Mergers & acquisition activity in the Canadian energy sector continues to the most active we have seen in many years. Yesterday, Crescent Point Energy announced its second transformational acquisition in the Alberta Montney within the calendar year.
Crescent Point announced that it was acquiring Hammerhead Resources for $2.55 billion. This follows up on the company’s acquisition of Montney assets from Spartan Delta Corp. in March of this year for $1.7 billion.
On a flowing barrel metric, this deal was done at about the same price ($45,535/boe/d) as the previous acquisition ($44,737/boe/d). Of note is that Crescent Point quotes the volumes for the acquisition at 56,000 BOE/d as an expected 2024 average, whereas Hammerhead reported its 2023 Q3 volumes yesterday at 46,046 BOE/d, so additional capital will likely be required to bring those volumes up to the expected 2024 figures.
This marks the 6th Alberta Montney transaction valued at over $150 MM in the last year and a half. The transaction metrics for those deals are summarized below, with our full M&A table accessible here.
Figure 1 – Recent Alberta Montney acquisitions
(tilt phone sideways to view full table on mobile device)
Announce Date | Acquirer | Target | Deal Value ($) | BOE/d | Pct Liquids | Value per BOE/D ($) |
---|---|---|---|---|---|---|
2022-06-28 | Whitecap Resources | XTO Energy Canada | 1,700,000,000 | 32,000 | 30 | 53,125 |
2023-03-28 | Crescent Point | Spartan Delta Corp. | 1,700,000,000 | 38,000 | 55 | 44,737 |
2023-07-31 | Cygnet Energy | Athabasca Oil Corporation | 160,000,000 | 3,000 | 45 | 53,333 |
2023-08-01 | Strathcona Resources | Pipestone Energy Corp. | 920,000,000* | 33,143* | 41* | 27,759* |
2023-08-03 | Cygnet Energy | Murphy Oil Company Ltd. | 150,000,000 | 1,700 | 39 | 88,235 |
2023-08-03 | Crescent Point | Hammerhead Resources | 2,550,000,000 | 56,000 | 48** | 45,535 |
*Formal metrics not press released. Assumed deal metrics based on public disclosure and best estimates.
**Not press released but based on Hammerhead Q3/2023 report
From an asset perspective, the fit is pretty obvious. Hammerhead’s Montney assets will tuck right in beside Crescent Point’s existing Montney acreage south of Grande Prairie. Pictured below in Figure 2 are how the assets will fit together. In purple you can see Crescent Point’s Crown mineral rights prior to the Spartan Delta acquisition. Crescent Point’s Crown mineral rights obtained via Spartan Delta are shown in red. And lastly, all of the wells licensed to Hammerhead Resources are shown in blue.
Figure 2 – BOE Intel asset transfer and activity map
Crescent Point says it will become the 7th largest E&P by production volume, and the largest land owner in the Alberta Montney. Pro forma production is said to be over 200,000 BOE/d, with a 65% oil/liquids weighting.
Pictured below in Figure 3 and Figure 4 are the quarterly production profiles from BOE Intel for Crescent Point and Hammerhead Resources.
Figure 3 – Crescent Point quarterly production
Figure 4 – Hammerhead quarterly production
A look at the top oil/condensate wells by volume for the month of September shows that Crescent Point (combined with Hammerhead) had 9 of the top 15 Alberta Montney wells. The company has certainly become a dominant Montney player in a short period of time.
See the location of the top 15 wells on a map here, along with production data.
TOP 15 OIL/CONDENSATE WELLS – ALBERTA MONTNEY – SEPTEMBER VOLUMES
Licensee | UWI | Field | Formation | Monthly Liquids Production (bbl) | Daily Average Liquids (bbl/d) | Daily Average Gas (mcf/d) | On Prod Date | Monthly Hours | Cumulative Liquids (bbl) |
---|---|---|---|---|---|---|---|---|---|
Hammerhead Resources Ulc | 102051506604W600 | KARR | MONTNEY FM | 35,163.0 | 1,172.0 | 6,381.0 | 2023-07-27 | 0.0 | 68,128.0 |
Crescent Point Energy Corp. | 100020906904W600 | ELMWORTH | MONTNEY FM | 35,149.0 | 1,172.0 | 2,115.0 | 2023-03-13 | 0.0 | 255,733.0 |
Hammerhead Resources Ulc | 103041506604W600 | KARR | MONTNEY FM | 33,947.0 | 1,132.0 | 4,511.0 | 2023-07-25 | 0.0 | 73,763.0 |
ARC Resources Ltd. | 102090306304W600 | KAKWA | MONTNEY FM | 30,406.0 | 1,014.0 | 4,511.0 | 2023-07-02 | 0.0 | 62,926.0 |
ARC Resources Ltd. | 105100306304W600 | KAKWA | MONTNEY FM | 26,809.0 | 894.0 | 3,749.0 | 2023-06-30 | 0.0 | 68,390.0 |
ARC Resources Ltd. | 100022506204W600 | KAKWA | MONTNEY FM | 26,203.0 | 873.0 | 3,583.0 | 2023-06-27 | 0.0 | 40,403.0 |
Crescent Point Energy Corp. | 104141106903W600 | BEZANSON | MONTNEY FM | 25,890.0 | 863.0 | 3,662.0 | 2023-04-13 | 0.0 | 186,707.0 |
Hammerhead Resources Ulc | 100041506604W600 | KARR | MONTNEY FM | 25,777.0 | 859.0 | 3,441.0 | 2023-07-25 | 0.0 | 59,634.0 |
Hammerhead Resources Ulc | 100131506604W600 | KARR | MONTNEY FM | 22,701.0 | 757.0 | 3,681.0 | 2023-07-29 | 0.0 | 42,846.0 |
Canadian Natural Resources Limited | 100033607209W600 | WEMBLEY | MONTNEY FM | 22,473.0 | 749.0 | 1,970.0 | 2023-08-18 | 547.0 | 33,281.0 |
Canadian Natural Resources Limited | 100063607209W600 | WEMBLEY | MONTNEY FM | 22,212.0 | 740.0 | 2,217.0 | 2023-08-14 | 563.0 | 34,156.0 |
ARC Resources Ltd. | 100012506204W600 | KAKWA | MONTNEY FM | 21,424.0 | 714.0 | 2,826.0 | 2023-07-01 | 0.0 | 49,777.0 |
Crescent Point Energy Corp. | 100040607004W600 | ELMWORTH | MONTNEY FM | 21,421.0 | 714.0 | 3,723.0 | 2023-07-09 | 0.0 | 66,758.0 |
Crescent Point Energy Corp. | 100043006904W600 | ELMWORTH | MONTNEY FM | 21,317.0 | 711.0 | 5,481.0 | 2023-06-24 | 698.0 | 85,397.0 |
Crescent Point Energy Corp. | 100092406905W600 | ELMWORTH | MONTNEY FM | 20,648.0 | 688.0 | 4,678.0 | 2023-06-23 | 702.0 | 84,376.0 |