Crescent buys Legacy
$1.53 billion
May 26, 2015 |
Whitecap buys Beaumont
$588 million
June 1, 2015 |
Cenovus selling royalties
3.1 million acres
June 1, 2015 |
Tamarack bolt-on
$54 MM for 1,420 boe/d
June 1, 2015 |
In the largest deal thus far in 2015, Crescent Point Energy announced a deal to acquire Legacy Oil & Gas for $1.53 billion in equity and debt assumed. CPE, already the largest Canadian Bakken producer, says it is building on its strategy of acquiring lands with high OOIP and low recovery rates. The Legacy assets add 20,000 boe/d and CPE is now guiding 2015 production 6.6% higher to 162,500 boe/d. The transaction is the result of a sales process by Legacy which resulted in 7 offers for assets and 1 offer for the company. First Energy and GMP Securities acted as co-advisors to Legacy's Board of Directors. |
On March 18, 2015, Whitecap Resources announced a cash and equity deal to acquire Beaumont Energy for $588 million, including debt assumed. As the slide above shows, Beaumont brings another high quality Viking waterflood that is in very close proximity to Whitecap’s existing operations. The Beaumont deal adds 5,100 boe/d on top of Whitecap’s average 2014 production of 32,458 boe/d. Whitecap is well-positioned to thrive in a low oil price environment with 2015 netbacks of $32.85/bbl based on a US$56.00 WTI price and has a great track record of profitable growth. |
Following the successful deal by Encana (spinning off a royalty company PrairieSky via IPO), Cenovus is market ready to monetize 3.1 MM net acres (90% fee). IPO is an option. The royalty interest volumes amounted to ~7,600 boe/d (55% liquids) in 2014. 2014 operating cash flow was $150 MM. To give some perspective on valuation, PrairieSky priced on May 22, 2014 at $28/share for an equity value of $3.6 billion. Prior-year cash flow (2013) was $195 million – implying an 18.7X multiple at IPO pricing. The price surged 30% on day 1 – increasing the multiple to 24.3X. PSK’s trailing PE is now 21.8X. |
Tamarack Valley Energy is sticking to its guns and executing a strategy for sustainability in a low price environment – which includes patience for M&A deals that are accretive. TVE pulled the trigger by spending $54 MM for three tuck-in deals at Wilson Creek adjacent to existing assets. The deals create a critical mass for lower LOE/boe and G&A/boe metrics. The deals also bring 70 locations, of which 40 are very high ROR with payback less than 1 year at $60/bbl Edmonton par prices. TVE is focused on the Cardium sweet spot with 49% IRRs and breakeven costs of $39.32/bbl. |
