CRES­CENT POINT EN­ERGY

Alberta Oil - - JUNIORS -

In­vestors know Cres­cent Point En­ergy as a sig­nif­i­cant oil pro­ducer. The com­pany has a mar­ket cap­i­tal­iza­tion of more than $10 bil­lion, 165,000 boe/d of pro­duc­tion and al­most a bil­lion bar­rels of proved and probable oil re­serves. That is a big com­pany.

Con­sid­er­ing how large Cres­cent Point is to­day, it’s hard to be­lieve that it didn’t even ex­ist at the turn of the cen­tury—yet an­other story of an en­tre­pre­neur­ial man­age­ment team build­ing some­thing out of noth­ing. Cres­cent Point’s CEO Scott Saxberg was an en­gi­neer for ju­nior pro­ducer Was­cana En­ergy when the 21st cen­tury rolled around. In 2001, Saxberg joined a lead­er­ship group that was ready to strike out on its own.

The name Cres­cent Point came from the road to Saxberg’s fam­ily cot­tage. The busi­ness strat­egy of fo­cus­ing on oil was a con­trar­ian one at a time when the ma­jors were snatch­ing up gas-weighted as­sets, be­liev­ing a short­age was com­ing. Boy, were they wrong. As the ma­jor pro­duc­ers bought com­pa­nies for their gas as­sets, they dumped the oil prop­er­ties. That meant op­por­tu­nity for Saxberg and his crew.

Em­brac­ing the hor­i­zon­tal drilling revo­lu­tion and mov­ing quickly into emerg­ing un­con­ven­tional plays like the Saskatchewan Bakken, Saxberg cre­ated an ac­qui­si­tion-fo­cused busi­ness model for Cres­cent Point. By keep­ing a very con­ser­va­tive bal­ance sheet, ag­gres­sive hedg­ing and sig­nif­i­cant div­i­dend, Cres­cent Point be­came very at­trac­tive to in­vestors, and as a re­sult has his­tor­i­cally had a pre­mium mar­ket val­u­a­tion.

Keep­ing a top qual­ity bal­ance sheet didn’t just al­low Cres­cent Point to build a size­able busi­ness. It has also al­lowed the com­pany to weather an oil price col­lapse that very few thought could last this long. While other higher de­cline un­con­ven­tional pro­duc­ers have dis­ap­peared, Cres­cent Point has been able to cut its div­i­dend and hun­ker down.

To­day, Saxberg and Cres­cent Point have a huge port­fo­lio of light oil drilling lo­ca­tions across the Bakken, Shauno­van, Unita and Vik­ing plays. The next act for Saxberg, once oil prices re­cover, is likely to be sec­ondary re­cov­ery through wa­ter-flood­ing, which can in­crease re­cov­er­ies by 200 to 300 per­cent.

CRES­CENT POINT CEO SCOTT SAXBERG

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