Scott Saxberg’s success is forever tied to Saskatchewan. Today, he’s one of the staunchest promoters of the province’s regulatory regime over its western neighbor’s
BY JESSE SNYDER
Born in Manitoba but raised in Saskatchewan, Scott Saxberg cut his teeth at the government-owned Saskoil before unleashing Crescent Point on the province a decade later
Scott Saxberg would rather not talk politics. The youthful-looking 48-year-old CEO of Crescent Point Energy is somewhat reserved as he fields questions about oil and gas royalties, Alberta’s NDP government and Saskatchewan’s regulatory framework. It’s only when technical questions of engineering or geology are raised that Saxberg becomes animated, reeling off lists of completions technologies or describing broad trends in energy innovation. As he talks, he makes spontaneous calculations on his iPhone to reinforce his points.
He is, in many ways, a typical oil executive: primarily an engineer and a problem solver—a numbers guy—who would rather focus on operations than the noisy world of public policy.
But Saxberg is also an anomaly. Unlike most of Canada’s biggest oil producers, Crescent Point is a Saskatchewan-focused outlier with zero oil sands assets. Saxberg is one of the few chief executives who co-founded the company he commands, a shrewd leader who guided Crescent Point from a scrappy junior to Canada’s eighth-largest oil-weighted producer. In an industry populated with stuffy corporate types, Saxberg is decidedly laid back. He strolls into an enormous boardroom at Crescent Point’s corporate headquarters for an interview wearing an untucked collared shirt and blue jeans.
Whether he enjoys talking politics or not, Saxberg has made departures from the typical talking points of the oil patch. Foremost among them was when he openly criticized Alberta’s NDP government so soon after it assumed power last May. During Crescent Point’s 2015 annual general meeting—mere days after the NDP leader Rachel Notley took office—Saxberg threatened to divest of some of his Alberta assets in the event of a royalty adjustment, saying the company would “shift that money into Saskatchewan, and we are reviewing that dependent on Alberta[’s] announcements of a royalty review.” (The next month Saxberg seemed to have changed his tune, saying a royalty review could actually create oppor-tunities for Crescent Point in Alberta if investors fled the province).
Meanwhile, Saxberg has been supportive of Saskatchewan Premier Brad Wall, who won a landslide victory in that province’s elections in April 2016 and has become perhaps the most full-throated supporter of Canada’s oil industry of any public official. In a recent series of advertisements aimed at attracting investment to Saskatchewan, the province used Saxberg’s smiling face as one of its central images. Indeed, the otherwise soft-spoken Saxberg has become the unlikely ambassador for Saskatchewan—an oil exec whose past is inextricably linked to the rise of a relatively young oil industry.
Saxberg was born in Manitoba but got his first job in Saskatchewan, the province that would later become the core focus of much of his career in oil and gas. His first job was at Saskoil, the government-owned corporation, where he worked for an internal subsidiary company in the early 1990s called Pasqua Resources. There, he helped manage some of the company’s non-core oil assets, gaining an understanding of the geology in southeast Saskatchewan’s oil and gas plays and the inner workings of its regulatory bodies.
It was a decade later that Saxberg, along with co-founder Paul Colborne, chose Saskatchewan as the launch pad for Crescent Point—both for its resource potential and for its easily navigable regulatory system, which he says played a major role in his success early on. “When we step back and look at the last 15 years for our company, the two key things that stood out to me were Saskatchewan’s regulatory system and how its energy department functions and works. The hands-on nature that they have, and the communication, and their view of development of resources, all aligned with our company and our mindset,” he says. “When I worked in Saskatchewan we’d be trying to get a well license, or we would be facing challenges on whatever issue, and you could phone the government, talk to the engineer, and you could work through it and resolve it and move on to the next project. Whereas in Alberta, you phone the regulator and they’re like, ‘How did you get my number?’”
Despite his criticisms, he says both the regulatory and governing bodies in Alberta have improved over the last year. The Alberta Energy Regulator has made an effort to be more readily accommodating, he says, while Alberta’s NDP government has shown signs of caution amid the nastiest oil rout in recent memory. In January, the government released the results of its long-delayed royalty review, which held royalty rates at their current level. “It’s not the time to reach out and make a money grab,” Premier Notley said at the time. The more business-friendly news outlets roundly applauded the move as economically pragmatic.
“This mindset of ‘we don’t want to have this boom and bust’—well, every industry is like that. It’s spring and fall. It’s nature. And you have to live within nature and understand it.”
Saxberg saw the decision as a turning point for the governing party, one which came with the recognition that Alberta’s oil and gas industry is facing intensified competition with cheaper jurisdictions. “The oil industry has changed dramatically, whereby capital inflows and outflows are being dictated by the economics of the plays,” he says. “We didn’t have these huge emerging U.S. plays 10 years ago, so we were the big plays—Alberta, Saskatchewan, B.C.—by default. Now the U.S. has the emerging plays, some of which are better than a lot of the plays in Canada, and so there’s a competition now. And Alberta had to step up and realize that the international oil market has become far more competitive in recent years.
“Saskatchewan, because of where they come from, they’ve always had to compete for capital, whether it’s agricultural, energy—you name it. So that’s just in their nature that they have to compete, because they were seen as a have-not province. That’s been driven really hard home by Brad [Wall]. Alberta took it all for granted, I think.”
Saxberg doesn’t see the NDP’s position on royalties as much of a divergence from the past Progressive Conservative government, which similarly tried and failed to adjust royalties. “The Conservatives had that view, and they went through that royalty process, realized they made a big mistake and then corrected it,” he says. “Now the NDP have come in, had that perspective, and then corrected it. If there’s anything that’s come out over the last year, I think it’s that.”
From the beginning, Saxberg’s success in energy was tightly interwoven with Saskatchewan’s. He saw an opportunity in the province’s sprawling light oil fields that other people overlooked, or at least underestimated. “In the ‘60s and ‘70s [geologists] looked at these big oilfields and they thought 25 percent recovery was the most you’d ever get out of the whole pool. As time marched on you saw these pools recover 30, 40 and then 50 percent. Our strategy was to find these larger pools that were under-optimized with low recoveries and take them to higher recoveries.”
Crescent Point was one of the early adopters of horizontal multistage fracking in Saskatchewan, which the company later coupled with a water flooding process that extended the life of its wells and gave it plenty of room to ramp up production. When the company first started trading on public markets in 2001, most players in Saskatchewan were divesting of their oil assets in favor of natural gas plays in northwest Alberta.
The flight toward gas gave Saxberg an opportunity to bulk up on assets at a discount, and set the stage for a decade of jaw-dropping growth. In 2006, the company completed more than 10 acquisitions and surpassed the 20,000 boe/d marker, up from just over 200 boe/d five years earlier. In the following years, it introduced a string of new technologies, beginning with a cemented liner technique in 2009 that helped boost its annual production to over 44,000 boe/d. It followed up with successive improvements to its completions processes, adding sliding sleeves and then adjustable sliding sleeves that helped to pinpoint its fracking locations and increase yields. “That allowed us to spread from the Viewfield to the Shaunavon to the Viking to Flatlake,” he says. “[These technologies] are super-efficient and low cost and really improved recoveries. It’s really about how the sand enters the reservoir.”
In 2015, Crescent Point averaged 163,000 boe/d production from its combination of assets in southern Saskatchewan, North Dakota and Utah, and Saxberg says he is currently looking at other plays in the U.S. as a way to grow the company’s corporate profile. In June, Crescent Point closed its acquisition of Legacy Oil + Gas for a total value of $1.53 billion (including over $900 million in debt), a price that was widely considered to be highly lucrative for Crescent Point. Saxberg also aims to boost production at his existing assets through water flooding and other technologies—processes that he believes are quickly growing in sophistication, and will improve even more quickly as time goes on. “It’s down to chemistry now,” he says. “Ten years ago you drilled a well, you perforated it—it was basically cookie cutter, everybody did the same technique. Horizontal multi-stage fracking now means that every play has a different formula, and it is technology at its finest. That’s all manifested over the last 10 years. And now, over the next 10 years it’s going to be about knowing how to apply these technologies. It’s like the early days of having an iPhone, or whatever device you had—now people are using these devices to apply them to all kinds of new things that you never thought you could do.”
Despite its reputation as a low-risk company with manageable debt levels and a generous dividend, Crescent Point has felt its share of pain since oil prices plummeted. Its gross revenues fell to $2.8 billion in 2015, down from $4.2 billion the year earlier. It also posted a net loss of $870 million over the year. In August of 2015, the company cut its dividend by 57 percent, the first time it had made such a cut in its history. Some investors balked at the severity of the cut. In the first quarter of 2016, shareholders shot down a say-on-pay vote that they apparently thought awarded the CEO too high of an annual compensation, forcing the company to refine its pay structure.
Relative to its peers, however, Crescent Point remains one of the better-positioned companies to take advantage of low asset prices. “The guys who have been through these downturns—we’ve been through three of these now—know how to protect their balance sheet in the good times. It’s healthy, and I think we’ll come out the other end much healthier.” Rather than spend his time worrying about how the industry could avoid volatile commodity cycles, he instead focuses on his own company’s operations, which, despite his plans for growth, will remain Saskatchewan-focused for many years to come. “This mindset of ‘we don’t want to have this boom and bust’—well, every industry is like that. It’s spring and fall. It’s nature. And you have to live within nature and understand it.”
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