Crescent Point Announces 2021 Budget Dec 4 2020 – MRM


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Well Permits in 2020

The map shows the Crescent Point well permits in 2020. The majority of Crescent Point’s 2021 capital expenditures budget is allocated to its key focus areas in Viewfield, Shaunavon and Flat Lake, which continue to provide attractive risk-adjusted returns.

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Crescent Point Announces 2021 Budget

CALGARY, AB, Dec. 4, 2020 /CNW/ – Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX and NYSE: CPG) is pleased to announce its formal 2021 capital expenditures budget and production guidance.

KEY HIGHLIGHTS

  • Capital expenditures of $475 to $525 million and annual average production guidance of 108,000 to 112,000 boe/d.
  • Disciplined, flexible and returns focused budget fully funded at approximately US$40/bbl WTI.
  • Excess cash flow of approximately $150 to $300 million expected in 2021 at US$45/bbl to US$50/bbl WTI with a target reinvestment ratio of less than 75 percent.
  • Continued to incorporate ESG initiatives within budgeting process, including emissions reduction and environmental targets.

“We remained disciplined and flexible throughout 2020 and, as a result of our efforts, we are on track to execute our annual program on budget with net debt reduction of approximately $600 million during the year,” said Craig Bryksa, President and CEO of Crescent Point. “Our plans for 2021 remain aligned with our returns based capital allocation framework, with a continued focus on further enhancing our balance sheet strength and sustainability. The 2021 budget is designed to position the Company defensively given the current volatility in commodity prices, while also providing exposure to significant excess cash flow generation in a rising oil price environment.” 

2021 PRODUCTION AND CAPITAL EXPENDITURES BUDGET

Crescent Point’s 2021 capital expenditures budget of $475 to $525 million is expected to generate annual average production of 108,000 to 112,000 boe/d. The Company’s 2021 capital expenditures budget is reduced in comparison to 2020, highlighting a lower pace of activity, improved capital efficiencies and a moderation in its decline rate to 25 percent from approximately 30 percent.

The majority of Crescent Point’s 2021 capital expenditures budget is allocated to its key focus areas in Viewfield, Shaunavon and Flat Lake, which continue to provide attractive risk-adjusted returns. The Company plans to allocate approximately 15 percent of its budget to discretionary long-term projects, such as decline mitigation and continued advancement of its operational technology (“OT”) platform which has successfully reduced operating expenses and enhanced environmental, social and governance (“ESG”) practices. 

Crescent Point is also dedicating incremental funds to proactive environmental stewardship initiatives, including asset retirement, emission reductions, and asset integrity projects. The Company is currently on track to meet or exceed its emissions intensity reduction target of 30 percent by 2025, including a 50 percent reduction in methane emissions, and is finalizing plans to set additional environmental targets.

Approximately 40 percent of the Company’s estimated first half 2021 oil and liquids production, net of royalty interest, is currently hedged. These hedges consist primarily of swaps with an average price of approximately CDN$60/bbl. Crescent Point plans to continue to increase its hedge position throughout 2021 and expects to layer on additional protection, in the context of commodity prices. To provide additional flexibility in its capital program throughout the year, approximately 60 percent of the Company’s 2021 annual budget has been scheduled for the second half 2021.

EXCESS CASH FLOW AND PRIORITIES

Crescent Point’s 2021 budget is fully funded at approximately US$40/bbl WTI. The Company expects to generate approximately $150 million to $300 million of excess cash flow at US$45/bbl to US$50/bbl WTI, and has targeted a reinvestment ratio of less than 75 percent.

Crescent Point will remain disciplined with a focus on sustaining production and maximizing excess cash flow in a higher commodity price environment, with approximately $35 million of funds flow sensitivity for every US$1/bbl change in WTI. The Company plans to initially prioritize its balance sheet with the allocation of its excess cash flow. As market conditions improve, Crescent Point will also evaluate other opportunities to further enhance value, including additional development capital and returning capital to shareholders.

The Company retains significant liquidity with over $2.5 billion of unutilized credit capacity, as at September 30, 2020, with no material near-term senior note debt maturities. Similar to prior years, Crescent Point will remain flexible in the event of lower commodity prices in order to preserve its strong liquidity position. 

All financial figures are approximate and in Canadian dollars unless otherwise noted. This press release contains forward-looking information and references to non-GAAP financial measures. Significant related assumptions and risk factors, and reconciliations are described under the Non-GAAP Financial Measures and Forward-Looking Statements sections of this press release, respectively.

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