March 9, 2016 / 12:25 PM / 3 years ago

Crescent Point cuts dividend as low oil prices bite

CALGARY, Alberta (Reuters) - Canadian oil and gas producer Crescent Point Energy Corp (CPG.TO) slashed its dividend on Wednesday and said it expects to spend C$950 million this year, the lower end of its budget forecast, as the global oil price slump drags on.

The Calgary-based company cut its monthly divided to 3 Canadian cents a share from 10 cents a share, which it said would save about C$430 million annually.

Other Canadian oil and gas producers including Encana Corp (ECA.TO) and Husky Energy (HSE.TO) also have cut or suspended dividends and reduced capital budgets.

Crescent Point originally forecast a 2016 budget of C$950 million to C$1.3 billion.

Chief Executive Officer Scott Saxberg said the steps would enable Crescent Point, a light and medium conventional crude producer, to live within its cash flow despite the 65 percent drop in benchmark crude prices since June 2014.

“This gives us time to assess the commodity price environment and make appropriate capital decisions to further improve our positioning in 2017,” Saxberg said.

Crescent Point shares were last up 0.4 percent on the Toronto Stock Exchange at C$17.85.

The company expects 2016 production to be around 165,000 barrels of oil equivalent per day, at the low end of 165,000-172,000 guidance. In the final quarter of 2015 Crescent Point averaged a record 176,000 boepd.

Based on initial planning for 2017, which assumes a capital budget of C$950 million, Crescent Point expects production in the 165,000 boepd range with U.S. crude at $45 a barrel.

As of March 4, about 39 percent of the company’s oil production was hedged for the rest of 2016 at an average price of C$80 per barrel, while 9 percent of 2017 output was hedged at C$76 a barrel.

Like many of its peers grappling with weak crude prices, Crescent Point is scaling back drilling activity this year and plans to drill approximately 550 net wells versus 700 last year.

Saxberg said the company has already realized cost savings of 30 percent and expects another 10 percent in savings in 2016.

Crescent Point posted a net loss of C$382.4 million, or 76 Canadian cents per share, for the fourth quarter, which included a C$589.4 million after-tax impairment charge.. The Calgary-based company had a profit of C$121.3 million, or 27 Canadian cents per share, a year earlier.

Funds flow from operations was C$496.7 million, or 98 Canadian cents per share diluted.

Reporting by Nia Williams in Calgary and Anet Josline Pinto in Bengaluru; Editing by Kirti Pandey and David Gregorio

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