Crescent Point Energy announced on Monday it is taking additional action to further enhance the company’s sustainability, including incremental cost reductions and a revised 2020 outlook.
“We have already taken, and will continue to take, meaningful action to enhance our flexibility during this period of low commodity prices. We have lowered our cost structure and also elected to shut-in production that is currently uneconomic to further enhance our cash flow. We are continually monitoring the commodity price environment and will make further adjustments throughout the year if necessary,” said Craig Bryksa, President and CEO of Crescent Point.
Some of the highlights of the changes for this coming year include reducing capital spending by 10 per cent or about $75 million, reducing salaries for the executive team and board of directors, reducing operating expenses by $140 million, and reducing the production guidance by 15 per cent by shutting in wells with above-average costs.
Crescent Point’s capital expenditures for 2020 are now forecast to be approximately $650 to $700 million. This reduction should have no impact on production.
Since the company first announced their 2020 budget, they have lowered their capital expenditures by 40 per cent, with about half of the budget set to be spent after the first quarter. About 65 per cent of the capital spending, will take place in the fourth quarter, and is discretionary, dependent on commodity prices.
The annual average production is now forecast to be 110,000 to 114,000 barrels of oil per day equivalent for 2020. This is a reduction of about 20,000 boe/d or 15 per cent, due to a shut-in of higher-cost production. Altogether, Crescent Point will shut in about 25,000 boe/d of its current production, of which 70 per cent is oil.
This production is primarily outside of the company’s key focus areas and carries costs above the corporate average. The plan is to restore this production when warranted, as management continues to evaluate market conditions.
The reduction in capital spending is a combination of internal efficiencies and operational outperformance resulting in lower expenditures during the balance of the year.
The president and CEO’s base salary will be reduced by 15 per cent, and the executive team will take a 10 per cent reduction to base salaries. The board of directors’ retainers will also be reduced by 15 per cent.
These adjustments demonstrate the company’s flexibility and corporate agility in response to changing pricing environments to strengthen cash flow and protect its balance sheet.