Crescent Point Energy Corp. posted a fourth quarter net loss of $510.6 million including a $457.0 million non-cash after-tax ($611.4 million pre-tax) net impairment charge.
This loss, announced on Feb. 23 as part of the company’s 2016 year-end reporting, was primarily resulting from a lower future forecast for commodity prices at Dec. 31, 2016 compared to Dec. 31, 2015, offset by significant technical and development reserves additions.
The company noted the after-tax net impairment represents approximately three per cent of the company’s total assets as at Dec. 31, 2016, but it does not impact Crescent Point’s funds flow from operations or the amount of credit available under its bank credit facilities.
Crescent Pointachieved average production of 165,097 boepd in fourth quarter 2016 with December exit production greater than 167,000 barrel of oil equivalent per day (boepd). Annual average production of 167,764 boepd exceeded the company’s 2016 guidance while total development capital expenditures of $1.10 billion, excluding land acquisitions, was in line with budget.
In 2017, Crescent Point plans to drill approximately 670 net wells and generate annual average production of 172,000 boepd with an exit rate of 183,000 boepd.
Williston Basin
The company drilled 378 oil wells and two services wells in the Williston Basin out of its total 715 wells drilled in 2016 with a 100 per cent success rate. Crescent Point no longer breaks out its southeast Saskatchewan, Manitoba and North Dakota wells in their numbers, although their drilling rig activity is largely in southeast Saskatchewan.
Crescent Point improved operating efficiencies within each of its Williston Basin resource plays throughout 2016. By fourth quarter, average drilling days improved approximately 11 per cent compared to 2015. The company noted this reflects the positive impact of their optimization programs, efficiencies achieved from increased drilling activity within the basin and the successful application of technologies such as new drill bits and motors.
Crescent Point also internally identified over 700 net new drilling locations in the Williston Basin during 2016. These new locations are primarily in the company’s multi-zone Flat Lake resource play, including approximately 300 net locations acquired in third quarter 2016 as part of the company’s strategic Flat Lake acquisition. The Flat Lake resource play continues to be a growth area for Crescent Point with strong netbacks that were 24 per cent higher than the corporate average during 2016.
In 2017, the company plans to drill approximately 350 net wells in the Williston Basin. The company’s 2017 budget includes step-out wells, a down-spacing program and infill drilling to further extend the basin’s boundaries and capitalize on its strong economics. Crescent Point also plans to test new technologies during the year, including its ICD waterflood system.
Waterflood
Crescent Point’s waterflood programs continue to improve estimated ultimate recoveries and economic values while reducing decline rates and limiting required maintenance capital expenditures. During late 2016, Crescent Point continued to test its injection control device (ICD) system. The company’s initial pilot demonstrated encouraging results with three times the amount of water injectivity without increasing the percentage of water produced in offsetting wells compared to prior technology. The company expects increased water injectivity and enhanced distribution of injected water will help manage reservoir pressure and may further reduce decline rates and increase estimated ultimate recoveries. The success of Crescent Point’s initial pilot led the company to implement additional ICD systems throughout the Williston Basin and southwest Saskatchewan in late fourth quarter.
