Crescent Point to spend $1B in Sask.

Crescent Point Energy Corp. is staying the course in 2015, projecting increased oil and gas production and bucking the industry trend toward major cuts in production and staffing in response to low oil prices.

Canada’s fourth-largest independent oil and gas company and the country’s top driller — based on exploratory and development metres drilled in 2014 — plans on spending more than two-thirds of its $1.45-billion capital budget in Saskatchewan this year, the company announced Wednesday.

The Calgary-based company credits its hedging program, which will see more than half of its 2015 production and one third of 2016 production locked in at higher prices, and cost reductions of up to 20 per cent, for being able to implement its 2015 business strategy.

Crescent Point is projecting oil and gas production to rise 8.3 per cent to 152,500 barrels of oil equivalent per day in 2015, up from 140,800 barrels in 2014 and 120,300 in 2013. The outlook was contained in Crescent Point’s financial report for the fourth quarter, a period that included a major drop in the price of crude that picked up momentum in late November. The price of benchmark West Texas Intermediate crude oil has dropped 55 per cent in six months to about $50 a barrel recently. Neil Smith, chief operating officer for Crescent Point, said the company had to pare back its capital spending in 2015 to $1.45 billion from more than $2 billion in 2014. But Crescent Point’s results benefited from its hedging program, which helped produce net income of $121.4 million in the fourth quarter and $509 million for the 2014 fiscal year.

“Why is Crescent Point bucking the trend? We’re one of (the few) very well-hedged companies in the energy sector,’’ with 56 per cent of 2015 production and 33 per cent of 2016 production hedged at $89 and $84 Cdn per barrel respectively, Smith said. “We have a conservative balance sheet,’’ Smith said, adding the company recently increased its credit facility by $1 billion to $3.6 billion. Most importantly, Smith said Crescent Point is the biggest producer in the one of the best oil producing areas in North America — Saskatchewan. “We’re now the No. 1 producer by volume in the province. Our assets are better than everybody else’s.”

Smith said Crescent Point started out in 2001 as junior resource company with no production; 14 years later, the company is the seventhlargest producer (by market capitalization) in Canada. “Saskatchewan has worldclass assets.’’

With a major piece of the prolific Bakken play in southeastern Saskatchewan, plus promising plays at Flat Lake in the Torquay area, near Estevan, and Shaunavon in the southwest, Crescent Point has assets in six of the top seven plays in North America, according a recent Scotiabank study.

This year, Crescent Point plans on spending $400 million drilling 184 wells in the Viewfield-Bakken area, $300 million drilling 110 wells in Shaunavon and $190 million drilling 45 wells at Flat Lake. “Just in the province of Saskatchewan, we’ll be investing $1 billion in 2015.’’