The price of oil tumbled from US$75 per barrel of West Texas Intermediate in early October to US$42 on Dec. 24, before coming back to US$51 on Jan. 15.
In that context, Crescent Point Energy Corp. released its capital budget for 2019, with a 30 per cent decrease compared to what it spent in 2018.
“This year's budget highlights the new team's emphasis on returns and capital allocation,” said Craig Bryksa, president and CEO of Crescent Point, in a Jan. 15 press release.
“Given the significant decline and volatility in commodity prices, we have reduced our 2019 capital budget by approximately $500 million, or 30 per cent, compared to the prior year. Due to our revised approach to capital allocation and taking into account improved overall efficiencies, our annual average production is unchanged from the prior year, net of dispositions.
“Additionally, we are on track to meet our 2018 guidance with capital expenditures approximately $35 million below budget.”
Crescent Point's reduced 2019 capital expenditures budget of $1.2 billion, compared to $1.3 billion, is expected to generate annual average production of 170,000 to 174,000 barrels of oil equivalent per day (boepd). After adjusting for dispositions that added approximately 4,500 boepd to the 2018 annual average production, the company's 2019 production guidance is unchanged from the prior year.
As of Jan. 15, Crescent Point lead the entire country with the most active drilling rigs deployed, according to Rig Locator (riglocator.ca). Their 17 rigs working included 10 in southeast Saskatchewan, four in southwest Saskatchewan, two in west central Saskatchewan and one near Swan Hills, Alta.
In total, Crescent Point disposed of assets producing approximately 7,000 boepd in 2018 for proceeds of approximately $355 million. This includes approximately 2,000 boepd of gas weighted production in the second half of 2018, for proceeds of approximately $65 million. Consistent with its previously stated transition plan, the company is currently exploring further disposition opportunities, including certain upstream and infrastructure assets. Crescent Point said it will be disciplined during its divestiture process to ensure appropriate asset values are realized for shareholders.
Crescent Point has allocated approximately 55 per cent of its total capital expenditures budget in 2019 to its key focus areas in the Viewfield Bakken, Shaunavon and Flat Lake resource plays, all within Saskatchewan. This is an increase from approximately 45 per cent in the prior year, reflecting the company's commitment to risk-adjusted returns.
The company plans to develop these resource plays through a combination of low-risk, high-return drilling, waterflood programs and new infrastructure investments to support future growth.
As part of its waterflood initiatives, Crescent Point plans to convert approximately 145 producing wells to water injection wells in 2019, compared to approximately 70 conversions in 2018. This increase demonstrates the company's ongoing focus on the consistent advancement of decline mitigation techniques, as previously outlined in its transition plan.
Crescent Point's 2019 production guidance includes the anticipated impact on production of approximately 2,000 boepd from converting existing producing wells to water injection wells.
