Crescent Point Energy: Trying to Overcome the Weakness

Crescent Point Energy’s (CPG) last-reported quarter was described as “an excellent quarter” by the President & CEO. In the second quarter, Crescent Point Energy had produced an average of 151,636 barrels of oil equivalent (boe/d), which was about 10 % more than 137,368 boe/d produced last year.

The share of liquids (light and medium crude oil and NGLs) in this production was about 91%.

A look at the operations

The company spent a sum of $329.3 million for total development capital expenditure. Under this head, the major highlight for the company was the $270 .7 million spent on drilling and development activities and achieving a 100% success rate while drilling a total of 185 wells in total.

The shorter than expected spring break-up in southern Saskatchewan was quoted as the primary reason behind the robust production in the second quarter. Due to this shorter break-up, the company was also able to move capital expenses into the second quarter from the latter half of the year. Thus, the capital expenditure to be reported in the second half of 2015 is greatly reduced which will positively impact the results of the next two quarters.

The selling price averaged $56.25 per boe for the 3 month period. Despite the low per boe selling price, the $41.74 netbacks per boe were impressive. The company’s hedging program was a great help in achieving this level of netbacks. Hedging contributed $8.18 per boe of realized gains on derivatives during the quarter. Without taking the hedging effect into consideration, the netbacks amounted to only $33.56 per boe.

Making smart moves

During the second quarter, Crescent Point has closed several strategically important investment and financing deals. The company has acquired Legacy Oil + Gas Inc. for approximately $ 1.48 billion. This adds production of 20,000 boe/d and 102.7 million boe of proved plus probable reserves to Crescent’s production base.

More recently, in early July, Crescent Point announced the acquisition of Coral Hill Energy ltd. which has a production capacity of 3,200 boe/d and 17.6 million boe of 2P reserves. Although the production accretion due to Coral is not that significant, its purpose is to enhance the long-term strategic value and flexibility of the Company's Swan Hills assets by strengthening its control over the course of development of those assets.

From the financing angle, Crescent Point is quite relieved due to a significant amount of liquidity and financial flexibility. It has no big debt obligations maturing in the near term. This is a significant plus for investors in this time of crisis. In addition to this, a credit facility of about $1.7 billion is still untouched by the company even after considering the debt related transactions involved in the recent acquisitions.


Hence, Crescent Point Energy is making the right moves to overcome weakness in the oil market. So, it looks like a good bet despite weak oil pricing.

Published on Oct 30, 2015
By Vinay Singh

Copyrighted 2020. Content published with author's permission.

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