Energy heavyweight, Crescent Point, cuts capex budget, reduces dividend
by Canadian Manufacturing.com Staff
Company keeps conservative, prepares for sustained low-price oil market
CALGARY—The downturn in oil prices has already led to significant cuts across Canada’s energy sector, and they have reached yet another business that appeared particularly well-positioned for the hostile climate. Continued price weakness has forced Bakken formation heavyweight, Crescent Point Energy Corp., to adjust its capital expenditure budget and dividend.
“Thee significant decline in spot and forward curve oil prices since the end of June and a risk that this low price environment may be lower for a longer period of time, the company has decided to reduce its dividend to not build debt,” the company said while reporting its 2015 second-quarter financial results.
The company noted it has always relied on a conservative strategy and per share growth.
Crescent point will reduce its capital expenditures guidance by $100 million for 2015, which reflects both a reduction in drilling related capital and the benefit of the company’s cost saving initiatives. Meanwhile, the company’s board approved a monthly dividend of 10 cents per share, effective as of the August dividend that is payable in cash mid-September. The company’s dividend had been maintained at 23 cents per share previously.
“This is the right decision,” Scott Saxberg, president and CEO of Crescent Point, said. “Reducing our dividend, lowering our capital expenditures and suspending our dividend reinvestment plans protects our balance sheet in this extremely low commodity price environment. It highlights our goal of internally funding our business model and not increasing debt or issuing equity to fund future growth.”
Prior to the recent steep decline in oil prices, the company noted it was comfortable with the sustainability of its dividend level given the overall environment and the outlook for commodity prices at the time.
“However, the macro environment and the outlook for commodity prices both have worsened considerably. Commodity prices have dropped significantly and oil price differentials have widened, and there is a concern that the low pricing environment may be more sustained,” Crescent Point said.
