Potentially add to production and reserves
When oil prices rebound, the Company expects that it will increase capital spending.
The Company's 2015 budget assumes an initial 10 percent reduction to service costs. Based on conversations to date with its service providers, the Company anticipates that even greater cost reductions are very likely if a low oil price environment persists.
"When prices fell dramatically in 2008 to 2009, we were able to realize a 30 percent reduction in our Bakken drilling and completions costs," said Saxberg. "We'll be working hard with our service providers and fully expect to see rates come down even more than they already have."
In addition to improving its capital efficiencies, Crescent Point is actively pursuing various initiatives to lower its costs. The Company is also working on various drilling and completion technologies that can potentially add to production and reserves in a cost-efficient manner.
Crescent Point has one of the strongest balance sheets in the sector, with significant financial flexibility. In addition, the Company has a strong risk management program, with oil and natural gas hedges in place until mid-2017 and early 2018, respectively. Currently for 2015, Crescent Point has more than 50 percent of its oil production hedged, net of royalties, with an average price above CDN$90.00/bbl and 53 percent of its natural gas production hedged, net of royalties, with an average price of CDN$3.60/GJ.
Similar to previous oil price cycles, Crescent Point aims to use this period to further strengthen the overall position of the Company. Given the strength of its balance sheet and the levers discussed above, Crescent Point is well-prepared to weather the current commodity price environment.