Crescent Point Energy Corp. continues to expand its core Kaybob Duvernay assets, announcing a purchase and sale agreement announced on Dec. 9 that will bolt-on production as well as midstream infrastructure and technical data.
With the deal, the company has now committed more than US$1 billion to the play.
The Calgary, Alberta-based company will acquire nearly 65,000 net acres from Paramount Resources Ltd. for CA$375 (US$274 million) cash. The assets average more than 4,000 boe/d, 50% liquids and include a gas plant, associated pipelines, water infrastructure and seismic data. The acquired asset’s production consists of 35% condensate, 15% NGL and 50% shale gas.
The deal includes 135 net drilling locations, are adjacent to the company’s existing position. Crescent Point said it expects to fund the acquisitions through its existing credit facility with an anticipated close in February 2023.
The company entered the liquids-rich play in February 2021 after agreeing to acquire Shell’s position in the Kaybob Duvernay play for CA$900 million (US$709 million). In third-quarter 2022, Crescent Point added a CA$87 million (US$64 million) bolt-on in the Kaybob.
Tudor, Pickering, Holt & Co. analyst Matt Murphy said the package primarily includes undeveloped land and inventory that will bolster the company’s Duvernay inventory.
“Notably, the company anticipates the acquisition to extend inventory in the play to north of 20 years and supports answering a key question from investors on the longer-term runway for corporate inventory,” Murphy wrote in a Dec. 9 report.
The company raised its 2023 production guide to 138,000 boe/d to 142,000 boe/d with its capital spend guidance unchanged, Murphy said.
“We continue to generate strong full cycle returns from our Kaybob Duvernay assets, which are top quartile within our overall portfolio,” said Craig Bryksa, president and CEO of Crescent Point. “Through this acquisition, we are increasing our drilling inventory in the play to over 20 years, based on current production. In addition, our land position will increase to approximately 400,000 net acres.”
Crescent Point plans to grow its Kaybob Duvernay asset to more than 55,000 boe/d within its five-year plan from approximately 35,000 boe/d in 2022. The company’s development program includes adding a second rig in the Kaybob Duvernay in 2024.
“We are also adding base production with an estimated net present value of approximately $200 million at current strip commodity prices,” Bryksa said. “The acquisition includes an attractive ESG profile, consistent with our existing Kaybob Duvernay assets, including low emissions intensity and minimal asset retirement obligations.”
Crescent Point said it is currently drilling its seventh pad in the play and expects to bring its sixth fully operated pad on-stream in early 2023. Its fourth and fifth fully operated multi-well pads were recently brought on-stream and are generating strong initial production results that are in-line with or ahead of its internal type wells.
Average IP rates for the fourth and fifth pads were approximately 785 boe/d per well (IP90) (75% liquids) and approximately 950 boe/d per well (IP30) (65% liquids), the company said.
Drilling days have also been reportedly reduced to between 11 to 13 days per well on its recent pads, a 40% decrease since entering the play, the company said.
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