— Crescent Point Energy Corp. is on its biggest acquisition spree in
recent years, one that market conditions and activity in its key
resource plays support continuing, chief executive Scott Saxberg said
Thursday following an announcement that the company inked a deal to take
over junior Cutpick Energy Inc. for $425 million.
Crescent Point, Canada’s fifth-largest independent oil and gas
producer, has been a serial acquirer since its founding acquisition in
2001 in the Provost, Alta. area where Cutpick is based. But 2011
represented a lull for the Calgary firm as it patiently awaited the
right targets, Saxberg said.
The company is now finding favourably priced deals due to decade-low
natural gas prices, which are forcing junior firms to sell oily assets
to raise money for drilling as investors shy away from equity financing,
Saxberg said. As companies in Crescent Point’s key tight oil plays in
Western Canada have been eager to sell, it has been keen to buy, he
“We’re always looking for opportunities and there still are a few
opportunities within our core areas that we’d obviously like to
consolidate over the next six to 12 months,” Saxberg said in an
“Then on top of that, we’re looking to expand into the U.S. and add
to that portfolio,” he said, pointing to the Bakken tight oil play in
The all-share deal to acquire private firm Cutpick Energy by June 19,
which includes $83 million in debt, comes with output of about 5,600
barrels of oil equivalent per day — about 65 per cent oil — in the
Viking light oil play near Provost, Alta.
The deal brings total acquisition spending this year for Crescent
Point to about $1.7 billion on four deals, which far exceeds the roughly
$201 million Crescent Point paid for U.S. assets in 2011, and if the
pace continues, could outdo the company’s roughly $2 billion spent on
acquisitions in 2010.
The Cutpick acquisition sets Provost up as Crescent Point’s
third-largest producing area, more than tripling output expected this
year in the area to about 7,500 barrels of oil equivalent per day, after
the Bakken and Shaunavon plays in southern Saskatchewan. Crescent
Point’s average annual daily production gets bumped up by 2,000 boe/d to
88,500 boe/d and the company is poised to exit the year up four per
cent at 97,500 boe/d. Capital spending also rises to $1.25 billion this
year, $50 million more than previously expected, thanks to the deal.
Alta Corp. Capital Inc. research analyst Don Rawson said since
Crescent Point shares trade at a premium, its valuation relative to cash
flow, production and reserves, it can do “pretty much any deal” it
“I wouldn’t speculate on what they would buy but they are a very
active acquirer so if they announced another acquisition, I wouldn’t be
surprised,” Rawson said.
Saxberg said Crescent Point, the only company to flood unconventional
reservoirs with water to increase oil recovery, is looking for assets
with “big oil in place” — a large potentially recoverable resource base,
in other words — in large fields that are mostly untapped, where
Crescent Point could maximize recovery through infill drilling and water
Desjardins Securities analyst Allan Stepa predicted more deals on the horizon for the company.
“Going forward, we would expect to see Crescent Point remaining very
active on the M&A (mergers and acquisitions) front as it continues
to leverage its premium valuation to consolidate holdings in its core
operating areas,” Stepa said in a note to clients.
Crescent Point shares closed down two per cent at $42.23 on the Toronto Stock Exchange.