Crescent Point said it plans to spend $1.8-billion this year and pointed to a major increase in prospective drilling locations at its expanding operations in Utah.
Crescent Point Energy Corp. shares jumped more than 5 per cent Wednesday after the company unveiled a deeper inventory of drilling prospects and a modest budget increase for 2018.
Crescent Point late on Tuesday said it plans to spend $1.8-billion this year and pointed to a major increase in prospective drilling locations at its expanding operations in Utah, a step-out from its core holdings in southeast Saskatchewan.
The company has identified 850 locations in the region's Uinta Basin, up from 120 a year ago, and said it expects overall production to increase next year by 5 per cent, to 183,500 barrels of oil equivalent a day.
While the spending plan eclipsed some analyst expectations, it marks a reversal for Crescent Point, which has faced criticism in recent years for tapping markets to fund pricey acquisitions and big drilling plans.
It also reflects a new-found sense of discipline in the oil patch, where companies are taking advantage of rising U.S. crude prices to boost financial hedges and production while pledging to spend within cash flow.
Crescent Point said nearly half of its liquids production for the first half of 2018 is hedged at an average price of $73 a barrel. Such contracts protect cash flow in a falling market, although gains can turn to losses if prices appreciate substantially.
"Overall, this budget appears to be consistent with Crescent Point's recent messaging regarding captial discipline, internally funded production growth, and balancing cash outflows with inflows," Canadian Imperial Bank of Commerce analyst Dave Popowich said in a research note.
A 12-per-cent rise in U.S. crude prices since early December has fuelled hopes of an end to a glut that has dogged markets since 2014 and led to tens of thousands of layoffs in Alberta's dominant energy industry.
On Wednesday, West Texas intermediate oil traded up above $63 (U.S.) a barrel, supported by U.S. government data that showed storage levels in that country fell by 4.9 million barrels last week.
Despite improving sentiment, companies are prioritizing debt repayment over hefty spending. Calgary-based Crescent Point shed $40-million (Canadian) worth of properties in the fourth quarter, pushing proceeds from asset sales in 2017 to $320-million.
Oil's rally may prompt the company to part with additional assets, GMP FirstEnergy analyst Cody Kwong told clients in a research note, citing properties in the Viking and Swan Hills regions as possible targets.
"In line with the balance-sheet cleanup sentiment management continues to drive towards, further non-core and strategic dispositions will continue to be followed closely," he said.