CALGARY, July 14, 2011/CNW/ - Crescent Point Energy Corp. ("Crescent Point" or the "Company")is pleased to announce its land position in Alberta's emergingBeaverhill Lake light oil resource play.
Over the past 18 monthsand through a series of joint ventures, farm-ins and Crown land sales,Crescent Point has accumulated more than 380 (165 net) sections of landhighly prospective for the Beaverhill Lake zone in the Swan Hills area.The majority of the lands were acquired in a joint venture with Coral Hill Energy Ltd. ("Coral Hill")through Crown sales by way of exploration licences, which have anine-year development term with minimal drilling requirements to holdthe lands.
Included in the above land totals are a farm-in agreement and a joint venture agreement that Crescent Point and Coral Hillhave entered into with Second Wave Petroleum Inc. ("Second Wave").Under the terms of the farm-in and net to the Company, Crescent Pointhas agreed to pay 57% of the drilling and completion costs of up to 13earning wells, to earn a 40% working interest in approximately 78 (31net) sections of highly prospective Beaverhill Lake rights. The firsttwo farm-in wells of this commitment have been drilled and have shownvery encouraging initial results.
To date, Crescent Point has spent approximately $70 million in the area, including land and development costs. Of this amount, approximately $40 million has been spent thus far in 2011.
Todate and including the farm-in wells described above, a total of 8 (3.0net) wells have been successfully drilled, and the Company currentlyhas four drilling rigs in operation in the Beaverhill Lake light oilresource play. Three of the wells have been completed and put onproduction, with average first-month production rates exceeding 1,000bopd gross. These rates are in excess of the Company's internallyestimated average type well curve, which predicts first-month averageproduction of 295 bopd. The Company's internal average type well curvegenerates a half-cycle rate of return of approximately 75 percent with apayout of 15 months under current commodity prices.
The Companyis currently reviewing its capital program for the remainder of theyear. With continued success of the Beaverhill Lake exploration program,the Company could spend up to an additional $100 millionon capital expenditures in the play this year. This level of spendingcould increase the drilling rig count from four to eight and couldresult in the drilling of up to 35 gross additional wells.
This level of spending would be incremental to the Company's original $800 million 2011 capital development budget.
"Asa company, we continuously search for new oil resource opportunities todrive our future long-term growth. We've been working on building thisBeaverhill Lake land base with our partner for almost two years and areexcited about our drilling results to date, as well as the compellingeconomics in this emerging light oil resource play," said Scott Saxberg,president and CEO of Crescent Point. "We're currently evaluating ourcapital budget and, with the success we've seen in this play, willlikely increase spending in the Swan Hills area."
Crescent Pointplans to review its 2011 capital program in the third quarter,incorporating Beaverhill Lake drilling success, and expects that arevised capital program will be approved and announced during the thirdquarter.
Crescent Point is also pleased to announce that it hasacquired ownership of 8,000,000 common shares of Arcan Resources Ltd.("Arcan"), which is a leading Beaverhill Lake producer, at an effectiveprice of $5.08 per Arcan share. Theseshares, which represent 9% of the issued and outstanding common sharesof Arcan, were acquired through the facilities of the TSX VentureExchange. As a result of the acquisition of the Arcan shares, CrescentPoint now has ownership and control over 16,750,000 common shares ofArcan, representing approximately 19% of the issued and outstandingcommon shares of Arcan, as of the date hereof, on a non-diluted basis.An Early Warning Report respecting this acquisition has been filed onthe System for Electronic Document Analysis and Review ("SEDAR") and canbe viewed at www.sedar.com.Crescent Point acquired the Arcan shares for investment purposes only.The investments will be reviewed on a continual basis, and CrescentPoint's holdings may be increased or decreased in the future, dependingupon economic or market conditions or matters relating to Arcan.
Neitherthe TSX Venture Exchange nor its Regulation Services Provider (as thatterm is defined in the policies of the TSX Venture Exchange) acceptsresponsibility for the adequacy or accuracy of this release.