Crescent Point to buy Ute Energy for $784 million
CALGARY, Alberta (Reuters) - Crescent Point Energy Corp (CPG.TO), Canada's No. 4 independent oil-exploration company, said on Thursday it will buy privately held oil and gas producer Ute Energy Upstream Holdings LLC for $784 million in cash to gain oil production in the Uinta basin in northern Utah.
The company said the acquisition, set to close at the end of the month, brings additional oil and gas production of 7,800 barrels of oil equivalent a day from proved and probable reserves of 55.1 million barrels of oil equivalent.
Crescent Point, which has focused primarily on producing oil from unconventional fields such as the Bakken shale-oil region of Saskatchewan, said its new Utah lands have the potential to boost production using multi-stage hydraulic fracturing on both vertical and horizontal wells.
"We believe we can apply the extensive horizontal multi-stage fracture stimulation expertise that we've developed in Canada to the Uinta Basin to deliver long-term value to our shareholders," Scott Saxberg, Crescent Point's chief executive, said in a release.
The company said that adding Ute's production will raise its average output in 2012 to 97,000 barrels per day from its earlier estimate of 95,000 bpd.
As well, it expects to finish the year with output of 109,000 bpd instead of the 100,000 bpd it had targeted.
Crescent Point will also raise its 2012 capital spending budget by C$150 million ($150 million) to C$1.4 billion.
To pay for the acquisition, the company will sell 18.75 million shares to a group of underwriters led by BMO Capital Markets, RBC Capital Markets and CIBC at a price of C$40 per share.
The issue will raise gross proceeds of C$750 million, rising to C$863 million if the underwriters exercise an option to acquire a further 2.8 million shares.
Crescent Point shares were halted on the Toronto Stock Exchange before the announcement. They last traded C$41.43, down 7 Canadian cents.
(Reporting by Scott Haggett and Shounak Dasgupta in Bangalore; Editing by Peter Galloway)
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