Calgary Herald

Crescent Point aims for six-figure production

Company says income up 55% to $287 million

- DAN HEALING

Light oil producer Crescent Point Energy Corp. said Wednesday it has set its sights on 2012 exit production of 100,000 barrels of oil equivalent per day.

Emboldened by strong drilling results and aided by asset acquisitio­ns made in the first half of the year, the Calgarybas­ed company is raising its exit target to six figures from earlier guidance of 97,500 boe/d, it said while reporting second-quarter results.

Average production is expected to exceed 95,000 boe/d, up seven per cent from earlier prediction­s of 88,500 boe/d.

“Spring breakup was better than expected, but most importantl­y I think the increase highlights our strong drilling results in 2011 and the first half of 2012,” said Scott Saxberg, president and chief executive, on a conference call with analysts.

The second quarter was way higher than expectatio­ns

ANALYST ALAN KNOWLES

“Our waterflood program in the Bakken and Shaunavon as well as facility optimizati­ons have mainly contribute­d to this increase in guidance.”

Later in the day, the company announced it had placed 13.4 million shares on a bought deal basis with a syndicate of underwrite­rs to raise gross proceeds of $550 million. An overallotm­ent option could take the offering to $633 million.

The money will be used cut debt, but Saxberg said in a news release the firm has $16-billion worth of drilling it has identified and it wants to be prepared to make ac- quisitions.

The company reported net income rose 55 per cent to $287 million and cash flow was up 24 per cent to $386 million in the three months ended June 30 of this year versus the same period of last year.

Production jumped 47 per cent to 97,000 boe/d — more than offsetting a 17 per cent fall in its average realized price of $72.85 per barrel of oil equivalent.

At the close in Toronto, Crescent Point’s shares were up five per cent or $1.92 at $42.34. It has traded between $35.51 and $47.30 in the past 52 weeks.

“The second quarter was way higher than expectatio­ns,” said Alan Knowles, an analyst for Haywood Securities.

“Most people were expecting to see a decrease in production because of the impact of spring breakup and the difficulti­es they had last year in Saskatchew­an, but they actually posted an increase in production and that translates to an increase in cash flow per share.”

Crescent Point said it hopes to make its capital budget of $1.25 billion go farther by delaying drilling to negotiate better service company prices.

“We believe that reduced industry activity will alleviate cost pressures in the second half of 2012, leading to improved operating costs and cash efficienci­es” Saxberg said.

The company is known for its unconventi­onal tight oil plays in Saskatchew­an, but is also developing emerging plays using horizontal wells and multi-stage hydraulic fracturing in northweste­rn and southern Alberta and in North Dakota.

Crescent Point said it expects cash flow this year to come in at $1.47 billion or $4.53 per share, based on a forecast of $94 US per barrel for New York-traded oil, $2.40 per thousand cubic feet for Alberta gas and a Canadian dollar worth 99 cents US.

It said it will increase its current 16,000 boe/d crude oil deliveries through its new Stoughton, Sask., rail facility to win better prices in markets that have been shut out by a crude bottleneck at the Cushing, Okla., pipeline hub.

 ?? Rachel Psutka/calgary Herald/files ?? Scott Saxberg, CEO of Crescent Point Energy Corp., is optimistic about his firm’s future following a better spring breakup than expected. The company has placed 13.4 million shares on a bought deal basis to raise $550 million.
Rachel Psutka/calgary Herald/files Scott Saxberg, CEO of Crescent Point Energy Corp., is optimistic about his firm’s future following a better spring breakup than expected. The company has placed 13.4 million shares on a bought deal basis to raise $550 million.

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