Crescent Point Energy to raise $650-million in bought deal

 

Crescent Point Energy to raise $650-million in bought deal

JEFFREY JONES

CALGARY — The Globe and Mail

Published Thursday, Sep. 08, 2016 5:14PM EDT

Last updated Thursday, Sep. 08, 2016 5:19PM EDT

 

Crescent Point Energy Corp. is selling $650-million of stock in a bought deal, and boosting spending on drilling, despite lingering uncertainty in oil markets.

Crescent Point, best known for its southern Saskatchewan oil fields, said it will issue 33.7-million shares at $19.30 each to underwriters led by Bank of Montreal. If underwriters exercise an overalotment option, proceeds will be $748-million.

Crescent Point Chief Executive Officer Scott Saxberg said the offering will allow the company to accelerate drilling in all its operating regions this year and next. The company now expects to produce 167,000 barrels of oil a day this year, up from the previous target of 165,000.

For 2016, capital spending is now expected to total $1.1-billion, up from the previous budget of $950-million. Crescent Point has set a preliminary 2017 budget of $1.4-billion.

The offering comes as oil markets remain shaky amid hopes that members of the Organization of Petroleum Exporting Countries and Russia can agree on production limits in the coming weeks, as well as fears that a global oversupply could last for another year.

Despite the uncertainty, Calgary investment banking sources say stronger players in the energy industry could raise more capital in the coming months as merger and acquisition activity picks up Mr. Saxberg said Crescent Point is still profitable with West Texas Intermediate crude at current levels below $50 (U.S.) a barrel.

“We have been very successful at reducing our cost structure during this commodity price downturn and have a large drilling inventory that is highly economic at $45 WTI. This is the first phase of a strong organic growth plan,” he said in a statement.

The latest offering is priced well below the company’s last ones, launched before the worst of the oil-price collapse. In Sept. 2014, it issued stock at $43.40 (Canadian) a share. The following May, Crescent Point helped finance its takeover of Legacy Oil + Gas with a $28.50-a-share offering. The stock has yet to rebound to those heights.

It closed at $20.26 on the Toronto Stock Exchange on Thursday.

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on September 9, 2016, in economic impact, miscellaneous, oil. Bookmark the permalink. Leave a comment.

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