Point Energy on Wednesday unveiled an $800-million budget for 2011
that will push production past 75,000 barrels per day by this time next
Calgary-based oil producer, which is known for its unconventional oil
operations in Saskatchewan, said the budget is its largest ever for
drilling and field work.
The company plans to punch 311 wells
this year, up from 224 wells originally planned in 2010. The company
previously budgeted $450 million for 2010 but wound up spending more
than $900 million, including $200 million for land, CEO Scott Saxberg
Saxberg said the preliminary budgeted figure for 2011 could
easily run higher depending on factors such as commodity prices and
drilling results in emerging areas such as the southern Alberta Bakken
play. "We may increase that capital program based on success," he said.
The company said it expects to generate $1.1 billion in cash
flow, based on a forecast oil price of $85.86 a barrel, $3.75 per
gigajoule of gas and an exchange rate of 99 cents. Crescent Point is
about 90 per cent levered to oil.
About 10 per cent of the budget
will be allocated to Alberta to prove up what some are calling the
next big Bakken oilfield in the extreme southern portion of the
province near the U.S. border.
The company plans to drill about
16 wells on an area covering 400,000 hectares in Alberta through
Montana. Although results from previous wells are being held tight,
Saxberg said the company could drill more wells in the area if the
results are encouraging.
Some have said the Alberta Bakken could
be three to four times as large as the comparable Saskatchewan play due
to geological factors such as the depth and thickness of the rocks.
Unlike older oilfields in Alberta that are reasonably well known and
understood, the Bakken is virgi rritory.
"We're going to find that out," Saxberg said. "Obviously it's an exploration play but it has significant potential."
Wilson, an analyst with Clarus Securities in Calgary, said the Alberta
Bakken could be at least as big if not bigger than deposits in
neighbouring states and provinces.
The United States Geological
Survey estimates that the Bakken shale formations south of the border
could contain more than four billion
rrels of recoverable oil, which would make it the largest oilfield discovered in the U.S. in more than 40 years.
to the U.S. government's Energy Information statistics, North Dakota's
oil production has more than doubled since 2007, to levels not seen
since 1951, and the state is on track to become the second-largest
oil-producing state after Texas.
Previous assumptions suggested
the Bakken ended at the Saskatchewan border and Alberta could represent
a major extension of the existing producing region, Wilson said.
clearer picture will emerge as well results trickle in, he added.
Crescent Point is in a prime position to dictate the pace and scale of
any future development due to its land position. "They're going to be
the driver of the play," he said. "Right now they seem to be the most
active driller in Alberta itself. But there's so little data on it at
this point, the real extent of the play is difficult to be certain
until we get details from companies, that being Crescent Point."
said price, technology and drilling costs will eventually determine
the economics and pace of activity, similar to other old oilfields in