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Crescent Point announces sale of Saskatchewan midstream assets

Published by , Editorial Assistant
World Pipelines,

Crescent Point Energy Corp. (Crescent Point or the Company) has announced that it has entered into a definitive agreement (the Agreement) to sell certain associated gas infrastructure assets (the Assets) in Saskatchewan to Steel Reef Infrastructure Corp. (Steel Reef or the Purchaser) for total cash consideration of US$500 million.

“Through the sale of these gas infrastructure assets, we will unlock value for our shareholders and further strengthen our financial position. We have now entered into agreements to sell, or have sold, in aggregate approximately US$1.45 billion of assets in 2019,” said Craig Bryksa, President and CEO of Crescent Point. “This sale is also aligned with our strategy, as it allows us to further focus on our core competencies to strengthen our corporate returns.”

Disposition metrics and terms

Through the sale of the Assets, Crescent Point will monetise nine natural gas gathering and processing facilities and two gas sales pipelines currently in operation within Saskatchewan. These gas processing facilities and associated sales gas lines have a total throughput capacity of more than 90 million ft3/d. The Assets do not include any oil-related infrastructure.

Under the terms of the Agreement, the Company will enter into certain long-term take-or-pay commitments with Steel Reef in exchange for Steel Reef granting Crescent Point processing rights at the facilities. The expected annual cash flow to the Purchaser is estimated at approximately US$47 million, excluding cash flow from third parties. Steel Reef, an established midstream company with other gas processing assets in Saskatchewan and a strong track record of environmental, health and safety performance, will operate the Assets.

As part of the Agreement, Steel Reef has committed to fund an upcoming 12 million ft3/d expansion of one of the gas processing facilities, reducing the need for capital that would otherwise be required by Crescent Point. Steel Reef’s cost to construct this expansion is estimated to be approximately US$30 million, which will be in addition to the purchase price of US$500 million. This facility expansion is expected to begin in 2020 and be completed within approximately 12 to 18 months following closing of the Asset sale. The expansion is expected to further enhance sales volumes while also reducing the facility’s emissions intensity.

RBC Capital Markets acted as exclusive financial advisor to the Company on this sale. GMP FirstEnergy represented Crescent Point as its strategic advisor. The transaction is expected to close in first quarter 2020, subject to customary closing conditions and regulatory approvals.

Crescent Point is also pleased to report that it continues to advance negotiations for third party development of a new sales oil pipeline. This pipeline is expected to enhance the Company’s market access and realised pricing for its southeast Saskatchewan oil production. Management expects that the new sales oil pipeline will take approximately 12 months to construct and bring in service, once an agreement is finalised.

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