Oil and gas producer Crescent Point Energy Corp. says it is selling Saskatchewan midstream assets for $500 million as part of a divestiture strategy adopted following a management shakeup last year.
The Calgary company says it has struck a deal to sell nine natural gas processing facilities and two gas sales pipelines with total throughput capacity of more than 90 million cubic feet per day to privately held Steel Reef Infrastructure Corp.
The companies say Crescent Point has agreed to long-term take-or-pay commitments of about $47 million per year to use the facilities, while Steel Reef has committed to fund a $30 million, 12 million cf/d expansion of one of the gas plants.
The deal is part of a recent trend by producers to sell gathering and processing assets to fund capital programs and pay down debt in light of poor access to capital markets and low share prices.STORY CONTINUES BELOW ADVERTISEMENT
Last month, Tourmaline Oil Corp. announced it had created a new company which would buy a royalty on certain of its oil and gas lands, along with interests in two of its 19 natural gas processing plants, for $775 million in shares and cash.
Crescent Point says its net debt will fall to $2.3 billion from about $2.8 billion when the Steel Reef deal closes early next year. It also plans to use about $50 million to buy back its own shares.
“Through the sale of these gas infrastructure assets, we will unlock value for our shareholders and further strengthen our financial position,” said Craig Bryksa, CEO of Crescent Point.
“We have now entered into agreements to sell, or have sold, in aggregate approximately $1.45 billion of assets in 2019.”