CALGARY, Alberta, March 15, 2012 /PRNewswire/ --
Crescent Point Energy Corp. ("Crescent Point" or the "Company")
(TSX: CPG) is pleased to announce its operating and financial
results for the year ended December 31,
2011. The Company also announces that its audited financial
statements and management's discussion and analysis for the year
ended December 31, 2011, will be
available on the System for Electronic Document Analysis and
Retrieval ("SEDAR") at http://www.sedar.com and on Crescent Point's
website at http://www.crescentpointenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended December 31 Year ended December 31
(Cdn$000s
except shares,
per share and
per boe
amounts) 2011 2010 % Change 2011 2010 % Change
Financial
Funds flow
from
operations
(1) 381,922 263,221 45 1,293,257 882,862 46
Per share (1)
(2) 1.32 0.98 35 4.65 3.70 26
Net income
(loss) (3) (86,197) (50,905) 69 201,134 50,921 295
Per share (2)
(3) (0.30) (0.19) 58 0.72 0.21 243
Dividends paid
or declared 199,869 184,688 8 771,362 657,520 17
Per share (2) 0.69 0.69 - 2.76 2.76 -
Payout ratio
(%) (1) (4) 52 70 (18) 60 74 (14)
Per share (%)
(1) (2) (4) 52 70 (18) 59 75 (16)
Net debt (1)
(5) 1,220,144 1,116,463 9 1,220,144 1,116,463 9
Capital
acquisitions
(net) (6) 2,765 81,456 (97) 201,313 2,077,733 (90)
Development
capital
expenditures 458,874 246,548 86 1,238,795 958,606 29
Weighted
average shares
outstanding
(mm)
Basic 286.6 263.4 9 275.4 234.9 17
Diluted 289.3 267.4 8 278.2 238.7 17
Operating
Average daily
production
Crude oil and
NGLs (bbls/d) 73,667 62,640 18 66,604 55,070 21
Natural gas
(mcf/d) 45,257 42,831 6 43,172 39,318 10
Total (boe/d) 81,210 69,779 16 73,799 61,623 20
Average
selling
prices(7)
Crude oil and
NGLs ($/bbl) 90.88 76.01 20 87.62 73.46 19
Natural gas
($/mcf) 3.48 3.88 (10) 3.87 4.12 (6)
Total ($/boe) 84.37 70.61 19 81.35 68.28 19
Netback
($/boe)
Oil and gas
sales 84.37 70.61 19 81.35 68.28 19
Royalties (14.42) (12.00) 20 (13.95) (12.56) 11
Operating
expenses (11.17) (11.37) (2) (11.16) (11.03) 1
Transportation (2.01) (1.68) 20 (1.91) (1.65) 16
Netback prior
to realized
derivatives 56.77 45.56 25 54.33 43.04 26
Realized gain
(loss) on
derivatives (3.37) (0.80) 321 (2.97) 0.25 (1,288)
Netback (1) 53.40 44.76 19 51.36 43.29 19
(1) Funds flow from operations, payout ratio, net debt and netback as
presented do not have any standardized meaning prescribed by
International Financial Reporting Standards ("IFRS") and, therefore,
may not be comparable with the calculation of similar measures
presented by other entities. Please refer to the Non-GAAP Financial
Measures section of this press release. Comparative amounts have been
restated to comply with IFRS.
(2) The per share amounts (with the exception of per share dividends) are
the per share - diluted amounts.
(3) Net income for the three months and year ended December 31, 2011,
includes unrealized derivative losses of $271.4 million and $6.2
million, respectively. Net income for the three months and year ended
December 31, 2010, includes unrealized derivative losses of $104.5
million and unrealized derivative gains of $96.3 million,
respectively.
(4) Payout ratio is calculated as dividends paid or declared (including
the value of dividends issued pursuant to the Company's dividend
reinvestment plan) divided by funds flow from operations.
(5) Net debt includes long-term debt, working capital and long-term
investments, but excludes derivative asset, derivative liability and
unrealized foreign exchange on translation of US dollar senior
guaranteed notes.
(6) Capital acquisitions represent total consideration for the
transactions, including long-term debt and working capital assumed,
and exclude transaction costs.
(7) The average selling prices reported are before realized derivatives
and transportation charges.
FOURTH QUARTER 2011 HIGHLIGHTS
In fourth quarter 2011, Crescent Point continued to execute its
integrated business strategy of acquiring, exploiting and
developing high-quality, long-life light and medium oil and natural
gas properties.
- Crescent Point achieved a new production record in fourth
quarter 2011 and averaged 81,210 boe/d, weighted 91 percent to
light and medium crude oil and liquids. This represents an overall
growth rate over fourth quarter 2010 of 16 percent, including more
than 15 percent of organic growth. Production increased 12 percent
over third quarter 2011.
- In fourth quarter 2011, the Company spent $458.9 million on development capital activities,
including $378.4 million on drilling
and development activities and $80.5
million on land, seismic and facilities. Crescent Point
drilled 178 (132.3 net) wells targeting oil and 1 (1.0 net) service
well with a 100 percent success rate.
- Crescent Point's funds flow from operations increased by 45
percent to a record $381.9 million
($1.32 per share - diluted) in fourth
quarter 2011, compared to $263.2
million ($0.98 per share -
diluted) in fourth quarter 2010.
- In fourth quarter 2011, the Company's netback increased by 19
percent to $53.40 per boe from
$44.76 in fourth quarter 2010.
- Crescent Point maintained consistent monthly dividends of
$0.23 per share, totaling
$0.69 per share for fourth quarter
2011. This is unchanged from $0.69
per share paid in fourth quarter 2010. On an annualized basis, the
fourth quarter dividend equates to a yield of 6.5 percent, based on
a volume weighted average quarterly share price of $42.44.
2011 HIGHLIGHTS
- Crescent Point grew average daily production in 2011 to 73,799
boe/d, a 20 percent increase over 2010. Production was weighted 90
percent to light and medium crude oil and liquids. Despite a
prolonged 2011 spring break-up due to unusual flooding in
Saskatchewan, Crescent Point
exceeded its 2011 annual average and exit production targets.
- In 2011, the Company spent $1.24
billion on development capital activities, including
$951.4 million on drilling and
development activities and $287.4
million on land, seismic and facilities. Crescent Point
drilled 516 (373.0 net) wells in 2011 with a 100 percent success
rate.
- In 2011, Crescent Point announced success in its new core areas
in Alberta's emerging Beaverhill
Lake light oil resource play and in the North Dakota Bakken/Three
Forks resource play. Within the past two years and including
acquisitions to date in 2012, the Company has acquired more than
280 net sections and more than 140 net sections in each play,
respectively. In 2012, the Company plans to drill 27 net wells in
the Beaverhill Lake light oil resource play and 14 net wells in the
North Dakota Bakken/Three Forks resource play.
- The Company increased proved plus probable reserves by 12
percent to 424.8 million boe ("mmboe") at year-end 2011, weighted
more than 92 percent to light and medium crude oil and liquids.
Proved reserves also increased by 12 percent to 281.0 mmboe.
- Crescent Point replaced 248 percent of 2011 production on a
proved plus probable basis, excluding reserves added through
acquisitions. This is the tenth consecutive year of strong positive
technical and development reserve additions.
- This is also the tenth consecutive year of growth in Net Asset
Value ("NAV") per fully diluted share, production and cash flow.
NAV per share increased to $38.42 per
fully diluted share discounted at 10 percent, representing growth
of 7 percent over 2010, not including dividends paid during the
year. Including dividends paid in 2011, this represents a 14
percent growth in value per share.
- Crescent Point achieved 2011 finding and development
("F&D") costs of $18.52 per
proved plus probable boe and $23.06
per proved boe of reserves, excluding changes in future development
capital ("FDC"). This represents recycle ratios of 2.9 and 2.4 for
proved plus probable and proved, respectively.
Total Proved
Total plus
Per boe, except Recycle Ratios Proved Probable
F&D
5-year weighted average cost, excluding change in
FDC(1) $18.45 $14.30
2011 cost, excluding change in FDC $23.06 $18.52
2011 average recycle ratio(2) 2.4 2.9
2011 cost, including change in FDC $33.35 $28.67
Finding, Development & Acquisition ("FD&A")
5-year weighted average cost, excluding change in
FDC $28.73 $20.78
2011 cost, excluding change in FDC $25.20 $19.95
2011 average recycle ratio(2) 2.2 2.7
2011 cost, including change in FDC $34.87 $29.35
(1) Future Development Capital.
(2) Based on 2011 netback (prior to realized derivatives) of $54.33 per boe.
- Including acquisitions that are expected to close in first
quarter 2012, the Company's proved plus probable reserves increase
by 12 percent to 475.8 mmboe, representing a proved plus probable
reserve life index of 15.0 years. Proved reserves increase by 12
percent to 314.4 mmboe.
- Crescent Point's funds flow from operations increased by 46
percent to $1.29 billion
($4.65 per share - diluted) in 2011,
compared to $882.9 million
($3.70 per share - diluted) in
2010.
- Crescent Point maintained consistent monthly dividends of
$0.23 per share, totaling
$2.76 per share for the year. This is
unchanged from $2.76 per share paid
in 2010. Since inception in 2001, Crescent Point has paid
approximately $2.7 billion in
dividends.
- The Company's balance sheet remains strong, with projected
average net debt to 12-month cash flow of less than 1.0 times and
approximately $1.0 billion unutilized
on its bank lines as at December 31,
2011.
- Crescent Point continued to implement its disciplined hedging
strategy to provide increased certainty over cash flow and
dividends. As at March 7, 2012, the
Company had hedged 59 percent, 49 percent, 32 percent and 16
percent of its expected oil production, net of royalty interest,
for 2012, 2013, 2014 and the first half of 2015, respectively.
Average quarterly hedge prices range from Cdn$94 per bbl to Cdn$100 per bbl.
- Crescent Point is pleased to announce that Mr. Kent Mitchell joined the Company in January 2012 in the role of President of Crescent
Point U.S. Energy Corp. Mr. Mitchell most recently held the
position of President at Long View USA.
OPERATIONS REVIEW
Fourth Quarter Operations Summary
During fourth quarter 2011, Crescent Point continued to
aggressively implement management's business strategy of creating
sustainable, value-added growth in reserves, production and cash
flow through acquiring, exploiting and developing high-quality,
long-life light and medium oil and natural gas properties.
Crescent Point achieved a new production record in the fourth
quarter and averaged 81,210 boe/d, which represents an overall 16
percent increase and an organic growth rate of greater than 15
percent over fourth quarter 2010.
During fourth quarter, the Company spent a record $378.4 million on drilling and development,
drilling 178 (132.3 net) oil wells and 1 (1.0 net) service well
with a 100 percent success rate. Crescent Point also spent
$80.5 million on land, seismic and
facilities, for total capital expenditures of $458.9 million during the quarter.
Drilling Results
The following tables summarize our drilling results for the
three and 12 months ended December 31,
2011:
Three months ended
December 31, 2011 Gas Oil D&A Service Standing Total Net % Success
Southeast Saskatchewan
and Manitoba - 87 - - - 87 71.4 100
Southwest Saskatchewan - 47 - 1 - 48 42.6 100
South/Central Alberta - 33 - - - 33 15.6 100
Northeast BC and Peace
River Arch, Alberta - 1 - - - 1 0.6 100
United States (1) - 10 - - - 10 3.1 100
Total - 178 - 1 - 179 133.3 100
Twelve months ended
December 31, 2011 Gas Oil D&A Service Standing Total Net % Success
Southeast Saskatchewan
and Manitoba - 246 - 2 - 248 198.5 100
Southwest Saskatchewan - 173 - 1 - 174 132.2 100
South/Central Alberta - 63 - - - 63 32.5 100
Northeast BC and Peace
River Arch, Alberta - 5 - - - 5 3.3 100
United States (1) - 26 - - - 26 6.5 100
Total - 513 - 3 - 516 373.0 100
(1) The net well count is subject to final working interest determination.
Southeast
Saskatchewan and Manitoba
In fourth quarter 2011, Crescent Point participated in the
drilling of 87 (71.4 net) oil wells in southeast Saskatchewan and Manitoba, achieving a 100 percent success
rate. Of the wells drilled, 67 (57.5 net) were horizontal wells in
the Bakken light oil resource play. In total, during 2011, the
Company drilled 193 (166.8 net) Bakken horizontal oil wells,
achieving a 100 percent success rate. The Company plans to drill up
to 154 net wells in the Viewfield Bakken play during 2012 and to
spend approximately $425 million,
including approximately $50 million
for land, seismic and facilities.
Production performance from water injection patterns in the
Viewfield Bakken resource play continues to exceed the Company's
expectations and has demonstrated the applicability of waterflood
to the play. During the quarter, the Company began injecting water
into four additional wells. By year-end 2011, the Company had
converted a total of 24 producing wells to injection wells in the
play. Including wells converted to date in 2012, Crescent Point has
32 water injection wells in the play and expects to have
approximately 60 by year-end 2012. With the recently announced
agreement to acquire PetroBakken Energy Ltd.'s ("PetroBakken")
interests in the proposed Viewfield Bakken waterflood area, the
Company plans to accelerate plans to implement unit-wide
waterfloods.
During the quarter, Crescent Point completed the construction of
approximately 100 kilometres of pipeline-gathering systems in the
Viewfield area. The Company also completed lease preparation in the
Stoughton area for oil-loading
rail facilities and ordered trans-loaders to fill rail cars with
trucked-in oil. Rail transport will allow the Company to diversify
its markets for Bakken crude oil and to more effectively manage
pipeline disruptions. The facility became operational in first
quarter 2012. More than 2,500 bbl/d of Bakken production was
delivered through the facility in February and the Company expects
March deliveries through the facility to be approximately 6,000
bbl/d.
Also during the quarter, 20 (13.9 net) horizontal oil wells were
drilled in the Glen Ewen,
Manor, Innes and Wapella areas, targeting the Midale, Frobisher and Spearfish formations, achieving
a 100 percent success rate.
Southwest
Saskatchewan
During fourth quarter, the Company participated in the drilling
of 47 (41.6 net) oil wells and 1 (1.0 net) service well in
southwest Saskatchewan, achieving
a 100 percent success rate. In 2011, the Company drilled a total of
127 (106.5 net) oil wells in the Shaunavon area. The Company plans to drill up
to 91 net wells in the Shaunavon
area in 2012 and to spend approximately $260
million on drilling, seismic, facility construction and land
acquisition activities.
The Company is currently injecting water into six horizontal
injection wells in four pressure maintenance programs in the Lower
Shaunavon zone. Crescent Point is encouraged by results to date.
Plans to convert up to four wells in the Upper Shaunavon zone to
water injection wells in 2012 are also underway and are expected to
bring the total number of injection wells into the play to 10 by
year-end 2012.
During fourth quarter, the Company completed construction of a 6
mmcf/d gas plant, which is designed to be expandable to 12 mmcf/d.
The plant is expected to be operational during second quarter 2012.
Also during fourth quarter, approximately 70 kilometres of pipeline
were constructed to tie-in recently drilled wells. Plans to
design and construct three additional batteries in 2012 to
accommodate increased production have commenced and construction is
expected to begin during the second and third quarters of 2012,
with commissioning anticipated by fourth quarter 2012.
Also during the quarter, 3 (1.5 net) wells were drilled in the
Viking area and 5 (2.7 net) wells were drilled and completed in
Cantuar, achieving a 100 percent success rate. The Cantuar wells
are currently being tied in and will be tested during first quarter
2012.
Alberta
During fourth quarter, 34 (16.2 net) oil wells were drilled,
including 20 (8.0 net) wells in the Beaverhill Lake light oil
resource play. In 2011, the Company participated in a total
of 39 (15.1 net) successful wells in the Beaverhill Lake play.
As announced in first quarter 2012, Crescent Point has expanded
its land position in the Beaverhill Lake light oil resource play by
more than 85 net sections through a series of Crown land sales and
acquisitions and another 15 net sections through an arrangement
agreement with Wild Stream Exploration Inc. ("Wild Stream"). In
total, the Company has more than 280 net sections in the area.
There are currently seven non-operated drilling rigs and one
operated drilling rig running on working interest lands. Under the
terms of the joint venture and farm-in agreement with Second Wave
Petroleum Inc. in respect of certain lands in the Swan Hills and Judy
Creek areas, Crescent Point expects to take over full
operatorship on these lands in the second quarter of 2012.
Due to the Company's positive results to date in the Beaverhill
Lake light oil resource play, Crescent Point plans to spend
approximately $170 million in the
area in 2012, drilling up to 27 net wells and investing up to
$22 million in infrastructure
projects, land and seismic. As of the end of fourth quarter, 29
(11.0 net) wells had been placed on stream in the Swan Hills area, with 27 (10.2 net) of those
wells on stream for more than 30 days. The average initial 30-day
rate for those wells exceeded 630 boe/d.
Crescent Point has access to a significant land base in southern
Alberta and has been pursuing
several exploration projects in the area. During fourth quarter,
the Company participated in the drilling of 6 (6.0 net) oil wells,
of which 2 (2.0 net) were to follow up on previously drilled
unconventional exploration wells in the Alberta Bakken play, for a
total of 3.0 net unconventional exploration wells in 2011. Plans
for 2012 include drilling up to 19 net wells on these lands.
United
States
During fourth quarter, the Company participated in the drilling
of 10 (3.1 net) oil wells, of which 3 (2.2 net) were operated,
achieving a 100 percent success rate. The two operated wells
drilled in third quarter and the three drilled in fourth quarter
are expected to be completed by early 2012, as part of Crescent
Point's two-year service agreement with a leading U.S. fracture
stimulation company. In total, the Company participated in drilling
26 (6.5 net) wells in 2011, including 5 gross operated wells.
Crescent Point has amassed more than 140 net sections of land in
North Dakota. The Company expects
to allocate approximately $130
million of the 2012 budget to the state, including drilling
up to 14 net wells targeting the Bakken and Three Forks zones.
Acquisitions
During first quarter 2012, Crescent Point announced that it
entered into an arrangement agreement with Wild Stream to acquire
approximately 5,400 boe/d of Wild Stream's production, 91 percent
of which is contiguous with Crescent Point's assets in the
Shaunavon and Battrum/Cantuar
areas of southwest Saskatchewan.
Upon successful closing of the arrangement agreement, the Company
expects to acquire more than 200 net sections of land in the
Shaunavon resource play, 15 net
sections of land in the emerging Beaverhill Lake light oil resource
play in the Swan Hills area and 37
net sections of land in the Battrum/Cantuar area of southwest
Saskatchewan. The arrangement is
expected to close on or about March 15,
2012.
Also during first quarter 2012, the Company announced that it
entered into an agreement with PetroBakken to acquire more than
2,900 boe/d of production and more than 25 net sections of land in
the core of the Viewfield Bakken resource play, primarily within
the boundaries of the Company's proposed waterflood units. The
agreement is expected to close on or about March 16, 2012.
On February 16, 2012, Crescent
Point announced that it closed an agreement to acquire
approximately 940 boe/d of production in southwest Manitoba. The Company believes this property
has significant upside potential through infill drilling and
waterflood optimization.
During first quarter 2012, Crescent Point acquired approximately
3 net sections of land in the Viewfield Bakken resource play, the
majority of which is undeveloped, for cash consideration of
$28.5 million. The assets are within
Crescent Point's proposed Viewfield Bakken waterflood area and are
adjacent to and contiguous with the Company's existing assets. The
acquisition is expected to accelerate and simplify the Company's
waterflood plans. The Company has internally identified 23.4 net
low-risk drilling locations on the lands.
Also during first quarter 2012, the Company acquired an
approximate 0.8 percent interest in the Weyburn unit in southeast Saskatchewan, increasing its total unit
interest to 3.2 percent. The assets acquired include more than 200
boe/d of production and independently assigned proved plus probable
reserves of 1.7 mmboe, as of February 29,
2012. Total consideration paid was approximately
$38.0 million.
RESERVES
In 2011, Crescent Point replaced 248 percent of production on a
proved plus probable basis, excluding reserves added through
acquisitions. Including acquisitions, the Company replaced 268
percent of production and increased its year-end proved plus
probable reserves by 12 percent to 424.8 mmboe and its proved
reserves by 12 percent to 281.0 mmboe. Year-end 2010 reserves were
379.5 mmboe proved plus probable and 250.8 mmboe proved.
- Crescent Point achieved 2011 F&D costs of $18.52 per proved plus probable boe and
$23.06 per proved boe, excluding
changes in FDC, generating proved plus probable and proved recycle
ratios of 2.9 times and 2.4 times, respectively.
- Including changes in FDC, 2011 F&D costs were $28.67 per proved plus probable boe and
$33.35 per proved boe, generating
proved plus probable and proved recycle ratios of 1.9 times and 1.6
times, respectively.
- Crescent Point's 5-year weighted average F&D cost,
including expenditures on land, seismic and facilities, is
$14.30 per proved plus probable boe
and $18.45 per proved boe,
representing recycle ratios of 3.4 and 2.6 times, respectively.
This highlights the Company's technical ability to efficiently add
value to its large resource-in-place asset base and accurately
reflects the full cycle nature of investments in land, seismic and
facilities.
- The Company's cumulative proved plus probable technical and
development reserves additions since inception increased to 246.8
mmboe, which represents 58 percent of year-end 2011 proved plus
probable reserves.
The Company's reserves were independently evaluated by GLJ
Petroleum Consultants Ltd. ("GLJ") and Sproule Associates Ltd.
("Sproule") as at December 31, 2011,
and the following highlights are based on such evaluations.
The following reserves information does not include the impact
of the pending or completed transactions referenced under the
heading "Acquisitions" above.
Summary of Reserves
(Escalated Pricing)
As at December 31, 2011
(1)
RESERVES(2)
Oil (Mbbl) Gas (MMscf) NGL (Mbbl) Total (Mboe)
Description Gross Net Gross Net Gross Net Gross Net
Proved
producing 130,750 114,644 72,411 66,823 4,523 4,157 147,342 129,938
Proved non-
producing 117,587 107,791 61,499 56,834 5,852 5,438 133,688 122,701
Total proved 248,337 222,435 133,910 123,657 10,375 9,595 281,031 252,639
Probable 127,615 113,311 67,112 61,463 4,946 4,551 143,747 128,106
Total proved
plus
probable (3) 375,954 335,746 201,021 185,120 15,321 14,146 424,778 380,745
(1) Based on GLJ's January 1, 2012, escalated price forecast.
"Gross Reserves" are the total Company's interest share before the
deduction of any royalties and without including any royalty interest
of the Company. "Net Reserves" are the total Company's interest share
(2) after deducting royalties and including any royalty interest.
(3) Numbers may not add due to rounding.
Summary of Before and After Tax Net Present Values
(Escalated Pricing)
As at December 31, 2011
(1)
BEFORE TAX NET PRESENT VALUE ($MM)
Discount Rate
Description Undiscounted 5% 10% 15% 20%
Proved producing 7,452 5,588 4,604 3,978 3,536
Proved non-producing 5,331 3,829 2,884 2,249 1,800
Total proved(2) 12,783 9,416 7,488 6,227 5,336
Probable 7,733 4,790 3,386 2,576 2,055
Total proved plus probable(2) 20,516 14,207 10,874 8,803 7,391
AFTER TAX NET PRESENT VALUE ($MM)
Discount Rate
Description Undiscounted 5% 10% 15% 20%
Proved producing 6,733 5,090 4,209 3,644 3,243
Proved non-producing 3,917 2,740 2,005 1,514 1,171
Total proved(2) 10,649 7,830 6,214 5,158 4,414
Probable 5,681 3,501 2,457 1,854 1,465
Total proved plus probable(2) 16,330 11,331 8,670 7,012 5,880
(1) Based on GLJ's January 1, 2012, escalated price forecast.
(2) Numbers may not add due to rounding.
Before Tax Net Asset Value Per Share,
Fully Diluted, Utilizing Independent Engineering Escalated
Pricing
2011 2010 2009 2008 2007 2006 2005 2004
PV 0% $71.39 $71.38 $72.01 $80.66 $61.03 $34.08 $21.99 $16.19
PV 5% $49.81 $47.65 $46.91 $49.30 $40.21 $21.61 $15.12 $11.22
PV 10% $38.42 $36.02 $35.08 $34.97 $30.05 $15.70 $11.45 $8.56
PV 15% $31.35 $29.10 $28.27 $26.85 $24.04 $12.27 $9.10 $6.85
Reserves Reconciliation
(Escalated Pricing)
Gross Reserves (1)
For the year ended December 31,
2011
CRUDE OIL AND NGL (Mbbl) NATURAL GAS (MMscf)
Proved Probable Total Proved Probable Total
Opening
Balance
January 1,
2011 230,537 119,602 350,139 121,638 54,771 176,408
Acquired 3,141 1,745 4,886 1,743 980 2,723
Disposed - (39) (39) - - -
Production (24,310) - (24,310) (15,758) - (15,758)
Development 38,867 24,922 63,789 18,384 12,154 30,538
Technical
revisions 10,478 (13,668) (3,191) 7,903 (793) 7,110
Closing
Balance
December
31, 2011
(2) 258,713 132,562 391,274 133,910 67,112 201,021
(table continued)
BOE (Mboe)
Proved Probable Total
Opening
Balance
January 1,
2011 250,810 128,731 379,540
Acquired 3,432 1,909 5,340
Disposed - (39) (39)
Production (26,937) - (26,937)
Development 41,931 26,947 68,879
Technical
revisions 11,795 (13,800) (2,006)
Closing
Balance
December
31, 2011
(2) 281,031 143,747 424,778
(1) Based on GLJ's January 1, 2012, escalated price forecast. "Gross
reserves" are the Company's working-interest share before deduction of
any royalties and without including any royalty interests of the
Company.
(2) Numbers may not add due to rounding.
Finding, Development and Acquisition Costs
(Excluding future development capital)
For the year ended December 31,
2011
CAPITAL FINDING, DEVELOPMENT AND
EXPENDITURES(1)(4) RESERVES (3) ACQUISITION COSTS(1)(2)
Total Proved Plus Proved Plus
Proved Probable Proved Probable
$000 % Mboe % Mboe % $/boe $/boe
Exploration
development
and revisions 1,238,795 86 53,726 94 66,873 93 23.06 18.52
Acquisitions,
net of
dispositions 201,313 14 3,432 6 5,301 7 58.66 37.98
Total 1,440,108 100 57,158 100 72,174 100 25.20 19.95
(1) Exploration, Development and Revisions exclude the
change in estimated FDC during 2011. These costs would add
$552.9 million and $678.3 million to the proved and proved plus
probable reserves categories, respectively. Including these
changes, the proved and proved plus probable F&D costs are
$33.35 and $28.67 per boe, respectively.
(2) Including change in FDC, FD&A costs are
$34.87 per proved boe and
$29.35 per proved plus probable
boe.
(3) Gross Company interest reserves are used in this
calculation (working interest reserves, before deduction of any
royalties and without including any royalty interests of the
Company).
(4) The capital expenditures exclude capitalized
administration costs and transaction costs.
F&D and FD&A Costs,
$/boe (1)
3 Years Ended
Dec. 31, 2011
Weighted
2011 2010 Average
F&D
Total Proved Cost, excluding change in FDC $23.06 $21.07 $20.98
Total Proved Cost, including change in FDC $33.35 $32.45 $30.18
Total Proved plus Probable Cost, excluding
change in FDC $18.52 $17.23 $16.67
Total Proved plus Probable Cost, including
change in FDC $28.67 $28.89 $25.71
FD&A
Total Proved Cost, excluding change in FDC $25.20 $35.94 $32.31
Total Proved Cost, including change in FDC $34.87 $41.85 $37.49
Total Proved plus Probable Cost, excluding
change in FDC $19.95 $26.15 $23.15
Total Proved plus Probable Cost, including
change in FDC $29.35 $31.54 $27.74
(1) The aggregate of the exploration and development costs
incurred in the most recent financial year and the change during
that year in estimated future development costs generally will not
reflect total finding and development costs related to reserves
additions for that year.
The following reserves information includes, in addition to
Crescent Point's year-end evaluations of reserves sourced from GLJ
and Sproule as of December 31, 2011,
the impact of the pending and completed transactions referenced
under the heading "Acquisitions" above.
Summary of Reserves, Including First Quarter 2012
Acquisitions and Dispositions
(Escalated Pricing)
As at March 15, 2012 (1)
(2)
RESERVES (3)
Oil (Mbbls) Gas (MMscf) NGL (Mbbls) Total (Mboe)
Description Gross Net Gross Net Gross Net Gross Net
Proved
producing 150,689 132,121 77,604 71,567 4,905 4,493 168,528 148,542
Proved
non-producing 128,992 117,957 63,944 59,028 6,211 5,760 145,861 133,554
Total proved 279,681 250,078 141,548 130,595 11,116 10,253 314,389 282,096
Probable 144,007 127,580 72,338 66,386 5,302 4,870 161,364 143,516
Total proved
plus
probable(4) 423,688 377,658 213,886 196,981 16,418 15,122 475,753 425,612
(1) Includes independent engineers' evaluations of both
Crescent Point's 2011 year end and all acquisitions that are
expected to close in first quarter 2012. Acquired reserves were
evaluated as of January 31, 2012, and
February 29, 2012.
(2) Based on GLJ's January 1,
2012, escalated price forecast.
(3) "Gross Reserves" are the total Company's interest
share before the deduction of any royalties and without including
any royalty interests of the Company. "Net Reserves" are the total
Company interest share after deducting royalties and including any
royalty interests.
(4) Numbers may not add due to rounding.
Summary of Before Tax Net Present
Values, Including First Quarter 2012 Acquisitions and
Dispositions
(Escalated Pricing)
As at March 15, 2012 (1)
(2)
BEFORE TAX NET PRESENT VALUE ($MM)
Discount Rate
Description Undiscounted 5% 10% 15% 20%
Proved producing 8,561 6,348 5,200 4,477 3,971
Proved non-producing 5,792 4,156 3,130 2,440 1,952
Total proved 14,353 10,504 8,330 6,917 5,923
Probable 8,767 5,366 3,771 2,859 2,275
Total proved plus probable (3) 23,120 15,869 12,100 9,776 8,198
(1) Includes independent engineers' evaluations of both Crescent
Point's 2011 year end and all acquisitions that are expected to
close in first quarter 2012. Acquired reserves were evaluated as of
January 31, 2012, and February 29, 2012.
(2) Based on GLJ's January 1,
2012, escalated price forecast.
(3) Numbers may not add due to rounding.
STRATEGIC CONSOLIDATION ACQUISITION OF
RELIABLE ENERGY LTD.
Crescent Point is pleased to announce that it has entered into
an arrangement agreement (the "Reliable Arrangement") with Reliable
Energy Ltd. ("Reliable"), a publicly traded company in which
Crescent Point owns a 12.8 percent equity interest. Reliable has
production of approximately 1,000 boe/d from the Bakken light oil
play in the Kirkella/Manson area and a land base of more than 135
net sections in southern Saskatchewan and southwestern Manitoba. The assets of Reliable include
internally assigned proved plus probable reserves of 4.1 mmboe, as
of December 31, 2011, and an
internally identified drilling inventory of 36 net locations.
The completion of the Reliable Arrangement will allow Crescent
Point to consolidate the assets currently held through a joint
venture with Reliable in the Bakken light oil play in southwest
Manitoba and is complementary to
the Company's previously announced Manitoba asset acquisition. The Bakken light
oil play in southwest Manitoba is
a low-cost, high-netback play that the Company believes has upside
potential through both infill and step-out drilling, as well as
waterflooding.
Under the terms of the Reliable Arrangement, Crescent Point has
agreed to acquire all of the issued and outstanding shares of
Reliable at an exchange ratio of 0.00794 of a Crescent Point share
for each Reliable share. In addition, Crescent Point expects to
assume approximately $20.0 million of
Reliable net debt, including deal costs and after taking into
account proceeds from Reliable stock options and warrants expected
to be exercised prior to the completion of the Reliable
Arrangement. Total consideration for the 87.2 percent of Reliable
not currently owned by Crescent Point is approximately $99.1 million, including net debt. Including
Crescent Point's existing 12.8 percent equity interest in Reliable,
total value is approximately $103.9
million, based on a five-day weighted average trading price
of $45.61 per Crescent Point
share.
The Reliable Board of Directors has concluded that the Reliable
Arrangement is fair to Reliable shareholders and has resolved to
recommend that the Reliable shareholders vote their Reliable shares
in favour of the Reliable Arrangement. All of the officers and
directors of Reliable exercising control or direction of
approximately 10.4 percent of Reliable's fully diluted shares have
agreed to vote their Reliable shares in favour of the Reliable
Arrangement.
The Reliable Arrangement is expected to close on or about
May 1, 2012, allowing Reliable
shareholders to receive Crescent Point's anticipated May dividend,
which is expected to be paid on or about June 15, 2012.
Peters & Co. Limited acted as advisor to Crescent Point with
regards to the Reliable Arrangement.
OUTLOOK AND UPWARDLY REVISED
GUIDANCE
Crescent Point continues to execute its business plan of
creating sustainable value-added growth in reserves, production and
cash flow through management's integrated strategy of acquiring,
exploiting and developing high-quality, long-life light and medium
oil and natural gas properties in United
States and Canada.
2011 was another successful year in which Crescent Point
achieved record production, reserves and cash flow. The Company
continued to develop and exploit the Viewfield Bakken and
Shaunavon resource plays, while
also acquiring significant positions in two emerging plays, the
Beaverhill Lake light oil resource play in Alberta and the North Dakota Bakken/Three
Forks play along the U.S./Canada
border.
Crescent Point now has more than 7,150 net low-risk drilling
locations in inventory, representing more than 550,000 boe/d of
risked potential production additions. This depth of drilling
inventory positions the Company well for long-term sustainable
growth in production, reserves and NAV and also provides support
for long-term dividends.
As a result of the Reliable Arrangement, the Company is upwardly
revising its guidance for the year. Crescent Point's average daily
production is expected to increase to more than 86,500 boe/d from
86,000 boe/d and its 2012 exit production rate is expected to
increase to more than 94,000 boe/d from 93,000 boe/d. The Company's
capital expenditures budget for 2012 remains unchanged at
$1.2 billion.
The 2012 capital program will focus on several organic growth
projects across the Company's asset base, as well as on advancing
the Company's emerging resource plays in Beaverhill Lake and North
Dakota Bakken/Three Forks. Crescent Point will continue to apply
and refine new techniques and concepts in each of its core resource
plays, which will provide the Company with a competitive advantage
in developing new prospects.
Crescent Point expects to spend approximately 36 percent of its
2012 budget in the Viewfield Bakken and Flat Lake areas of
southeast Saskatchewan, 22 percent
in the Shaunavon area of southwest
Saskatchewan, 14 percent in the
Beaverhill Lake light oil resource play and 11 percent in the
Bakken/Three Forks resource play in North
Dakota. The remainder of the budget will be allocated to the
Company's other core conventional properties and to the exploration
and development projects in southern Alberta. In total, Crescent Point expects to
drill approximately 389 net wells in 2012 and to spend
approximately $150 million on
facilities infrastructure, primarily in the Bakken and Lower
Shaunavon resource plays.
The Company will continue to expand and develop its waterflood
programs in the Viewfield Bakken and Shaunavon resource plays. By year-end 2012,
the Company expects to have approximately 60 and 10 injection wells
in the Bakken play and Shaunavon
play, respectively.
Funds flow from operations for 2012 is expected to increase to
$1.5 billion ($4.74 per share - diluted), based on forecast
pricing of US$100.00 per barrel WTI,
Cdn$2.75 per mcf AECO gas and a
US$/Cdn$0.98 exchange rate.
The Company's guidance for funds flow from operations includes
wider corporate oil differentials for the first half of 2012 to
reflect factors impacting the PADD II refining region. The Company
expects differentials to improve in the second half of the year.
However, to offset these price risks, Crescent Point has begun
delivering crude oil through its Stoughton rail terminal, which will provide
access to new markets outside of the PADD II region.
The Company's balance sheet remains strong, with projected
average net debt to 12-month cash flow of less than 1.0 times and
approximately $1.0 billion unutilized
on its bank lines as at December 31,
2011.
Crescent Point continues to implement its balanced 3½-year price
risk management program, using a combination of swaps, collars and
purchased put options with investment grade counterparties. As at
March 7, 2012, the Company had hedged
59 percent, 49 percent, 32 percent and 16 percent of its expected
oil production, net of royalty interest, for 2012, 2013, 2014 and
the first half of 2015, respectively. Average quarterly hedge
prices range from Cdn$94 per bbl to
Cdn$100 per bbl.
Crescent Point's management believes that with the Company's
high-quality reserve base and development drilling inventory,
excellent balance sheet and solid risk management program, the
Company is well-positioned to continue generating strong operating
and financial results through 2012 and beyond.
2012 GUIDANCE
Crescent Point's upwardly revised 2012 guidance is as
follows:
Production Prior Revised
Oil and NGL (bbls/d) 78,000 78,500
Natural gas (mcf/d) 48,000 48,000
Total (boe/d) 86,000 86,500
Exit (boe/d) 93,000 94,000
Funds flow from operations ($000) 1,490,000 1,500,000
Funds flow per share - diluted ($) 4.72 4.74
Cash dividends per share ($) 2.76 2.76
Capital expenditures ($000) (1) 1,200,000 1,200,000
Wells drilled, net 389 389
Pricing
Crude oil - WTI (US$/bbl) 95.00 100.00
Crude oil - WTI (Cdn$/bbl) 98.96 102.04
Natural gas - Corporate (Cdn$/mcf) 3.25 2.75
Exchange rate (US$/Cdn$) 0.96 0.98
(1) The projection of capital expenditures excludes
acquisitions, which are separately considered and evaluated.
ON BEHALF OF THE BOARD OF DIRECTORS
(signed)
Scott Saxberg
President and Chief Executive Officer
March 15, 2012
Non-GAAP Financial Measures
Throughout this press release, the Company uses the terms "funds
flow from operations", "funds flow from operations per share -
diluted", "net debt", "netback", "payout ratio" and "payout ratio
per share - diluted." These terms do not have any standardized
meaning as prescribed by IFRS and, therefore, may not be comparable
with the calculation of similar measures presented by other
issuers.
Funds flow from operations is calculated based on cash flow from
operating activities before changes in non-cash working capital,
transaction costs and decommissioning expenditures. Funds flow from
operations per share and funds flow from operations per share -
diluted are calculated as funds flow from operations divided by the
number of weighted average diluted shares outstanding. Management
utilizes funds flow from operations as a key measure to assess the
ability of the Company to finance dividends, operating activities,
capital expenditures and debt repayments. Funds flow from
operations as presented is not intended to represent cash flow from
operating activities, net earnings or other measures of financial
performance calculated in accordance with IFRS.
The following table reconciles the cash flow from operating
activities to funds flow from operations:
($000s) 2011 2010 % Change
Cash flow from operating activities 1,322,971 816,454 62
Changes in non-cash working capital (36,078) 54,349 (166)
Transaction costs 2,679 9,311 (71)
Decommissioning expenditures 3,685 2,748 34
Funds flow from operations 1,293,257 882,862 46
Net debt is calculated as current
liabilities plus long-term debt less current assets and long-term
investments, but excludes derivative asset, derivative liability
and unrealized foreign exchange on translation of US dollar senior
guaranteed notes. Management utilizes net debt as a key measure to
assess the liquidity of the Company.
The following table reconciles
long-term debt to net debt:
($000s) 2011 2010 % Change
Long-term debt 1,099,028 1,006,451 9
Current liabilities 681,279 449,931 51
Current assets (308,515) (212,670) 45
Long-term investments (151,917) (62,164) 144
Excludes:
Derivative asset 10,216 7,087 44
Derivative liability (101,997) (78,707) 30
Unrealized foreign exchange on
translation of US dollar senior
guaranteed notes (7,950) 6,535 (222)
Net debt 1,220,144 1,116,463 9
Netback is calculated on a per boe
basis as oil and gas sales, less royalties, operating and
transportation expenses and realized derivative gains and losses.
Netback is used by management to measure operating results on a per
boe basis to better analyze performance against prior periods on a
comparable basis.
Payout ratio and payout ratio per
share - diluted are calculated on a percentage basis as dividends
paid or declared (including the value of dividends issued pursuant
to the Company's dividend reinvestment plan) divided by funds flow
from operations. Payout ratio is used by management to monitor the
dividend policy and the amount of funds flow from operations
retained by the Company for capital reinvestment.
Reserves Data
There are numerous uncertainties inherent in estimating
quantities of crude oil, natural gas and NGL reserves and the
future cash flows attributed to such reserves. The reserve and
associated cash flow information set forth above are estimates
only. In general, estimates of economically recoverable crude oil,
natural gas and NGL reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary materially. For
these reasons, estimates of the economically recoverable crude oil,
NGL and natural gas reserves attributable to any particular group
of properties, classification of such reserves based on risk of
recovery and estimates of future net revenues associated with
reserves prepared by different engineers, or by the same engineers
at different times, may vary. The Company's actual production,
revenues, taxes and development and operating expenditures with
respect to its reserves will vary from estimates thereof and such
variations could be material.
The reserve data provided in this news release presents only a
portion of the disclosure required under National Instrument
51-101. All of the required information will be contained in the
Company's Annual Information Form for the year ended December 31, 2011, which will be filed on SEDAR
(accessible at http://www.sedar.com) on or before March 30, 2012.
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking statements. All forward-looking statements are
based on Crescent Point's beliefs and assumptions based on
information available at the time the assumption was made. The use
of any of the words "could", "should", "can", "anticipate",
"expect", "believe", "will", "may", "projected", "sustain",
"continues", "strategy", "potential", "projects", "grow", "take
advantage", "estimate", "well-positioned" and similar expressions
are intended to identify forward-looking statements. By their
nature, such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking statements. Crescent Point believes that the
expectations reflected in those forward-looking statements are
reasonable but no assurance can be given that these expectations
will prove to be correct and such forward-looking statements
included in this report should not be unduly relied upon. These
statements speak only as of the date of this press release or, if
applicable, as of the date specified in those documents
specifically referenced herein.
In particular, this press release contains forward-looking
statements pertaining to the following: the performance
characteristics of Crescent Point's oil and natural gas properties;
oil and natural gas production levels; capital expenditure
programs; drilling programs; well conversion and water injection
programs; the quantity of Crescent Point's oil and natural gas
reserves and anticipated future cash flows from such reserves; the
anticipated closing dates for the acquisitions described under
"Operations Review - Acquisitions" and the expected impact of such
acquisitions on the Company's reserves as at March 15, 2012; the quantity of drilling
locations in inventory; projections of commodity prices and costs;
supply and demand for oil and natural gas; expectations regarding
the ability to raise capital and to continually add to reserves
through acquisitions and development; expected debt levels and
credit facilities; expected pipeline capacity additions; facility
construction plans; and treatment under governmental regulatory
regimes.
By their nature, such forward-looking statements are subject to
a number of risks, uncertainties and assumptions, which could cause
actual results or other expectations to differ materially from
those anticipated, including those material risks discussed in our
annual information form under "Risk Factors" and our Management's
Discussion and Analysis for the year ended December 31, 2011, under the headings "Risk
Factors" and "Forward-Looking Information." The material
assumptions are disclosed in the Management's Discussion and
Analysis for the year ended December 31,
2011, under the headings "Dividends", "Capital
Expenditures", "Decommissioning Liability", "Liquidity and Capital
Resources", "Critical Accounting Estimates", "Future Changes in
Accounting Policies" and "Outlook." The actual results could differ
materially from those anticipated in these forward-looking
statements as a result of the material risks set forth under the
noted headings, which include, but are not limited to: financial
risk of marketing reserves at an acceptable price given market
conditions; volatility in market prices for oil and natural gas;
delays in business operations, pipeline restrictions, blowouts; the
risk of carrying out operations with minimal environmental impact;
industry conditions including changes in laws and regulations
including the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced; uncertainties
associated with estimating oil and natural gas reserves and
Discovered Petroleum Initially in Place; economic risk of finding
and producing reserves at a reasonable cost; uncertainties
associated with partner plans and approvals; operational matters
related to non-operated properties; increased competition for,
among other things, capital, acquisitions of reserves and
undeveloped lands; competition for and availability of qualified
personnel or management; incorrect assessments of the value of
acquisitions and exploration and development programs; unexpected
geological, technical, drilling, construction and processing
problems; availability of insurance; fluctuations in foreign
exchange and interest rates; stock market volatility; failure to
realize the anticipated benefits of acquisitions; general economic,
market and business conditions; uncertainties associated with
regulatory approvals; uncertainty of government policy changes;
uncertainties associated with credit facilities and counterparty
credit risk; and changes in income tax laws, tax laws, crown
royalty rates and incentive programs relating to the oil and gas
industry.
Barrels of oil equivalent ("boes") may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 Mcf:
1 Bbl is based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead.
The aggregate of the exploration and development costs incurred
in the most recent financial year and the change during the year in
estimated future development costs generally will not reflect total
finding and development costs related to reserves additions for the
year.
Additional information on these and other factors that could
affect Crescent Point's operations or financial results are
included in Crescent Point's reports on file with Canadian
securities regulatory authorities. Readers are cautioned not to
place undue reliance on this forward-looking information, which is
given as of the date it is expressed herein or otherwise and
Crescent Point undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, unless required to do so
pursuant to applicable law.
Crescent Point is a conventional oil and gas producer with
assets strategically focused in properties comprised of
high-quality, long-life, operated light and medium oil and natural
gas reserves in United States and
Canada.
Crescent Point shares are traded on
the Toronto Stock Exchange under the symbol CPG.
Crescent Point Energy Corp.
Suite 2800, 111-5th Avenue S.W.
Calgary, Alberta T2P 3Y6
For further information:
Greg Tisdale, Chief Financial
Officer, or Trent Stangl, Vice
President Marketing and Investor Relations.
Telephone: +1(403)693-0020 Toll-free (US &
Canada): 888-693-0020
Fax: +1(403)693-0070
Website: http://www.crescentpointenergy.com