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Crescent Point taking a breather from major acquisitions in 2013

By: Lauren Krugel, The Canadian Press

Posted: 03/14/2013 10:18 AM | Comments: 0 | Last Modified: 03/14/2013 12:13 PM

CALGARY - Crescent Point Energy Corp. is taking a breather from large-scale acquisitions this year after doing some $3 billion in deals in 2012, one of which established a presence in Utah for the Calgary-based light oil producer.

"This year is going to be really focused on organic growth," CEO Scott Saxberg told analysts on a conference call Thursday.

"We're in really no rush to do any significant transactions this year."

During the fourth-quarter, Crescent Point (TSX:CPG) closed its US$861 million acquisition of privately-held Ute Energy Upstream Holdings LLC, giving it a foothold in northeastern Utah's Uinta Basin.

The Uinta Basin has been producing oil for 50 years, but advances in drilling techniques have breathed new life into that mature area. It's a familiar story for Crescent Point, which uses hydraulic fracturing, or fracking, techniques to coax oil out of older reservoirs in Alberta and Saskatchewan.

About 8,000 barrels of oil per day are currently flowing out of Crescent Point's Uinta lands. The company plans on spending $195 million to drill there in 2013.

Other acquisitions Crescent Point did in 2013 helped consolidate its core positions in Alberta and Saskatchewan, where it is known as one of the predominant light oil producers.

Desjardins Securities analyst Allan Stepa said he expects Crescent Point to add shareholder value "through the drill bit" this year as opposed to through more deals.

Some smaller-scale acquisitions wouldn't be out of the question, but Stepa said he expects Crescent Point to be "more selective."

"To that end, we would expect to see a small dividend increase on the back of any new acquisitions, provided that Canadian light oil differentials remain conducive," he wrote in a note to clients.

Crescent Point has been shielding itself from swings in crude prices through hedging contracts and long-term agreements to ship oil by rail.

Between those two measures, Crescent Point has locked in more than 15,000 barrels per day of its output for the next 18 months at selling prices higher than $90 per barrel.

Also Thursday, Crescent Point said its net loss widened 10 per cent in the fourth-quarter even as it achieved record quarterly production.

Crescent Point put the loss at $95.2 million or 26 cents per share in the three months ended Dec. 31, which included an unrealized derivative loss of $20.1 million.

That was up from a $86.2 million or 30 cents per share, loss in the same period a year ago, when Crescent Point booked an unrealized derivative loss of $6.1 million.

Revenue from oil and gas sales, however, rose to $727.4 million from $630.4 million as the company reported record quarterly production averaging more than 108,000 barrels of oil equivalent per day.

The increase in production, from 81,210 barrels in the 2011 period and weighted 90 per cent to light and medium crude oil and liquids, was achieved through acquisitions over the past year.

Funds flow from operations, a non-standard accounting term, was $430.4 million up 13 per cent from $381.9 million, while netback — revenue from bringing oil to the marketplace minus the cost of doing so — was $46.5 million, down 13 per cent from $53.4 million in the prior-year period.

The company's bottom line was also hurt by lower average selling prices, which were down eight per cent over the year to $74.57 from $81.35.

Crescent Point shares rose 12 cents to $39.06 in early afternoon trading on the Toronto Stock Exchange Thursday.

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