Crescent Point Energy Corp. said Tuesday it would acquire junior oil and gas producer Legacy Oil + Gas Inc. for about 563 million Canadian dollars ($457 million) in shares, boosting its position in southeast Saskatchewan and giving it a foothold in the emerging Midale light-oil play.
Calgary-based Crescent Point put the total value of the acquisition at C$1.53 billion, including assumption of about C$967 million in debt.
Legacy, a light-oil-weighted producer, had recently been pressured by an investor to shake up its board after it guaranteed a C$5.1 million margin loan held by its chief executive amid low oil prices. The company said it would engage with the investor, Connecticut-based hedge fund FrontFour Capital Group LLC.
Legacy said Tuesday that the deal with Crescent Point values its shares at about C$2.85 each based on Crescent Point’s closing price of C$30 in Toronto on Monday, a 24.5% premium to Legacy’s 60-day average trading price.
Crescent Point’s move comes as Canadian oil and gas producers overall grapple with the steep drop in the price of oil, which has led some firms to renegotiate debt arrangements.
“Our balance sheet and our financial strength allow us to execute on our growth strategy and to protect our dividend in a low oil price environment,” Chief Executive Scott Saxberg said in a statement.
Crescent Point said Legacy would add about 22,000 barrels of oil equivalent of production, much of it from conventional and unconventional plays in Crescent Point’s core southeast Saskatchewan, Manitoba and North Dakota areas. The assets to be acquired include land in southeast Saskatchewan in the emerging and “highly-economic” Midale resource play, it noted.
To fund the purchase, Crescent Point has entered into an agreement to sell at least C$600 million of common shares at C$28.50 each. The underwriting agreement includes an option that could boost proceeds to C$690 million. Crescent Point closed at C$29.82 in Toronto Tuesday.
By Carolyn King