By: The Canadian Press

CALGARY - Crescent Point Energy Trust, (TSX:CPG.UN), a Calgary-based oil and natural gas producer, more than tripled its third-quarter net loss to $353.7 million from $117.8 million after a big writedown on its futures contracts.

The trust, which operates in Alberta, B.C. and Saskatchewan, said Monday it lost $2.83 per unit for the three months ended June 30. That compared with a loss of $1.17 a unit for the same 2007 quarter.

Crescent Point said revenues more than doubled to $360.7 million from $144.2 million, mainly from acquisitions, rising output and high energy prices.

Crescent Point said it booked energy hedging losses of $430.8 million for the latest quarter.

As a means to protect themselves against volatility in global energy markets, many companies enter into contracts to sell their oil at a set price months or years into the future.

But with prices for oil far higher than most in the industry had expected a year ago, those companies aren't reaping all of the benefits of oil's day-to-day increases, which is recorded as a loss when they report their earnings.

Oil was trading at just under US$114 Monday on the New York Mercantile Exchange, but had soared as high as US$147 earlier in the quarter.

The average price of crude oil and natural gas liquids for Crescent Point during the quarter was $115.48. As of July 2008, about 57 per cent of the trust's production was hedged.

Other big oilpatch companies - like EnCana Corp. (TSX:ECA), Nexen Inc. (TSX:NXY), Canadian Natural Resources Ltd. (TSX:CNQ) and Penn West Energy Trust (TSX:PWT.UN) - have also been forced to record big hedging losses on their books this past quarter.

"In hindsight, guys are going to look back and wish they hadn't have done that," said CIBC World Markets analyst Brad Borggard.

On one hand, the runup in oil prices during the quarter is "a good problem to have" since it means enormous growth in revenues, he said.

"The problem is, when prices go up, they miss an opportunity to participate in that. And when prices, go down they've protected themselves and that's the point in the hedge."

Crescent Point's hedging loss includes a $34.5-million charge on "derivative crystallization" in the second quarter, which essentially means the trust closed out its current contracts in order to lock in its production at higher levels in the future.

Funds flow from operations were $142.9 million, or $1.13 per unit, compared to $78.2 million, or 77 cents per unit a year earlier.

Production was 36,500 barrels of oil equivalent per day, up from a year-ago 26,170 barrels.

Stripped of the hedging losses, Crescent Point's performance during the quarter was "modestly above projections," Borggard said.

Particularly exciting is Crescent Point's position in the Bakken light oil formation in Southern Saskatchewan, he said.

"What we like about it is they still have material exposure to what we still think is a very good play."

In the second quarter, Crescent Point acquired six net sections of undeveloped Bakken land, increasing its holdings to 386 sections.

The trust also has a 19 per cent stake in private producer Shelter Bay Energy Inc., which drilled 13 new horizontal wells in the Bakken region during the quarter.

"Q2 results confirmed the trust's strong operational momentum, which appears poised to continue through the balance of the year," wrote UBS Investment Research analyst Grant Hofer in a research note, giving Crescent Point a "buy" rating at $45 share price target.

"Crescent Point remains well positioned to meet its exit rate of 37,500 barrels of oil equivalent and exceed its full year guidance of 36,250 barrels."

Crescent Point units were down 40 cents to $35 Monday afternoon on the Toronto Stock Exchange.

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