CALGARY- A five-year unblemished record of quarter-over-quarter production growth at Calgary-based Crescent Point Energy Corp. came to an end during this year’s exceptionally wet spring.

For the first time since at least fourth quarter 2005, average output per day fell in the second quarter — from 56,000 barrels of oil equivalent in the first three months of 2010 to 54,900 boe/d.

Oilpatch drilling, pipeline construction and completion work tends to slow down in the spring because the melting landscape makes moving equipment difficult.

“We had a good quarter,” insisted chief executive Scott Saxberg in an interview. “Q2 is always a slower quarter just because of spring breakup but it was the most active drilling Q2 (74 wells, 48 net to Crescent Point) in the history of the company ... and that helps us carry production growth into Q3 and Q4.”

A chart on Crescent Point’s website shows production growing at various rates from quarter to quarter starting from 13,791 boe/d in the fourth quarter of 2005.

Saxberg added the company has already jumped ahead of its second quarter numbers. Thanks mainly to closing the acquisition of private Shelter Bay Energy Inc. in early July, which added 7,400 boe/d, the company is currently pumping about 65,000 boe/d and well on its way to its forecast exit rate of 69,500 boe/d.

On a year-over-year basis, Crescent Point put up impressive numbers, growing funds flow and production by 34 per cent thanks to a series of acquisitions and drillbit successes and getting an average price of 10 per cent more for its oil and gas.

The company registered net income of $63 million or 29 cents per share, a turnaround from last year’s second-quarter net loss of $67 million or 45 cents. Both numbers were influenced by unrealized hedging gains or losses.

Funds flow came in at $185 million or 84 cents, slightly behind analyst consensus, compared with $138 million or 91 cents in the same three months of 2009.

Analyst Kyle Preston of Canaccord Genuity said the production and cash flow misses aren’t a concern for the company, which has a large position in Saskatchewan’s Bakken and Lower Shaunavon crude oil resource plays.

“All of their production guidance and exit targets (for 2010) have been retained so I suspect they’ll make up for that in the second half of the year.”

He added costs came in a bit higher than expected but it was “still a decent quarter.”

Jeff Martin, an analyst for Peters & Co., said in a note that Crescent Point met production expectations that had been lowered because of the wet weather, but missed his cash flow estimate of 89 cents a share.

Crescent Point shares closed at $37.88, down 13 cents on the day.

The company reported spending $189 million on development in the second quarter, including $99.1 million on drilling and completions and $90.3 million on facilities, land and seismic. Its capital budget for the year is $750 million.

Production was weighted 89 per cent to light and medium crude oil and liquids.

In another weather setback in early July, the company reported lightning struck a Crescent Point-operated facility in southeast Saskatchewan, igniting several crude oil and produced water tanks and shutting in approximately 4,000 boe/d per day.

“No one was injured in the incident and more than two-thirds of the shut-in production was brought back on production within 72 hours,” the company noted. “The remaining shut-in volumes are expected to be back on production by end of third quarter and will not substantially affect production targets.”

Saxberg said Crescent Point’s first and second water flood pilot wells continue to show positive results. A third test started in July and a fourth is to start this month. Two more pilot projects are planned for implementation by year-end to prove up the new production technique.

As of July 27, Crescent Point had hedged 50 per cent, 44 per cent, 30 per cent and 15 per cent of production, net of royalty interest, for the balance of 2010, 2011, 2012 and 2013, respectively, at average quarterly hedge prices ranging from $79 per boe to $92 Cdn per boe.

DHEALING@THEHERALD.CANWEST.COM