Crescent Point Energy Corp. reported its second-quarter profit fell by 36 per cent year-over-year as global oil prices declined from 2022’s dramatic peaks.
The Calgary-based company said Wednesday it earned $212.3 million in the three-month period ended June 30, 2023, down from $331.5 million in the same period a year ago.
The company’s operating results are still “solid,” said RBC Capital Markets analyst Michael Harvey in a note Wednesday. He pointed out Crescent Point’s adjusted funds from operations for the quarter, which work out to $1.01 per share, beat Wall Street’s expectations of 97 cents per share.
During the quarter, Crescent Point also returned 60 per cent of its free cash flow to shareholders via dividends and share repurchases, for a total of almost $167 million.
But the decline in earnings coincided with weakening crude oil prices due to slowing global economic growth and the fading of concerns about supply disruptions as a result of the Ukraine war.
Many Canadian oil producers reaped record profits in 2022 as global commodity prices spiked in the aftermath of Russia’s unprovoked invasion. But those sky-high prices have eased significantly in recent months. The benchmark West Texas Intermediate averaged US$75 per barrel for the first six months of 2023, down from over $100 per barrel on average over the same period in 2022.
Crescent Point — which has drilling operations in Alberta, Saskatchewan, and Manitoba — says its average selling price in the quarter was CDN$67.31 per barrel of oil equivalent, down from $109.44 a year earlier.
During the quarter, the company closed its previously announced deal to buy Spartan Delta Corp.’s Montney oilfield assets in Alberta for $1.7 billion.
The deal means that Crescent Point will significantly grow its presence in what is one of North America’s largest unconventional petroleum plays, acquiring 600 drilling locations the region and adding 38,000 barrels of oil equivalent per day to the company’s production capacity.
On a conference call with analysts on Wednesday, CEO Craig Bryksa said the company’s early results from wells in its new Montney play have been “prolific”, adding Crescent Point is excited about the opportunities in the area.
He said the company remains on track to drill 15 wells in the Montney in 2023, and 15 wells in its Kaybob Duvernay play, which it acquired from Shell Canada for $900 million in 2021.
“During the second half of this year, we expect to realize the benefits of our recent Montney acquisition and continued momentum in our Kaybob Duvernay play, as we plan to bring onstream additional (well) pads in both areas during the third and fourth quarter,” Bryksa said.
Assuming oil prices remain in the US$75 range, Crescent Point’s output for the second half of 2023 will average about 179,000 barrels of oil equivalent per day (boe/d), he said.
Crescent Point was one of many oil and gas producers that was forced to temporarily halt some of its operations in northwest Alberta in May as a precaution as wildfires raged across the province.
The company said the downtime resulted in a loss of about 7,000 barrels of oil equivalent per day (boe/d) of production in the quarter, with its total production for the three-month period averaging 155,031 boe/d.
However, Crescent Point said due to better-than-expected performance from its Kaybob Duvernay oilfield assets in the first half of the year, it is able to maintain its annual average production guidance and its capital expenditures budget remains unchanged.
“I’d like to commend our teams in the field and thank our local community members and first responders for their incredible efforts to keep everyone safe during the wildfires,” Bryksa said.
“Furthermore, thanks to our dedicated teams and advanced field operation technology, we were able to quickly restore our Kaybob Duvernay volumes as the fire subsided.”
The company also announced on Wednesday a special cash dividend of 3.5 cents per share.