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escent Point Energy Corp. expects to start making acquisitions again when an oil price recovery kick-starts deals in the industry, Chief Executive Officer Scott Saxberg said Monday.
The Canadian energy company, the largest producer in the province of Saskatchewan, will begin to have “a tremendous amount of excess cash flow” to put toward purchases as U.S. crude rises above $55 a barrel, Saxberg said in an interview on Bloomberg TV Canada with Pamela Ritchie.
“We could easily do up to a C$1 billion transaction ($750 million), if prices recover back to the $70 to $80 price environment and do that all within our cash flow,” Saxberg said. “We feel that that’s what’s going to happen over the next year or two as prices come back and will put us in a very strong position to consolidate areas like the Viking and further in Saskatchewan and some plays in the U.S.”
Crescent Point has made 13 purchases in Canada’s oil and gas industry in the past five years, the most among buyers, according to data compiled by Bloomberg. The company has slowed its acquisition spree as an oil slump that has lasted 17 months prevents would-be sellers from doing deals. In 2015, Crescent Point purchased Coral Hill Energy Ltd. and Legacy Oil + Gas Inc. for a combined C$1.73 billion ($1.3 billion) including debt.
“Companies don’t want to sell at the low, so once prices improve, you’ll see a lot more activity,” Saxberg said.
Suncor Energy Inc.’s inability so far to win over Canadian Oil Sands Ltd. this year to accept its unsolicited takeover bid is an example of the difficulty buyers face in consolidating amid low prices, he said. Suncor will probably have to raise its offer price to succeed, he said.
“They’re in a position, I think, to pay more,” Saxberg said, referring to Suncor. “We’ll see whether they walk away here or not.”
U.S. crude will probably rise above $50 a barrel in early 2016 as supply growth shrinks and is likely to increase to $70 or $80 in 2017, Saxberg said. If the Organization of Petroleum Exporting Countries mentions cutting production at its meeting this week, prices could move above $50, he said.
West Texas Intermediate is down more than 60 percent from its high in 2014, hovering just above $40 a barrel.