Spartan to sell its Montney assets to Crescent Point Energy for $1.25 billion

Spartan Delta has agreed to sell its Gold Creek and Karr Montney shale assets in Alberta, Canada, to Crescent Point Energy for C$1.7 billion ($1.25 billion), effective 1 May.

Under the agreement, Spartan will sell its interests in 377 sections of Montney land with production recently standing at more than 33,000 barrels of oil equivalent per day.

In its own statement, Crescent Point Energy said the assets currently have capacity to produce 38,000 boepd.

Crescent said the transaction added 600 new Montney locations to its inventory. The new assets are close to its own Kaybob Duvernay assets, which offer 20 years of drilling inventory.

Crescent Point raised its production outlook to 160,000 to 166,000 boepd as a result of the deal, from an earlier forecast of 138,000 to 142,000 boepd.

Crescent Point chief executive Craig Bryksa said: “Over the past five years, we have fundamentally rebuilt and strengthened Crescent Point. As a result of our efforts, and after closing this transaction, our asset base will include significant inventory depth in both the Kaybob Duvernay and the Montney, while also maintaining significant low-decline assets in Saskatchewan that provide additional excess cash flow.

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He said the new wells would be profitable even if benchmark West Texas Intermediate crude prices fall below $40 per barrel.

After the sale, Spartan said it will continue developing its Deep Basin assets, with a focus on returning free cunds flow to its shareholders, and will spin out some Alberta and British Columbia assets in a new subsidiary, Logan Energy Corp.

“I am pleased to announce the successful conclusion of our strategic repositioning process with our core Montney development asset sale, the creation of a new growth-focused Montney junior company and the retention of our sustainable Free Funds Flow and dividend generating assets in the Deep Basin,” said Spartan president and chief executive Fotis Kalantzis.

Spartan will also transfer 4,000 barrels of oil equivalent production per day from the Pouce Coupe and Simonette areas of Alberta and 500 barrels of oil equivalent per day of production and nearly 60,000 undeveloped acres in the Flatrock area of British Columbia to its new subsidiary, Logan Energy.

The deal is expected to close during the second quarter.