Crescent Point Energy (CPG -6.5%) is lower despite reporting a smaller Q3 loss, helped by cost-cutting efforts that offset a drop in production and lower average oil and gas prices.
But Q3 cash flow fell 24% Y?Y, with overall production down 7% to 160,610 boe/day from 172,570 boe/day a year earlier, but CPG says production came in ahead of its expectations, which puts it on track to meet or exceed its full-year guidance of 167K boe/day.
In its earnings conference call, President and CEO Scott Saxberg highlighted the CPG’s operational achievements including waterflooding techniques in southern Saskatchewan, new fracking techniques and encouraging results from wells in Utah, saying the company had reduced its costs by 12% in the past year after a 20% cost reduction the year before.
Raymond James analyst Chris Cox says CPG shares have underperformed since September's surprise $650M equity issue, but that the new technologies could help bring back investors.
Crescent Point Energy (NYSE:CPG) -5.3% premarket after disclosing plans to sell 33.7M common shares on a bought deal basis at C$19.30/share to raise ~C$650M (US$503M) in gross proceeds.
CPG says the proceeds will be used to fund more drilling as part of a C$150M increase in capital spending to a total C$1.1B this year; the company also plans a preliminary budget of C$1.4B for 2017.
CPG expects the higher spending in 2016 to raise its production target for the year by 2K boe/day to 167K boe/day, with output by the end of 2017 foreseen at 175K-177K boe/day, for an annual growth rate of 5%-8%.
CPG says Q2 operating expenses fell 7% Y/Y, partly due to improvements in transportation and hauling, chemical, labor and service costs, and expects annual operating expenses to come in ~C$50M (US$38M) lower than predicted in its original 2016 budget; it sees full-year average operating expenses at $11.40/boe, ~$0.85 lower than the original estimate.
CPG also reiterates annual production guidance of ~165K boe/day after Q2 output rose 10% Y/Y to more than 167K boe/day, and full-year capex outlook of C$950M.