On the wane: Crescent Point Energy Trust said it would focus all its capital spending in Saskatchewan because of the threat of higher royalties in Alberta
Crescent Point cuts Alberta spending
Crescent Point Energy Trust said today it will plow all of its C$150 million (US$151.1 million) oil and gas development budget into Saskatchewan next year after deciding that proposed royalty changes in Alberta have created too much uncertainty.
Crescent Point echoed other companies in the Canadian oil industry in saying that higher royalties recommended last month by a government-appointed review panel will make investments in other jurisdictions more attractive, Reuters reported.
Last week, Canadian giant EnCana threatened to cut its Alberta spending next year by $1 billion and redirect its capital if the government adopts the new measures.
"Increased royalty rates in Alberta would decrease the rates of return on projects in the province, making investments in other jurisdictions more attractive," Crescent Point chief executive Scott Saxberg said in a statement.
The trust is a small player in Alberta. Most of its production and capital spending are concentrated in southern Saskatchewan. According to its latest financial report, it drilled all of its 25 wells in Saskatchewan in the second quarter.
Saxberg said Crescent Point has another 1000 drilling locations identified in Saskatchewan.
Like others in the industry, he said the royalty panel report did not take into account the costs and risk of operating in Alberta.
Alberta Premier Ed Stelmach has yet to say whether the energy-rich province will adopt the recommendations.