CALGARY – Crescent Point Energy Corp., the biggest oil producer in Saskatchewan, cut its dividend and pared back its spending plans Wednesday because it took a $589 million charge resulting from the collapse in oil prices.
The company took the impairment charge on its assets as a result of the plunge in oil prices and bleak forecasts for future prices.
The charge pushed Crescent Point to a $382 million net loss in your fourth quarter, compared to earnings of $121 million the same time frame a year earlier.
Crescent Point president and CEO Scott Saxberg said with an earnings call that the company has been “very conservative” in booking oil reserves. “We still have low-risk reserves left to book,” he explained.
Despite the big charge, the business’s chief operating officer Neil Smith said Crescent Point could be profitable at current oil prices. Free airline Texas Intermediate benchmark price closed at US$38.31 per barrel on Wednesday, up US$1.81.
“At $25, I’m still making money. Within the low $20s, I’m still making money,” Smith said.
Still, the Calgary-based company cut its monthly dividend to 3 cents per share from 10 cents beginning this month. The move is expected in order to save Crescent Point an additional $430 million each year, as it is constantly on the cut its costs.
Smith said Crescent Point has additionally approached the oilfield service companies employed by the company and inspired to see their books, in order to further lower costs through its very own logistics and those of their service providers.
Unconventional oil and gas producers across Western Canada happen to be slashing their capital budgets and aggressively cutting costs because the oil price rout drags on.
Seven Generations Energy Ltd., which produces gas in northwestern Alberta and northeastern Bc, announced Wednesday it had reduced its drilling costs by 24 percent over the course of 2015, while also reducing its costs to frack wells by 26 per cent.
Seven Generations president and CEO Pat Carlson said he thinks more than half from the costs the company has cut throughout the downturn will be sustainable if oil prices rise.
At as soon as, Carlson said, oilfield service companies – like drilling companies and hydraulic fracturing companies – are “bidding lower and lower” on jobs.
The Calgary-based company was able to beat analysts’ expectations for money flow within the fourth quarter, even though it did post a $28 million net loss in the quarter, compared with net earnings of $68 million simultaneously last year.
Both Seven Generations and Crescent Point plan to spend less this season as oil and gas prices are forecasted to stay low.
Crescent Point now expects to invest $950 million during the period of 2016, compared with an initial estimate between $950 million and $1.3 billion. The majority of that money is allocated the 2nd half of the year, if this will be used to bring more oil on-stream for next year.
“We see the budget and dividend cuts as a prudent and smart decision, and something that will ensure (Crescent Point) manages with the downturn while waiting to resume growth when oil prices recover,” National Bank Financial analyst Kyle Preston said in a research note.
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