Crescent Point Energy Corp. (CPG.TO, CPG) overnight Thursday said it has entered into an agreement, on a bought deal basis, to sell 33.7 million common shares at $19.30 per share to raise gross proceeds of near C$650 million. According to a statement, the net proceeds will be used to fund incremental growth capital expenditures during 2016 and 2017 and to reduce bank indebtedness. The Offering is subject to normal regulatory approvals and is expected to close on or about September 20, 2016. Crescent Point has also granted the underwriters an over-allotment option to purchase, on the same terms, up to an additional 5,055,000 common shares. This option is exercisable, in whole or in part, by the underwriters at any time until 30 days after closing of the Offering. The maximum gross proceeds raised under the Offering, and the full exercise of the option, will be approximately C$748 million. Canada’s BNN TV said since the early 2000s, CPG has gone to the market nearly every year for an equity issuance.
BNN TV said only in 2013, since 2002, had it not done so. According to BNN, the latest CPG news is being seen as showing optimism that we will see higher oil prices, with the company trying to get ahead of its rivals. However, BNN also noted that at $19.30 per share, the pricing was lower than usual. In June of last year, it charged $28 per share. The stock gained around 2.5% to close at $20.26 on the TSX yesterday. CPG last more than 3% in U.S. after hours yesterday. BNN cited Raymond James as saying this was a cautious move from CPG.
The brokerage, according to BNN, noted the company is not willing to go “gung ho” just yet, but is willing to spend within its means. “By raising equity now, management is allowing the company to kick-start growth while costs remain low, without taking on any additional risk if oil prices do not improve into next year,” Chris Cox at Raymond James reportedly said. For 2016, Crescent Point is increasing its fourth quarter capital budget by $150 million, resulting in budgeted annual capital expenditures of $1.1 billion and upward revised annual average production guidance of 167,000 boe/d. This additional fourth quarter capital is expected to add incremental production volumes in early 2017 and further improve the company’s growth plans. This updated guidance compares to the company’s previously announced capital budget of $950 million and annual average production guidance of 165,000 boe/d. The company’s preliminary 2017 budget of $1.4 billion includes $450 million of incremental growth capital above its sustaining capital budget of $950 million. This is expected to result in 2017 exit production of approximately 175,000 boe/d to 177,000 boe/d, or an annual growth rate of approximately five to eight percent. Crescent Point plans to finalize its 2017 budget in late fourth quarter 2016 or early January 2017. “We have continued to advance each of our resource plays throughout 2016,” said Saxberg. “We successfully added new drilling locations and generated strong production results from previously untested geologic zones. Our most recent Castle Peak horizontal well in the Uinta Basin, for example, is expected to generate a payout of less than two years with a 30-day initial production rate of approximately 600 bopd at a cost of approximately US$5 million.” Crescent Point said its increased 2016 and 2017 capital budget will allow the company to maintain its current 20 rig drilling program over the next 12 to 18 months, excluding spring break-up. Crescent Point’s revised drilling budget also includes an additional rig in Flat Lake as well as one rig that is expected to be continually active throughout the Uinta Basin. “This preliminary 2017 budget of $1.4 billion compares to our development capital expenditures of $2.1 billion during 2014,” said Saxberg. “This is the first phase of a strong organic growth plan that further positions us to increase capital as long-term WTI prices improve above US$45.”
About 2.40M shares traded hands or 17.07% up from the average. Crescent Point Energy Corp (TSE:CPG) has risen 20.46% since February 5, 2016 and is uptrending. It has outperformed by 3.97% the S&P500.
Crescent Point Energy Corp. is a Canada gas and oil exploration, development and production company. The company has a market cap of $8.87 billion. The Firm is an gas and oil producer with assets consisting of light and medium oil and natural gas reserves in Western Canada and the United States. It currently has negative earnings. The Company’s primary assets are the shares in Crescent Point Holdings Inc. (CPHI), shares in Crescent Point U.S.
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