Crescent Point confident despite current environment
Good business planning and keeping costs low seems to be a common theme among successful companies.
- 24 Jun 2016
- The StarPhoenix
- BRUCE JOHNSTONE email@example.com
LOW OIL PRICES NO ISSUE FOR SASK. OIL PRODUCER
Crescent Point CEO confident despite current environment
While the rest of the Western Canadian oilpatch is battening down the hatches and bailing furiously during the current low oil-price squall, Crescent Point Energy is sailing along — albeit at slightly reduced speed — seemingly impervious to the rough seas that have swamped some competitors in the last two years.
That certainly was the message Crescent Point president and CEO Scott Saxberg was conveying to reporters following a meeting with Premier Brad Wall at the Legislative Building on Thursday.
As the largest oil producer in Saskatchewan, with 25 per cent of total oil production, and the largest gas producer, with 23 per cent of total gas production, Crescent Point has every reason to be confident, even cocky, in the current low price environment. In November 2014, Crescent Point passed Husky to become the largest oil producer in Saskatchewan. The Calgary-based company was also the most active oil-well driller in the province in 2015, with 623 new wells or 34 per cent of total oil wells drilled in the province, primarily in the Estevan area.
After his meeting with Wall, Saxberg spoke briefly with reporters. Here are some excerpts from that interview.
Q What was the nature of your discussions with Premier Wall?
A “One of the key things I laid out to him was the unique position Saskatchewan is in with the resource that we have here. It’s water-floodable, secondary recovery that we can continue to grow and be very sustainable in the kind of reservoirs and properties that we have in Saskatchewan.”
Q How many wells would you project Crescent Point to drill in the province in 2016?
A “Roughly the same (as last year). We’re the largest driller in Canada. Over the last three to four years, we’ve drilled the most wells (in the country), mostly in Saskatchewan. Again, that’s the unique nature of the high profitability and value of these assets in Saskatchewan. They’re large projects. We have upwards of $20 billion worth of projects still to do in the province. We’ve spent, just in the last five years, close to $7 billion on capital projects, never mind our day-today operating costs (which) are probably $500 million to $600 million per year on top of that. The assets and properties (we have) in Saskatchewan — in Weyburn, in Shaunavon — continue to outperform.
Q How can Crescent Point drill hundreds of wells and pump about one-quarter of the province’s oil and gas production with oil prices at $50 US per barrel WTI, which is substantially higher than the Canadian Light crude price at $47 per barrel CDN or Western Canadian Select at $37 per barrel CDN?
A “It’s a lot of things. Light oil production; the highest price is (for) light oil. Very shallow nature of the reservoirs here, so it’s cheap to drill. And because of how we develop the assets, with centralized facilities, very low operating costs. So the combination of low operating costs and capital costs, shallow nature (of reservoirs), size and scale (of projects), gives us that value and growth and ability to profit. Even as low as $35 US a barrel oil, we’re still reasonably profitable.’’
Q Your initial capital budget for 2016 for Saskatchewan was around $1 billion. What’s your projected capital budget for the province at the halfway point?
A “It’s probably around $800 million to $900 million for this year. Prior to the downturn, we would have been closer to $2 billion in the province in 2014. So our expectation is, as prices improve, our capital spending in the province will go up. We’d anticipate — whether it’s in 2017 or 2018 — a higher capital spend for the province in those years, relative to this year.’’
Q Premier Wall has been a
strong advocate of pipeline projects, like Keystone XL and Energy East? How important are those projects to your company and your industry?
A “The new pipelines are very important to us. It really improves the price that we get for our product. There’s a probably a $5 per barrel delta (price change) because of the lack of pipe and infrastructure going to the proper markets.