Crescent Point Energy Corp. surprised the market with stellar second-quarter results Thursday morning, reporting record production of 96,900 barrels of oil equivalent (boe) and blowing cash flow estimates out of the water.
Even better, the company raised its earnings guidance for the rest of the year. It now expects to average 95,000 boe, up from 88,500.
In part, the bump stems from some deal making last quarter, including buying the Shaunavon assets from Talisman Energy for $343-million. These assets produce about 2,500 boe, about 95 per cent of which is oil.
But boosting production is only a fraction of the rosy outlook. Crescent Point wouldn’t be that much better off if it couldn’t get good prices for its oil. And the producer thinks it can.
Instead of relying on pipelines, Crescent Point has invested in its Stoughton rail facility, and last quarter increased the size of it to handle 16,000 barrels a day at full capacity. On Thursday, management raved about how rail shipments have increased its oil deliveries and helped to diversify its markets.
Plus, chief executive officer Greg Tisdale noted that shipping crude by rail acts as a hedge to volatile price differentials his firm expects to continue for the rest of the year. Mr. Tisdale said the price volatility from rail is only about one-third of the volatility seen on pipeline shipments.
Crescent Point also sees big things for rail, noting that Stoughton effectively goes right through its field so the capital costs to expand from 16,000 barrels per day to 40,000 are minimal.