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Crescent Point to sell entire Uinta assets

Canadian shale player Crescent Point Energy is selling its entire Uinta position to an unnamed private buyer for C$700 million (US$525 million) in cash, writes Caroline Evans.

The assets include 350 net sections of undeveloped land, 123.1 million barrels of oil equivalent of proven plus probable reserves and 29.5 million boe of proven developed producing reserves, based on an independent 2018 assessment.

The announcement comes one year after Crescent Point launched an aggressive transition plan to slash C$1 billion in debts and focus its asset portfolio.

The plan launched with a headcount reduction of 17% and the appointment of a new chief executive, Craig Bryska.

At the time, Crescent Point said it would streamline its assets to focus on its Viewfield, Shaunavon and Flat Lake resource plays in Saskatchewan, its east Duvernay shale position in Alberta and its Uinta basin properties.

However, Crescent Point also said at the time that it would be "flexible" in the divestiture programme depending on market conditions.

This week, Crescent Point said it now expects to generate improved corporate returns and a stronger operating netback from lower royalties and reduced expenses resulting from the Uinta sale.

Crescent Point also said it would sell some of its conventional assets in Saskatchewan to multiple unnamed buyers.

The properties include 7000 boe per day of production, 70% of which is oil and 49.2 million boe of proven plus probable reserves.

"These conventional assets operate with a higher operating cost structure and generate an operating netback that is approximately 30% below Crescent Point's corporate average," according to the company.

"Additionally, the future decommissioning liabilities associated with these non-core assets are higher than those associated with the company's key focus areas."

The deals are expected to close late in the third quarter.

Including the Uinta and Saskatchewan sales, Crescent Point has divested C$1.3 billion in assets since the start of its transition plan in 2018.

The company intends to return some of that to shareholders, with $100 million of share repurchases budgeted for the rest of 2019 based on current prices.

The company said it would continue to seek buyers for the rest of its conventional assets in south-east Saskatchewan and its gas infrastructure assets in the province.

"Since we established our transition plan in September 2018, we have meaningfully improved the sustainability of our business model by revising our capital allocation process, lowering our cost structure and strengthening our balance sheet," Bryska said.

"The sale of the Uinta basin and certain conventional assets is accretive for our shareholders and aligned with the key criteria we established for our asset portfolio. These transactions are a considerable step forward in our ongoing plan to focus our asset base."

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