Crescent Point to buy back Shelter Bay

Calgary-based Crescent Point Energy Corp. has announced it is buying back its spinout Shelter Bay Energy for $1.1 billion, in order to boost its dominant status in two promising Saskatchewan oil plays.  Crescent Point holds the largest position in the Bakken, Canada's second-largest oil field. Together with Shelter Bay, it also holds nearly 90 percent of Lower Shaunavon production, a deep oil play in south-west Saskatchewan. The medium-density oil fieldÔÇöwestern CanadaÔÇÖs third-biggestÔÇöholds four billion barrels of oil and has similar characteristics to the Bakken. Shelter Bay is the third-largest landholder in both the Bakken and Lower Shaunavon plays. Crescent Point created Shelter Bay in early 2008 to ease its growth strategy in the Bakken, which also stretches into parts of North Dakota and Montana. The oil and gas producer has now said it will buy back the 79 percent of Shelter Bay that it doesn't own. During the first quarter of this year, Shelter Bay's production averaged more than 7,400 barrels of oil equivalent per dayÔÇö97 percent of which was pumped from the Bakken and Lower ShaunavonÔÇörepresenting a five percent increase over the previous quarter. The deal values Shelter Bay at $1.3 billion, and Crescent Point's 79 percent stake at $1.1 billion, including C$121 million net debt. ÔÇ£From our perspective, Shelter Bay was a great success for both Crescent Point and Shelter Bay shareholders,ÔÇØ commented Scott Saxberg, president and CEO of Crescent Point. ÔÇ£Under the constraints of the Safe Harbour growth rules, without Shelter Bay we could not have captured and consolidated the Bakken and Lower Shaunavon plays as completely as we did. At the same time, Shelter Bay shareholders received strong returns, despite the financial downturn in late 2008 and early 2009.ÔÇØ The decision to buy Shelter Bay back follows Crescent PointÔÇÖs conversion last year from an income trust to a corporation and reflects its desire to gain efficiencies from combining the companies. The transaction is subject to court and shareholder approval and is expected to close in July. The company said it expects to end this year with total daily production of more than 69,500 barrels of oilÔÇö13 percent higher than its previous forecast. Capital spending will also increase by C$125 million to C$750 million. Earlier this year, Crescent Point completed the acquisition of Lower Shaunavon assets from Penn West Energy Trust (PWE) and last fall, it acquired Wave Energy, a privately held oil and gas company with large landholdings in the Lower Shaunavon area.