This is Neat. Bakken, Shaunavon Infill Drilling Can Double Crescent Point's Reserves, Shareholders Told
Crescent Point Energy Corp. can double its reserves just through infill drilling at its Shaunavon and Viewfield properties, shareholders heard on Thursday.
Crescent Point's current proved plus probable reserves total 496.8 million bbls of oil equivalent. This includes year-end 2011 reserves adjusted for 2012 acquisitions and dispositions, and assumes the closing of the Cutpick Energy Inc. acquisition.
"These two properties -- Shaunavon and Viewfield -- have the ability just through simple infill drilling to double our reserve base as a company," Crescent Point president Scott Saxberg told the company's annual meeting in Calgary.
Referring to the company's total asset base, he said: "We believe right now -- just through infill drilling and some waterflooding on existing assets -- we have the potential to add over a billion bbls of reserves, above and beyond our current base."
He said the company has $16 billion worth of development inventory and more than 7,500 future drilling locations -- "all defined by 3D seismic, geology and engineering."
Crescent Point -- which is 91 per cent oil weighted -- is forecasting average 2012 production of 88,500 boe a day, but has already surpassed that forecast. The company's first quarter output averaged a record 90,285 boe a day.
In the first quarter the tight-oil producer bagged $1.3 billion worth of acquisitions, and is forecasting 2012 exit production of 97,500 boe a day.
In 2012, the former income trust expects to pay dividends of $900 million, or $2.76 a share. In other words, it expects to pay out roughly 57 per cent of its cash flow to shareholders.
Crescent Point has a 2012 capital budget of $1.25 billion and plans to drill 408 net wells this year.
The company expects to increase production to about 132,500 boe a day over the next five years. That includes raising output from its Saskatchewan Bakken area to 74,000 boe a day from about 60,000 boe a day in the first quarter.
Shaunavon production would shoot up to 35,000 boe a day over the next five years from 18,500 boe a day in the first quarter. Production from the Viking formation would edge up to 8,000 from 7,000 boe a day and Swan Hills output would more than double to 6,000 from 2,260 boe a day.
The company's other core areas are in North Dakota, southern Alberta and Manitoba.
Saxberg described Crescent Point's Swan Hills, North Dakota and southern Alberta Viking properties as "emerging plays."
"We don't have a lot of growth in those areas at this stage in this five-year model," he said. "I think that's key in the fact that we're not relying on some new area to grow the next five years.... This model is based on infill drilling -- mainly Shaunavon and Bakken -- and the growth is [mainly] going to happen from there -- which is low risk and easily achievable."
He also noted the plan to grow to 132,500 boe a day in five years doesn't include any Bakken or Shaunavon waterflooding impact, and it doesn't include any additional acquisitions or increased output due to future technology improvements.
"So we have a very low-risk, five-year plan to grow production four to eight per cent per year on a per-share basis for a six to seven per cent dividend," said Saxberg.