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2023 Closes with a Wave of Deals: Canada to Permian Basin01/09/2024
-Crescent Point Energy finalized its $1.9 billion purchase of Hammerhead Energy to expand operations in Alberta's Montney Shale
-Two Canadian companies merged to increase their presence in Alberta's Kaybob Duvernay area
-Ring Energy completed acquisition in the Permian Basin
As 2023 drew to a festive close️, with winter's ❄ charm and the spirit of the New Year in the air, the oil and gas industry saw some exciting deals. Crescent Point Energy got bigger by buying Hammerhead Energy, which means they now have a lot more places to drill in Alberta's Montney Shale. In a similar activity, two Canadian companies teamed up in Alberta’s Kaybob Duvernay area. And not to be left out, Ring Energy also made a purchase in the Permian Basin.
So, let's don our Santa hats, raise our glasses, and toast to these remarkable 2023 year-end achievements that shape the future of the energy sector!
Crescent Point's $1.86 Billion Deal Ignites 2024 Prospects with New Year Sparkle
In the spirit of the holiday season, Crescent Point's US$1.86 billion acquisition (about CA$2.55 billion), really boosts their drilling spots. This deal adds roughly 800 new drilling locations to the company's portfolio, nestled in Calgary. They've now got enough resources to keep busy for over 20 years, setting them up nicely as we head into the new year with a festive and hopeful vibe.
❄️Our recent Alberta Montney consolidation marks the completion of our portfolio transformation. Through this strategic transaction, we have enhanced the long-term sustainability of our business, including increasing the excess cash flow per share expected within our five-year plan by approximately 20%❄️
- Craig Bryksa, Crescent Point's President and CEO
In a deal akin to tidying up before the New Year, Crescent Point also announced plans to sell off around CA$140 million in non-core Alberta assets, including its Swan Hills and Turner Valley properties. These divestments, expected to wrap up early in 2024's first quarter, are anticipated to contribute an average production of about 5,000 barrels of oil equivalent per day (75% oil and liquids).
Looking ahead to 2024, Crescent Point's overall production is expected to range between 198,000 and 206,000 barrels of oil equivalent per day, with development capital expenditures estimated to be between CA$1.4 billion and CA$1.5 billion.
❄️45% of the 2024 development budget is earmarked for Alberta Montney, with the intention of maintaining three active drilling rigs.
❄️Another 35% will be directed towards the Kaybob Duvernay play, where two rigs are planned.
❄️The remaining 20% will support the company's stable assets in Saskatchewan, which are poised to contribute about half of Crescent Point's excess free cash flow in 2024.
As the company looks beyond the frosty windows towards 2028, there's a quiet ambition to increase average production to 260,000 barrels of oil equivalent per day, a growth nurtured by the Montney and Kaybob Duvernay assets.
Holiday Cheers to the Athabasca-Cenovus Alliance: A Magical 2023 Finale
As 2023 wrapped up with a dash of festive magic, Athabasca Oil Corp. and Cenovus Energy teamed up in a holiday-inspired collaboration. They're creating a new company called Duvernay Energy Corp., a bit like mixing ingredients for a perfect holiday recipe.
❄️Athabasca will be the main chef with a 70% stake
❄️Cenovus adds its own flavor with a 30% share
Duvernay Energy, managed by Athabasca, is set to become a star in Alberta's oil-rich Kaybob Duvernay play, much like a bright star atop a Christmas tree.
Their combined assets cover about 46,000 acres of prime land. This includes new territory Athabasca has picked up, along with Cenovus’ contribution, making it a bit like swapping gifts under the tree.
With around 200,000 acres at their disposal and about 500 potential drilling spots, Duvernay Energy’s plans are as ambitious as Santa’s Christmas Eve journey. They're starting with a modest production but have big dreams of ramping it up to 25,000 barrels a day!
For 2024, their sleigh is loaded with plans for 12 wells and a budget of CA$82 million, funded by their own hard work and a nice seed capital of CA$40 million.
This union of Athabasca and Cenovus in creating Duvernay Energy adds a sprinkle of holiday cheer to the oil and gas sector – HO-HO-HO!
Ring Energy Shines Bright in the Permian Basin
Cheers to Ring Energy, a company from The Woodlands, Texas, has added some gifts to 2023 year. Think of it like putting the final twinkling lights on a New Year's tree. They’ve just finished buying some important oil assets in the Central Basin Platform of the Permian Basin from Founders Oil & Gas IV LLC. This deal was like a big present, costing $75 million, but in a happy turn, the final payment was just $11.9 million – a bit like finding an extra surprise in your stocking!
This piece of good news, announced right before the holidays on December 21, is like a warm hug in the cold winter. Now, Ring Energy has a whole new playground of around 3,600 acres and 50 drilling spots in Texas.
❄️We remain focused on maximizing free cash flow generation through cost reduction initiatives, the disposition of non-core assets, and the acquisition of high margin, low break-even assets and applying the excess cash from our operations to accelerate paying down debt❄️
- Paul McKinney, Ring chairman and CEO
On December 21, they decided to gift-wrap some extra assets in Gaines County, Texas, and hand them off for a cool $1.5 million. Think of it as Ring Energy filling their own stocking, but instead of candy canes, they're tucking away this neat sum to pay down their debts. They've got the go-ahead from their lenders to borrow up to $600 million, which is part of a bigger $1 billion credit line.
As we close 2023, the energy industry has witnessed notable growth and collaborations. Let's welcome 2024 with more great news for each of us.
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