TriStar Oil & Gas Ltd., Calgary, (Toronto: TOG) and Crescent Point Energy Trust, Calgary, (Toronto: CPG.UN) plan to acquire assets in southeastern Saskatchewan and Montana from Talisman Energy Inc., Calgary, (NYSE; Toronto: TLM) for C$720 million in cash.
The assets include approximately 610,000 net acres (73% in Saskatchewan). Production is more than 8,500 barrels of oil equivalent per day.
Tristar and Crescent Point report proved reserves at 31.7 million barrels of oil equivalent (45.6 million barrels proved plus probable) independently evaluated by GLJ Petroleum Consultants Ltd. as of March 31, 2009. A significant portion of the value is associated with the undeveloped land base in Saskatchewan of more than 395,000 net acres, which includes more than 60 net sections within the Bakken play.
Talisman reports proved reserves related to the sale of 20.1 million barrels equivalent (34.1 million proved plus probable), evaluated by AJM Petroleum Consultants dated March 2.
TriStar and Crescent Point will each acquire a 50% working interests for approximately C$360 million. The break-up fee is C$72 million.
Assuming a value of C$45 million for undeveloped land, Tristar and Crescent Point each value the deal at C$69,875 per producing barrel based on 4,000 barrels equivalent per day, C$13.25 per proved plus probable barrel, and C$19.14 per proved barrel. Analysts at Pritchard Capital Partners value the deal at US$66,700 per flowing barrel equivalent and US$17.90 per barrel equivalent on proved reserves.
Following closing, Crescent Point and TriStar will sell a portion of the Bakken assets acquired from Talisman to Shelter Bay Energy Inc., a privately-held company owned 21% by Crescent Point, for approximately $71 million.
The Bakken assets to be sold include production of approximately 500 barrels equivalent per day and 2.5 million barrels of proved reserves (3.5 million barrels proved plus probable). The deal involves 12 net sections of undeveloped Bakken land.
“The acquisition of Talisman's assets in southeastern Saskatchewan will further solidify Crescent Point's position as the largest oil producer in the area and the leading player in the Bakken light oil resource play,” says Scott Saxberg, Crescent Point president and chief executive. “These are high netback, long-life, low-decline, predictable assets that should provide many years of reserves growth and sustainable production.”
The deal will add more than 1,600 drilling locations for Crescent Point, he says.
Talisman president and chief executive John A. Manzoni says, “This is in keeping with our strategic objective to focus Talisman's portfolio on material, core assets. Although southeastern Saskatchewan has been part of our legacy, the majority of our capital spending and effort in North America going forward will be deployed to accelerate success in our unconventional natural gas plays.”
The effective date is April 1. Closing is expected by June 1.
Macquarie Capital Markets and BMO Capital Markets were advisors to TriStar. BMO Capital Markets and RBC Capital Markets were advisors to Crescent Point. FirstEnergy Capital Corp. was advisor to Talisman.
Talisman operates in Canada, the U.K., Norway, Southeast Asia, North Africa and the U.S.
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