FOCUSING ON TECHNOLOGY
Crescent Point rebounds
Crescent Point Energy Corp.’s losses narrowed in the third quarter as the shale oil and gas producer focused its efforts on deploying new technology in an attempt to lower costs.
President and CEO Scott Saxberg highlighted the company’s operational achievements — new waterflooding techniques in southern Saskatchewan, new fracking techniques and encouraging results from wells in Utah — on a Thursday earnings call, saying the company had reduced its costs by 12 per cent in the past year, after a 20 per cent cost reduction the year before.
“Throughout 2016 we’ve been successful in each area of our new play development,” Saxberg said, noting the company has added 700 new drilling locations between two formations in Alberta and Saskatchewan.
Still, the company posted a $109-million net loss in the quarter, which is a 46 per cent improvement from the loss of $201 million during the same period a year earlier. Crescent Point shares tumbled more than five per cent in intra-day trading Thursday.
Raymond James analyst Chris Cox said in a research note that Crescent Point shares have “noticeably underperformed since the surprise $650 million equity issue in early September.”
Crescent Point shares tumbled immediately following that equity issue. The company said Thursday the money raised had been used to pay down debt and to give the company financial flexibility.
The company’s net debt was $3.6 billion at the end of the third quarter, which is a 14 per cent improvement from $4.2 billion a year earlier.
Cox noted Crescent Point shares are down roughly 20 per cent compared with the S&P/TSX Energy Index since the company announced the equity issuance.
Cox has a $25 price target on the stock and noted that the new technologies could help bring investors back to Crescent Point following the equity issue.
“In this respect, the improved performance from the early testing of a new waterflood approach should be welcome news, alongside the additional locations in the company’s two key growth plays,” he said.
Production at Crescent Point declined to 160,610 barrels of oil equivalent per day in the third quarter, from 172,579 boe/d a year earlier. The company announced in September that it would increase spending and boost production in order to pump more than 175,000 boe/d by the end of 2017.