Crescent Point Energy to acquire Shell’s Canadian shale assets

Canadian oil and gas company Crescent Point Energy has agreed to acquire Royal Dutch Shell’s Kaybob Duvernay shale light oil assets in Alberta, Canada for $707m in a cash-cum-stock deal.

Royal Dutch Shell will transfer about 450,000 net acres in the Fox Creek (Kaybob) and Rocky Mountain House (Willesden Green) areas.

The assets considered for the sale currently produces nearly 30,000 barrel of oil equivalent per day (boe/d) from more than 270 wells.

The consideration comprises $550m in cash and 50 million common shares of Crescent Point Energy.

Crescent Point Energy expects the deal to allow it to foray into a liquids rich play with more than 10 years of high-return, low risk drilling inventory.

Crescent Point Energy president and CEO Craig Bryksa said: “The acquisition is aligned with our core principles to focus on strategic initiatives that enhance our balance sheet strength and sustainability. It is expected to enhance our free cash flow generation, leverage ratios and ESG profile.

“The depth of high-return drilling inventory also provides optionality within our capital allocation framework. We view the Kaybob assets as low-risk given that they have been delineated over the past decade and key infrastructure and market access are already in place.”

The transaction, which is subject to regulatory approvals, is planned to be closed in April 2021.

Shell upstream director Wael Sawan said: “Divesting these assets underpins Shell’s effort to focus the Upstream portfolio to deliver cash.

“While we believe these assets hold value, the divestment allows us to focus on our core Upstream positions like the Permian Basin, with integrated value chains, thereby building a resilient, lower-risk and less complex portfolio.”

Shell said it plans to maintain its shale gas positions in the Groundbirch project in British Columbia, as well as shale gas and liquids positions in the Gold Creek project in Alberta.

Earlier this year, Shell announced a new strategy to accelerate its transformation to a net-zero emissions energy products and services provider.