Crescent Point Announces Q3 2021 Results

CALGARY, AB, Oct. 28, 2021 /CNW/ – Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX: CPG) (NYSE: CPG) is pleased to announce its operating and financial results for the quarter ended September 30, 2021.

KEY HIGHLIGHTS

  • Generated over $180 million of excess cash flow, or over $580 million year-to-date, further enhancing balance sheet strength.
  • Successfully commenced Kaybob Duvernay drilling program, with completions expected in fourth quarter 2021.
  • Entered into farm-in agreement with a Kaybob Duvernay operator and completed partner wells 20 percent below budget.
  • Net debt to adjusted funds flow expected to be at 1.0 times in early 2022, based on current forward strip commodity prices.
  • Recently accelerated shareholder returns by increasing quarterly dividend to $0.03 per share, as previously announced.
  • Excess cash flow generation of approximately $925 million expected in 2022, after dividends, at US$75/bbl WTI.

“Our third quarter and year-to-date results continue to demonstrate the success of our operational, financial and strategic execution,” said Craig Bryksa, President and CEO of Crescent Point. “We are focused on continually enhancing the business and shareholder returns through our key pillars of balance sheet strength and sustainability. Our recently increased dividend also demonstrates our commitment to returning capital to shareholders, with a goal to increase such returns over time.”

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FINANCIAL HIGHLIGHTS

  • Adjusted funds flow totaled $393.9 million or $0.67 per share diluted during third quarter, supported by a strong operating netback of $44.15 per boe. Crescent Point’s adjusted funds flow generation continues to benefit from its improved cost structure, high liquids weighting and strong market access that positively impacted realized pricing in the quarter. In particular, the Company’s liquids product streams in its North Dakota and Kaybob Duvernay assets currently trade at a premium to WTI.
  • For the quarter ended September 30, 2021, the Company’s development capital expenditures, which included drilling and development, facilities and seismic costs, totaled $187.1 million.
  • Crescent Point’s net debt as at September 30, 2021 totaled approximately $2.1 billion, reflecting over $180 million of net debt reduction in the quarter. Since the closing of the Kaybob Duvernay acquisition in second quarter 2021, the Company has reduced its net debt by approximately $550 million, or over 80 percent of the cash portion of the purchase price.
  • As part of its risk management program to reduce cash flow volatility, Crescent Point maintains an active and diversified hedging portfolio. The Company currently has approximately 45 percent of its oil and liquids production, net of royalty interest, hedged for 2022 utilizing a portfolio of swaps and collars that provide a combination of price protection with upside participation. Crescent Point plans to remain disciplined in its approach to layering on additional protection in the context of commodity prices.
  • The Company reported net income of $77.5 million for the three month period ended September 30, 2021. Crescent Point’s third quarter net income included approximately $44 million in non-recurring charges primarily related to a re-evaluation of the Company’s tax pools in addition to costs incurred related to the closure of its U.S. corporate office.
  • During the quarter, the Company’s Board of Directors approved and declared a fourth quarter dividend increase to $0.03 per share, payable on January 4, 2022 to shareholders of record on December 15, 2021. This equates to an annualized dividend of $0.12 per share, an increase of $0.11 per share from the prior level.

OPERATIONAL HIGHLIGHTS

  • Crescent Point’s average third quarter production was 132,186 boe/d, comprised of over 80 percent oil and liquids. The Company’s production reflects the recent disposition of non-core assets, a conservative 2021 program with expenditures below sustaining capital requirements and the timing of several high impact multi-well pads that were brought onstream during the first half of the year.
  • In the Kaybob Duvernay, the Company initiated its first multi-well pad drilling program during third quarter with strong operational execution to date. These wells are expected to be completed during fourth quarter 2021. Crescent Point plans to further enhance economics in the Kaybob Duvernay, which are already highly competitive, through a combination of realizing potential cost efficiencies and improved productivity from modifications to the completions design of the prior operator.
  • During third quarter, the Company also entered into a farm-in agreement with a Kaybob Duvernay operator to complete certain wells in exchange for a working interest in such wells and additional lands in the play. Crescent Point successfully completed a related five-well pad in late third quarter, achieving completion costs approximately 20 percent below those that were expected by the Company when it entered the Kaybob Duvernay play in early 2021.
  • Crescent Point’s other operating activities remain focused on low-risk, high-return development in its major operating areas of Saskatchewan and North Dakota. The Company also recently expanded the economic boundaries of its Viewfield and Shaunavon resource plays through a successful 2021 step-out drilling program.
  • As part of its decline mitigation initiatives, the Company has converted approximately 115 producing wells to water injection wells year-to-date and currently remains on track to convert over 135 wells in 2021. During the quarter, Crescent Point received approval from the Government of Saskatchewan to fully unitize an additional two units in the Viewfield Bakken. The Company now has six fully unitized units in the play, providing the opportunity to expand its waterflood program over the coming years.
  • As part of its continued commitment to strong environmental, social and governance (“ESG”) practices, Crescent Point introduced a target in its 2021 Sustainability Report to reduce its inactive well inventory by 30 percent over the next 10 years. The Company is accelerating progress towards this target by increasing its 2021 reclamation activities spending and planning for the safe retirement of approximately 500 wells, up from approximately 400 wells. Year-to-date, Crescent Point has successfully retired approximately 450 wells, further reducing its environmental footprint.
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.

OUTLOOK

Based on strong year-to-date results, the Company now expects to generate 2021 average production of 132,000 to 134,000 boe/d, at the higher end of its previous guidance range of 130,000 to 134,000 boe/d. Crescent Point’s 2021 capital expenditures are now expected to be approximately $625 million, within its prior guidance range of $600 to $625 million. This budget includes capital associated with the additional completions of partner wells in the Kaybob Duvernay along with reductions in other operating areas, highlighting the Company’s capital discipline.

Crescent Point recently established its preliminary guidance for 2022, which it expects to formalize prior to the end of the year. The Company is expected to generate annual average production of 131,000 to 135,000 boe/d within a conservative budget of $825 to $900 million in development capital expenditures, including long-term and environmental initiatives as well as an assumption for cost inflation.

Crescent Point anticipates its 2022 annual program, along with the recently increased dividend, will be fully funded at a low oil price of approximately US$40/bbl WTI. Assuming US$75/bbl WTI, this budget is expected to generate significant excess cash flow of approximately $925 million, after dividends, providing the opportunity to create further shareholder value.

The Company is currently prioritizing its balance sheet with its excess cash flow allocation and expects to achieve 1.0 times net debt to adjusted funds flow in early 2022 based on current forward strip commodity prices.

Crescent Point will continue to evaluate its excess cash flow allocation in the context of its capital allocation framework. The Company is committed to returning capital to shareholders while also generating returns through debt-adjusted per share growth.

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