Crescent Point raising spending, production
Organic growth will be the focus for Crescent Point Energy Corp. in 2013, it said Thursday, as it revealed a capital budget that is 23 per cent higher than its initial plan for 2012.
The Calgary-based company, which came tantalizingly close to averaging 100,000 barrels of oil equivalent per day in the third quarter, vowed to increase average daily production next year to 112,000 boe/d, with an exit rate of 114,000 boe/d.
Spending is budgeted at $1.35 billion, up from the $1.1 billion 2012 budget set last December, and it plans to drill 455 net wells.
“In 2012, we advanced new technologies across our major plays and expect to deliver production per share growth greater than 10 per cent,” said president and chief executive Scott Saxberg in a news release.
“We will focus on organic growth and the integration of assets from key acquisitions, and continue to build upon our success over the last couple of years.”
The 2013 budget includes funds for its traditional Saskatchewan unconventional light oil resource plays in the Bakken and Shaunavon, plus money for newer assets in the United States and Alberta.
Last month, Crescent
Point bought Ute Energy Upstream Holdings LLC of Utah for $784 million US plus assumed debt, gaining production of about 7,800 boe/d. It raised $800 million at the same time through a bought deal financing.
It said Thursday it plans to spend $242 million in the United States in 2013, including $195 million to drill 74 net wells and build $10 million in facilities and infrastructure in Ute’s core Uinta Basin light oil play. Another $34 million is committed to the North Dakota Bakken play.
“There are maybe nine significant light oil plays in Western Canada and we’re the leader or the largest owner in six of them,” he said.
“The Uinta is fairly similar in that it’s a new development in that the lands were released over the past half-dozen years or so.”
Crescent Point expects to spend $510 million in southeast Saskatchewan, drilling 178 net Bakken wells while continuing to invest in infrastructure projects such as an expansion of the Viewfield gas plant to 42 million cubic feet per day from 30 mmcf/d.
In southwest Saskatchewan, it plans to spend $283 million to drill 89 net Shaunavon wells. It’s also expanding its Dollard rail facility to more than 10,000 barrels per day from 4,000 bpd — a second facility at Staughton can move 40,000 bpd.
In Alberta, the company plans to spend $158 million to drill 45 net wells, most in the emerging Swan Hills Beaverhill Lake light oil resource play and in the Provost area.
Analyst Cody Kwong of FirstEnergy Capital Corp. maintained his outperform rating on the company. “There were no surprises in terms of capital allocation as the Bakken will see 33 per cent of the budget, Shaunavon at 21 per cent and the newly acquired Uinta Basin utilizing 14 per cent of capital expenditures,” he wrote in a note to investors.
Crescent Point stock closed down two per cent or 83 cents at $36.17 in afternoon trading. In the past 52 weeks it has traded as high as $47.30 in March.
Saxberg said the company plans to expand its waterflood optimization program to Beaverhill Lake, Uinta Basin, Alberta Viking and Manitoba Bakken plays.
Depending on oil prices, the company may add to its budget in the second half of 2013, it said.
Crescent Point expects to register cash flow in 2013 of $1.73 billion based on forecast pricing of $90 per barrel for New York traded West Texas Intermediate. It said it has hedged 49 per cent of production in 2013 to lock in prices.
In the third quarter, it reported production of 99,600 boe/d, a 38 per cent increase over the same period of 2011.