My take...Well it almost has to be Crescent Point's assets based on the size of production...don't think others like Ridgeback or Vermillion are that big in that part of Sask.
I think it is a win win for both Crescent Point and Saturn.
It is a very bad sign for the Western Canadian Sector. Don't let Eric Nuttall fool you.
The reason these assets sold so cheap is Saturn wouldnt have had that much competition in the bidding process as the likely public potential companies to also be interest in these assets like Cardinal Energy, or IPCO or Whitecap...they all have lots of existing decommisiioning liablities and propably don't want to increase them at this point as it is used in lending ratios. Canadian banks are afraid of decomissioning liabilities right now.
These are actually great assets FOR a company like Saturn...a company that doesnt have much.
If Saturn had 50 million or more in already existing decomissiong liabilties that probably could not do this deal.
Only a company that is new with little was likely in the bidding pool.
Gear energy for example couldnt really handle another 200M plus in decomissioning liabilities.
Notice they don't mention the amount of decomissiong liabilities in the press release?
I guess over 125M in decomissioning liablities...on the low side...could be over 200M. The low cash price makes me think 150M at least. I am so sure that I will shave my head if the reclmation liabiltities are under 100M. These is the only real negative thing with the property.
If it is CPG, they can improve their balancesheet by more then 93M as they can also take some decomissioning liabilties off.
Saturn should look to implement a divy at some point as these assets are perfect for that. Steady 5-10 barrels a day wells for years and years. Lots of water old wells for water disposal and injection so operating costs really arent that bad...and at 55 plus oil...not a worry.
Such a riskless deal for them..they have hedged alot of cashflow.
I really commend Saturns management for having the gonads to do this deal. Like the first new company created inawhile. Only been contractions of companies.
It's still a bad sign for the sector that a Canadian Bank wouldnt tackle this.
But it is a likely win win deal for whoever sold the assets and for Saturn. The assets likely were not looked after the best as non core to whoever owned them so probably a ton of room for improvement with some more close attention.