustainability. It is expected to enhance our free cash flow generation, leverage ratios and ESG profile. The depth of high-return drilling inventory also provides optionality within our capital allocation framework.

We view the Kaybob assets as low-risk given that they have been delineated over the past decade and key infrastructure and market access are already in place.”

Crescent Point said that before the expected closing of the deal in April, Shell plans to bring a number of drilled and uncompleted wells on stream. “As a result, production from the acquired Assets is expected to increase to approximately 35,000 boe/d during second quarter 2021.”

The Canadian oilpatch has seen a spate of mergers and acquisitions this year, as commodity prices rebound. Last week, ARC Resources Ltd. said it will buy Seven Generations Energy in a deal that will create the biggest Montney producer.