Crescent 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 year.

The 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 said.

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."

Kirk 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.

According 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.

A 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."

Wilson said price, technology and drilling costs will eventually determine the economics and pace of activity, similar to other old oilfields in the province.

Source: Calgary Herald

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