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Crescent Point exits Uinta basin

Canadian player also announces deal to sell some conventional assets in Saskatchewan

Canadian player Crescent Point Energy will exit the Uinta basin in the US state of Utah, a year after kicking off a transition plan to improve its finances and focus its asset portfolio.

The company will sell its entire Uinta position to an unnamed private buyer for C$700 million (US$525 million) in cash, according to a release.

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

"CrescentPoint expects to generate improved corporate returns and a stronger operating netback from lower royalties and reduced expenses as a result of this disposition," Crescent Point said in the release. "The capital expenditures required to sustain the company's annual production are also expected to improve due to a shallowing of the corporate decline rate."

The sale is expected to close in October.

The company announced its transition plan last year as a drastic step to slash $1 billion in debt from its balance sheet by the end of 2019. At the launch of the plan, Crescent Point slashed its workforce by 17% and appointed 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.

On Tuesday, Crescent Point also said it would sell some of its conventional assets in the Canadian province of 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 proved 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 release.

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"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 in late in the third quarter.

Including the Uinta and Saskatchewan sales, Crescent Point has divested C$1.3 billion in assets. 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 Canadian 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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