Crescent Point Energy Corp. moved Tuesday to add to its dominant position in the Saskatchewan Bakken light oil play by buying junior Ryland Oil Corp. for $122 million worth of stock and debt.

The company said the purchase could help launch a move into the United States portion of the unconventional pool, which is being tapped using horizontal wells and multistage fracture stimulation.

 

"We see great potential in the Flat Lake Bakken pool, which is an extension of the Bakken play in the U.S.," said Scott Saxberg, president and chief executive of Crescent Point, in a news release.

 

"This acquisition of our only partner in the play allows us to fully manage the development of the area and adds a U.S. land base of over 50 net sections (130 net square kilometres) in the Bakken."

 

Ryland, a Vancouver-based junior explorer, has assets in North Dakota. It controls 1,230 square kilometres of mostly undeveloped land and has production of about 150 barrels of oil equivalent per day in the Flat Lake Bakken in Saskatchewan near the U.S. border.

 

Crescent Point chief financial officer Greg Tisdale said the acquisition brings the company to about 2,070 net square kilometres of land -- not all of it prospective for Bakken -- in the United States and sets the table for more exploration south in future.

 

"We're looking at potentially extending down to the States," he said. "With this land base it gives us further prospects down there."

 

The company picked up U.S. assets when it bought Saskatchewan lands from Talisman Energy in March 2009, including more than 325 net square kilometres of exploratory Bakken land in Montana.

 

Crescent Point became a partner with Ryland last fall when it bought privately held TriAxon Resources for $249 million in stock and debt. Ryland and TriAxon had been jointly developing Flat Lake, with TriAxon as the operator.

 

"This agreement is the culmination of a lengthy process launched by our company to determine how to maximize shareholder value," said Ryland president Gerry Shields in a news release. "Ryland has a premier land position in southeast Saskatchewan and North Dakota, and it will take considerable resources to exploit it."

 

If Ryland shareholders approve the deal, they will receive 0.0117 Crescent Point shares for each Ryland share. Total consideration includes an estimated $26.4 million of Ryland net debt. The arrangement is expected to close Aug. 20.

 

To date, Crescent Point and firms it has acquired have drilled six successful wells in the Flat Lake area, the company said. It has budgeted to drill up to eight more wells by the year-end to further delineate the play. Tisdale said the company may increase its overall 2010 capital expenditure budget of $750 million because of the deal, but that decision has not yet been made.

 

Crescent Point said it will also gain tax pools estimated at $85 million to offset future tax obligations.

 

Source: Calgaryherald.com