/THIS NEWS RELEASE IS NOT FOR DISSEMINATION IN THE UNITED STATES OR TO
ANY UNITED STATES NEWS SERVICES/
CALGARY, Aug. 24 /CNW/ - Crescent Point Energy Corp. ("Crescent Point" or
the "Company") (TSX:CPG) is pleased to announce that it has entered into an
arrangement agreement (the "Wave Arrangement") to complete the strategic Lower
Shaunavon consolidation acquisition of Wave Energy Ltd. ("Wave"), a private
oil and gas producer. Wave currently has the largest land position in the
Lower Shaunavon resource play in southwest Saskatchewan, with more than 150
net sections of land and access to original oil in place ("OOIP") estimated by
the Company at more than 1.0 billion net barrels. Under the terms of the Wave
Arrangement, Wave shareholders will receive 0.21 of a Crescent Point share for
each Wave share, or approximately $7.28 per Wave share based on a five day
weighted average trading price of $34.68 per Crescent Point share. With the
successful completion of the Wave Arrangement, Crescent Point will control a
total of 259 net sections in the strategic core of the Lower Shaunavon
resource play.
Crescent Point is pleased also to announce that it has closed one
agreement and entered into a second agreement (collectively, the "Asset
Acquisitions") to acquire producing assets in southeast and southwest
Saskatchewan (the "Assets") for consideration of approximately $258.5 million
of cash. The Assets produce approximately 3,750 boe/d, 73 percent of which is
light and medium crude oil, including 450 boe/d in the southeast Saskatchewan
Bakken light oil resource play.
Crescent Point also announces a $100 million increase to its 2009 capital
spending plans, increasing planned capital expenditures to $325 million. The
increase in planned spending is expected to be directed towards the Company's
Bakken and Lower Shaunavon resource plays, including the funding of additional
drilling and facilities expansion.
Assuming the successful completions of the Wave Arrangement and the Asset
Acquisitions (together the "Transactions") and the increase in the Company's
planned 2009 spending, Crescent Point is increasing its year end production
guidance by 16 percent to 51,500 boe/d.
In addition, the Company announces that it has entered into an agreement,
on a bought deal basis, with a syndicate of underwriters co-led by Scotia
Capital Inc., BMO Capital Markets and CIBC, and including RBC Capital Markets,
FirstEnergy Capital Corp., TD Securities Inc., National Bank Financial, GMP
Securities L.P., Peters & Co. Limited and Tristone Capital Inc., for an
offering of 5.8 million Crescent Point shares at $34.50 per Crescent Point
share to raise gross proceeds of approximately $200 million. Closing is
expected to occur on or about September 15, 2009, and is subject to customary
regulatory approvals. Crescent Point has also granted the underwriters an
over-allotment option to purchase, on the same terms, up to an additional
870,000 Crescent Point shares. This option is exercisable, in whole or in
part, by the underwriters at any time up to 30 days after closing. The maximum
gross proceeds raised under this offering will be approximately $230 million
should this option be exercised in full. Closing of the financing is not
subject to the successful completions of the Transactions.
WAVE ARRANGEMENT
Under the terms of the Wave Arrangement, Crescent Point expects to
acquire all of the issued and outstanding shares of Wave at an exchange ratio
of 0.21 of a Crescent Point share for each Wave share. In addition, Crescent
Point expects to assume approximately $57.9 million of Wave net debt,
including deal costs and the value of the Wave stock options expected to be
exercised. The Company's aggregate consideration for Wave is approximately
$665.3 million based on a five day weighted average trading price of $34.68
per Crescent Point share.
Wave currently has the largest land position in the Lower Shaunavon
resource play. This land base is adjacent to, and contiguous with, existing
Crescent Point Lower Shaunavon properties. Assuming the successful completion
of the Wave Arrangement, Crescent Point will control 259 net sections of Lower
Shaunavon land, including 44 net sections Crescent Point presently manages on
behalf of Shelter Bay Energy Inc. ("Shelter Bay"). The Company estimates that
this land base contains approximately 1.8 billion barrels of estimated OOIP.
Wave's land holdings also include approximately 65 net sections of land
in the emerging Dodsland Viking light oil play in west central Saskatchewan
and more than 500 sections of undeveloped land in Montana.
The Wave Arrangement is expected to close on or before October 30, 2009,
allowing Wave shareholders to receive Crescent Point's anticipated October
dividend, which is expected to be paid November 16, 2009. The Wave Arrangement
is subject to Wave shareholder approval, court approval, and other conditions
typical of transactions of this nature. The Board of Directors of Wave has
unanimously approved the Wave Arrangement and recommended that holders of Wave
shares vote in favour of the transactions contemplated by the Wave
Arrangement. Holders of Wave shares representing more than 38 percent of
Wave's issued and outstanding shares have signed hard lockup agreements and
have agreed to tender their Wave shares to the Wave Arrangement.
Key attributes of Wave:
- 150 net sections of Lower Shaunavon land, including 132 net sections
undeveloped (104 of which have no associated reserves booked);
- 65 net sections of land in the Viking light oil play, including
63 net sections undeveloped;
- More than 500 sections of undeveloped land in Montana;
- 474 net internally identified low risk drilling locations, including
369 net in the Lower Shaunavon play at a drilling density of four
wells per section;
- 810 net internally identified Lower Shaunavon drilling locations at
eight wells per section;
- Current production of approximately 3,000 boe/d comprised of
87 percent high quality, long life Lower Shaunavon medium gravity
oil;
- Tax pools estimated at more than $176 million;
- Operating costs of approximately $13.50/boe; and
- Royalties of approximately 12%.
Reserves Summary
Independent engineers have assigned reserves utilizing NI 51-101 reserve
definitions and effective December 31, 2008 as follows:
- Approximately 17.6 million boe of proved plus probable and
8.7 million boe of proved reserves; and
- Reserve life index of 16.1 years proved plus probable and 7.9 years
proved.
ASSET ACQUISITIONS
Under the terms of the Asset Acquisitions, Crescent Point expects to
acquire the Assets for combined consideration of approximately $258.5 million
of cash.
The Assets produce approximately 3,750 boe/d, comprised of approximately
2,750 boe/d of high quality, southeast Saskatchewan production and 1,000 boe/d
of high quality, long life southwest Saskatchewan production. The southeast
Saskatchewan assets are largely adjacent to and contiguous with existing
Crescent Point assets in southeast Saskatchewan, including in the Bakken
resource play. The southwest Saskatchewan assets are largely adjacent to and
contiguous with Crescent Point assets in the Lower Shaunavon resource play.
The Assets include high quality, low decline assets with stable, predictable
production and infill drilling upside.
Key attributes of the Assets:
- Current production of approximately 3,750 boe/d, comprised of
73 percent crude oil and 27 percent natural gas;
- 178 net sections of undeveloped land, including 14 in the Bakken
light oil resource play;
- 51 net low risk drilling locations, including 23 in the Bakken light
oil resource play; and
- Tax pools estimated at $258.5 million.
Reserves Summary
On a combined basis, reserves associated with the Asset Acquisitions have
been assigned utilizing NI 51-101 reserve definitions as follows:
- Approximately 11.1 million boe of proved plus probable and
7.3 million boe of proved reserves; and
- Reserve life index of 8.1 years proved plus probable and 5.3 years
proved.
COMBINED ACQUISITION METRICS
Based on the above expectations for the Transactions, and after adjusting
for estimated land and seismic value of $320.0 million, the combined estimated
acquisition metrics for the Transactions are as follows:
1. 2010 Cash Flow Multiple:
- 6.3 times based on production of 6,750 boe/d (US$70.00/bbl WTI,
Cdn$5.00/mcf AECO and $0.90 US$/CDN$ exchange rate)
2.
