Crescent Point Taps Equity Market to Boost Drilling Budgetby
Producer’s $503 million share sale to fund rise in spending
Company says it has large inventory profitable at $45 WTI oil
Crescent Point Energy Corp. is turning to equity investors to fund more drilling, the latest energy company to boost activity as oil prices rise.
The Canadian oil producer has agreed to sell 33.7 million common shares at C$19.30 apiece for proceeds of about C$650 million ($503 million), the Calgary-based company said Thursday in a statement after the close of regular trading on North American markets. The company’s shares closed Thursday at C$19.50 in Toronto.
The secondary stock offering will allow Crescent Point to accelerate drilling as part of a C$150 million increase in capital spending to a total C$1.1 billion this year, according to the statement. The company also announced a preliminary budget of C$1.4 billion for 2017.
The higher spending in 2016 is expected to boost the average output target for the year by 2,000 equivalent barrels of oil a day to 167,000, the company said. Production by the end of 2017 should be 175,000 to 177,000 barrels a day, for an annual growth rate of 5 to 8 percent.
Crescent Point, the largest oil producer in Saskatchewan, follows Calgary-based Whitecap Resources Inc. and Houston-based Apache Corp. in announcing a rise in activity with West Texas Intermediate crude hovering above $45 a barrel, up from a low of about $26 in February.
Whitecap will boost 2017 exploration and development spending by 46 percent to C$300 million, according to a presentation this month on its website. Apache on Wednesday said it’s increasing its capital guidance this year by about $200 million to roughly $2 billion as it announced a major oil discovery in West Texas.
“This is the first phase of a strong organic growth plan,” Crescent Point Chief Executive Officer Scott Saxberg said in the statement. “We have been very successful at reducing our cost structure during this commodity price downturn and have a large drilling inventory that is highly economic at US$45 WTI.”
Drilling is increasing globally as the oil and natural gas industry sees hope for a sustained crude price recovery after a two-year slump. The global oil and natural gas rig count for August rose to 1,547, the highest since March, Baker Hughes said in an e-mailed statement on Thursday. The number of U.S. rigs seeking oil rose last week by one to 407, the ninth increase in 10 weeks, according to Baker Hughes data released on Sept. 2.