Crescent Point Energy Trust: A track record of top performance

Source: Exec Digital Canada

Date :9/9/2008 4:14:04 AM

This major player in the Western Canadian market now runs eight distinct oil and gas operations – and VP Neil Smith says they’re not done growing.

Written By Gabe Perna

It is amazing to realize that Crescent Point Energy Trust, which consolidated from Crescent Point Energy Ltd. (CPE) and Tappit Resources Ltd, is only seven years old. The company is so firmly established in the Western Canadian Oil and Gas market you would think it has been there for years.

The company is an open-ended, conventional oil and gas trust involved in the acquisition and development of strategically selected oil and gas assets in Western Canada. “We are an energy trust that invests its shareholders’ hard-earned money in large oil or gas in place reservoirs to increase the value of these assets and provide a stream of distributions back to its shareholders while increasing the value of their initial investments through our operating and exploitation expertise,” says VP of Engineering and Business Development Neil Smith.

Smith boasts 22 years experience with a specialty in technical and business skill. He began his career as a battery operator and field engineer with Dome Petroleum in 1986, then went to Gilbert Laustsen Jung Associates for more than four years as an engineering reserves evaluator. Prior to joining Crescent Point, he was the Manager of Business Development at PrimeWest Energy Trust where he was on a team that grew that company from 10,000 barrels of oil equivalent per day (boe/d) to more than 34,000 boe/d.

Rapid growth

Crescent Point forecasted a production of 34,500 boe/d, 87 percent weighted to light and medium crude oil in 2008. When the company began in 2001 it had an average of 275 boe/d. It is easy to see why Smith hopped on board in 2003 and never looked back. The company continues to show astonishing growth. “We operate over 80 percent of our production,” explains Smith. “We have a track record of top performance through low finding and development costs, a disciplined approached to achieving top quartile netbacks through quality acquisitions, low operating costs and disciplined hedging programs and maintaining a conservatively debted balance sheet to maintain degrees of freedom for capital spending and to timely take advantage of acquisition opportunities.”

Crescent currently runs eight different operations which are either oil or gas properties or both. With an increased budget it will look to expand its operations. Smith clarifies, “We recently increased our 2008 capital budget to $425 million to expand our drilling program. We increased our facility spending to accommodate increased production for this year and anticipated increases in future years including expanding our 6 mmscfd gas plant to over 30 mmscfd by mid 2009 and to take advantage of land sake opportunities.”

Another key aspect of Crescent Point is its three-point strategic method – to acquire, to manage risk and to develop and exploit. This means Crescent Point uses excellent balance sheet and growth capital to acquire focused, long life, high quality reserves and production in Western Canada. It then strives to manage risks associated with the oil and gas industry to provide stability to its distributions. Finally it uses its large, low risk development-drilling inventory to maintain production, reserves and distributions.

Smith says this strategy is essential to success. “I think the most important point is that we have maintained the discipline to adhere to our strategy throughout different points of the commodity cycle and economic conditions. Our tremendous success can be attributed to our proven track record as a team and disciplined approach to our strategy,” says Smith.

Bakken Business

Undoubtedly Crescent Point’s biggest focus these days is the Bakken Oil Field. Bakken is a highly sought after play located in Southeast Saskatchewan. Smith says Crescent has operated Bakken for years following the early development of the play and it made timely acquisitions just as the play began to be proven up and took off in its development.

The Bakken remains one of the most competitive plays in Saskatchewan. However, Smith says that Crescent remains on top of its competitors when dealing with Bakken. “We are the number one driller and number one producer in the Bakken in southeastern Saskatchewan,” says Smith.

“We own the lion’s share of land within the central and best part of the play. We operate and own an expansive gas gathering system and plant in the heart of the play which gives us a tremendous value added advantage over all our competitors. Gas and natural gas liquids add about 20 percent to the value of our production that the other guys can’t compete with us on.”

According to Smith, with a worth estimated at more than 4.6 billion barrels of oil in place, Bakken is the largest conventional play discovered in the past 50 years in Canada and second largest conventional ever after the Pembina field. The play produced only in a few hundred barrels just a few years ago and now collectively produces between 30,000 and 40,000 bop/d.

Furthermore, Smith says Bakken has allowed for technological advancements in the field. “Technically the most recent advances in well completion technology have unleashed access to billions of barrels of crude and BCF’s of natural gas in reservoirs previously uneconomic to produce,” he explains.

Environmental STEPS

Smith says that Crescent Point also uses several green initiatives. One in particular Smith is proud to say equates to the spending of CAN $1 to $2 million each year. “We contribute 15 cents for every boe produced to an environmental emission reduction fund to reduce our impact on the environment. We spend that money reducing emissions from such equipment as compressors, adding equipment to collect vented fumes from produced oil and water tanks and to adding new equipment to existing facilities to reduce emissions and sequester by products of production,” he says.

Smith says Crescent enjoys a great relationship with its employees. Recently recognized as one of the best places to work for its employee perks and rewards, Smith says staff is the most important asset. Crescent has a low turnover rate and the luxury of a pool of prospective employees who want to work there.

This is one of the many reasons Crescent stands alone against its competitors. “Our employees work as a team and we have created a positive business environment in which all employees can excel by being exposed to a multidisciplinary team environment. Our approach of acquiring large and focused in place reserves allows us to concentrate our efforts on value added activities in an efficient manner,” says Smith.

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