"Calgary independent Talisman Energy Canada and its affiliate, Fortuna have agreed to sell their assets in Bakken play in southwest Saskatchewan and Daniels County, Montana for about C$720 million (US$565.6 million) to Crescent Point Resources and TOG Partnership, an affiliate of Tristar Oil & Gas..."
In addition Crescent Point Energy Trust is converting into a corporation.
"“Conversion to a corporation is an exciting and necessary step in the continued growth of Crescent Point,” says Mr. Saxberg. “At the current growth and development stage of the southeast Saskatchewan Bakken light oil resource play, there are too many opportunities available to Crescent Point to be
constrained by the federal government’s Safe Harbour growth limitations. Our business model will remain unchanged."
The Talisman asset acquisition metrics for CPG
2009 Cash Flow Multiple:
- 5.8 times based on production of 4,000 boe/d (US$50.00/bbl WTI, Cdn$5.00/mcf AECO and
$0.80 US$/CDN$ exchange rate)
Production:
- $69,875 per producing boe based on 4,000 boe/d
- Operating costs of less than $11.50 per boe.
Reserves:
- $13.25 per proved plus probable boe
- $19.14 per proved boe
The acquisition looks ok and the conversion is an expected move, though it does take place much earlier than I expected. CPG is funding the purchase through issuance of new equity, monetization of hedges and through bank lines. Adding debt in todays finance market is a bold move, but in a better environment the number on the price tag of these assets would have been much greater. CPG's ability to raise 200 million worth of common equity with modest costs to its current unitholders clearly reflects company's high quality asset base and healthy financial position. The acquired 312 net sections of undeveloped land in Saskatchewan and 125 net sections of Bakken land in Montana should enable Crescent Point to sustain and even grow its reserves through the drill bit in the coming years.
Talisman's decision to focus on unconventional gas seems outright stupid as allmost every single oil & natural gas company in North America is more or less involved in unconventional gas.
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