NR AT AUG. 31 AT 5:55pmCrescent Point Energy Announces Strategic U.S. Acquisitions, Increase in 2011 Exit Guidance and a $375 Million Bought Deal Financing
CALGARY, Alberta, August 31, 2011 /PRNewswire via COMTEX News Network/ --
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Crescent Point Energy Corp. ("Crescent Point" or the "Company") is pleased to announce that it has acquired approximately 750 boe/d of production and more than 78 net sections of lower-risk land in North Dakota, U.S., through two strategic acquisitions (the "Acquisitions").
As a result of the Acquisitions, Crescent Point is upwardly revising its 2011 capital expenditure plans and production guidance. Capital expenditures are expected to increase by $50 million to $1.05 billion, with 100 percent of the increase allocated to development capital on the acquired assets. In conjunction with the Acquisitions, the Company has entered into a two-year agreement with a leading U.S. fracture stimulation company with operations in North Dakota to secure access to equipment and services for the Company's expanded development plans in 2012. Crescent Point is also upwardly revising its 2011 exit production rate to more than 77,500 boe/d from 76,500 boe/d.
The Company also announces that it has entered into an agreement, on a bought deal basis, with a syndicate of underwriters co-led by BMO Capital Markets and CIBC, and including Scotia Capital Inc., RBC Capital Markets, FirstEnergy Capital Corp., TD Securities Inc., National Bank Financial Inc., GMP Securities L.P., Macquarie Capital Markets Canada Ltd. and Peters & Co. Limited for an offering of 8,625,000 Crescent Point shares at $43.50 per share to raise gross proceeds of approximately $375 million. Closing is expected to occur on or about September 21, 2011, 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 1,293,750 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 $431 million, should this option be exercised in full.
NORTH DAKOTA ACQUISITIONS AND INCREASED 2011 EXIT GUIDANCE
In third quarter 2011, Crescent Point closed two agreements to acquire approximately 750 boe/d of Bakken light oil production and more than 78 net sections of land in North Dakota. Crescent Point believes the land to be prospective for the lower-risk Bakken and Three Forks zones. The majority of the lands are in a highly prospective area of the Bakken and are adjacent to existing Crescent Point properties, further consolidating the Company's land position in North Dakota. Combined consideration for the Acquisitions was approximately CDN$164 million of cash.
Key attributes of the Acquisitions:
Bakken light oil production of approximately 750 boe/d;
More than 78 net sections of land, of which the majority are operated;
Average land acquisition cost of approximately $2,500 per acre, net of value for production; and
More than 140 net internally identified low-risk drilling locations in the Bakken and Three Forks zones.
The Acquisitions are expected to be accretive to Crescent Point on a debt-adjusted per share basis to cash flow, reserves and production and to the Company's long-term drilling inventory.
Pro forma the Acquisitions, Crescent Point now has more than 165 net sections of lower-risk land within the main productive areas of the North Dakota Bakken. The Company has internally identified approximately 260 net low-risk drilling locations on these lands. Currently, Crescent Point's production in the U.S. is approximately 1,000 boe/d.
To date in 2011, the Company has participated in the drilling of 16 (2.2 net) non-operated North Dakota Bakken/Three Forks horizontal oil wells and has drilled its first operated North Dakota Bakken horizontal oil well, which the Company expects to complete in September. In addition, the Company has entered into a two-year agreement with a leading U.S. fracture stimulation company with operations in North Dakota to secure access to equipment and services for the Company's expanded development plans in 2012. The agreement is effective in 2012 and will provide the Company with full access to fracture stimulation equipment to complete wells and put production on in a timely manner.
In total, the Company now expects to drill 10 net wells in North Dakota in 2011, up from previous plans of 3 net wells. As a result of the Acquisitions, the Company is upwardly revising its expected year-end 2011 exit production rate to more than 77,500 boe/d.
As previously announced, on August 1, 2011, Crescent Point took possession of new office space in Denver, Colorado, which will enable the Company to continue to pursue its business strategy of acquiring, exploiting and developing high-quality, long-life light and medium oil and natural gas properties in the United States.
BOUGHT DEAL FINANCING
Crescent Point has entered into an agreement, on a bought deal basis, with a syndicate of underwriters co-led by BMO Capital Markets and CIBC, and including Scotia Capital Inc., RBC Capital Markets, FirstEnergy Capital Corp., TD Securities Inc., National Bank Financial Inc., GMP Securities L.P., Macquarie Capital Markets Canada Ltd. and Peters & Co. Limited for an offering of 8,625,000 Crescent Point shares at $43.50 per share to raise gross proceeds of approximately $375 million. Closing is expected to occur on or about September 21, 2011, 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 1,293,750 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 $431 million, should this option be exercised in full.
The offering will be a bought underwritten public issue in all provinces of Canada by way of a short form prospectus. The offering will be offered for sale to Qualified Institutional Buyers in the United States, pursuant to the registration exemptions provided by Rule 144A of the Securities Act of 1933 and internationally, as permitted.
The net proceeds of the offering will be used to fund the increased capital expenditures, to fund the Acquisitions and to reduce corporate debt.
Consistent with the Company's strategy of maintaining significant financial flexibility to execute its business strategy, Crescent Point's balance sheet remains strong, with projected net debt to cash flow of less than 1.0 times and substantial unutilized credit capacity. With a strong balance sheet, robust hedging position and secured access to services, Crescent Point is well positioned to continue generating strong operating and financial results in both Canada and the U.S. in 2012 and beyond.