Crescent Point Energy Corp. ("Crescent Point" or the "Company")
(TSX:CPG) and (NYSE:CPG) is pleased to announce its budget for
2018.
KEY HIGHLIGHTS
- Achieved 2017 exit rate of 183,000 boe/d and expects 2018
year-over-year exit growth of approximately seven percent.
- 2018 capital budget focused on returns, with over 75 percent of
net wells drilled expected to payout in two years or less.
- Increased total corporate productive capacity by approximately
70 percent, driven by new horizontal locations in Uinta.
- Transacted over $320 million of non-core dispositions in 2017
with a continued focus on debt reduction.
The Company's 2018 budget is expected to generate annual average
production of 183,500 boe/d and exit production of
195,000 boe/d. This represents annual growth of approximately
five percent and year-over-year exit growth of approximately seven
percent. These growth rates are in addition to the Company’s
monthly dividend income provided to shareholders.
Crescent Point is also pleased to announce it achieved a 2017
exit rate of 183,000 boe/d, which represented year-over-year
production growth of approximately 10 percent, both on an absolute
and per share basis. This growth was realized despite executing
several non-core asset dispositions throughout 2017.
The Company also successfully identified new drilling locations
during 2017, including additional horizontal locations in the Uinta
Basin. At year-end 2017, Crescent Point’s risked Uinta Basin
horizontal inventory increased to approximately 850 net locations,
up from 120 at the end of 2016. These new higher rate locations
have the potential to generate significant production and increase
the productive capacity of the Company’s drilling inventory by
approximately 70 percent compared to the prior year. Crescent Point
also updated its estimated original oil-in-place for the Uinta
Basin, which grew by over 60 percent to approximately 8.5 billion
barrels.
“Our operational execution was highly successful in 2017,” said
Scott Saxberg, president and CEO of Crescent Point. “We added new
drilling locations in each of our core areas and advanced new plays
for future development. In Uinta, our risked horizontal drilling
inventory increased to approximately 850 net locations and can
potentially increase to over 1,700 based on the continued success
of our newly acquired lands on the western portion of the basin,
new zone development and additional down-spacing.”
Crescent Point’s budget remains focused on allocating capital
based on returns and balancing longer-term development goals for
its core areas. Over 75 percent of net wells drilled in 2018 are
expected to payout in two years or less at US$55.00/bbl WTI.
2018 BUDGET AND GUIDANCE SUMMARY
Exit production (boe/d) |
|
195,000 |
|
Total average annual production (boe/d) % Oil and
NGLs |
|
183,50090% |
|
Capital expenditures ($ millions) Drilling and
development Facilities and seismic |
|
$1,610$190 |
|
Total capital expenditures, before net land and
property acquisitions ($ millions) |
|
$1,800 |
|
Net wells drilled |
|
~630 |
|
Funds flow from operations netback based on current strip prices
($/boe) (1) (2) |
|
~$30.00 |
|
Cash dividends per share in 2018 (based on current monthly dividend
of $0.03 per share) |
|
$0.36 |
|
Total payout based on current strip prices (%) (1) (2) (3) |
|
99% |
|
Net debt to funds flow from operations based on current strip
prices (1) (2) (4) |
|
1.9x |
|
Funds flow from operations sensitivity for every US$1.00/bbl WTI ($
millions) |
|
~$40 |
|
|
|
|
|
(1) Funds flow from operations netback, total payout, net debt
and net debt to funds flow from operations 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. |
(2) Current strip prices equate to US$60.14/bbl WTI and $0.80
US/CAD for 2018. |
(3) Total payout is calculated on a percentage basis as
capital expenditures and dividends declared divided by funds flow
from operations. |
(4) Net debt to funds flow from operations is calculated as
the period end net debt divided by the sum of funds flow from
operations for the trailing four quarters. |
|
________________________________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 the Forward-Looking Statements and Other
Matters sections of this press release, respectively. |
|
2018 CORE AREA SUMMARY
The following table summarizes Crescent Point’s planned core
area capital allocation and expected production in 2018:
Core Area |
Capital Expenditures(% of
Total) |
AnnualAverage
Production(boe/d) |
Exit-to-ExitGrowth(%) |
Net Wells(# of Locations) |
Williston Basin |
55 |
% |
106,000 |
7 |
% |
370 |
Southwest Saskatchewan |
20 |
% |
39,500 |
4 |
% |
210 |
Uinta Basin |
20 |
% |
25,000 |
15 |
% |
30 |
|
Figures
shown above are approximations. |
|
“Each of our core areas are expected to generate
growth in 2018,” said Saxberg. “Our Williston Basin and southwest
Saskatchewan areas continue to generate free cash flow and support
our growth strategy in the Uinta Basin. Our 2018 focus in Uinta
will include two-mile horizontal wells, multi-well pad drilling for
improved efficiencies, new zone development and further delineation
on the western portion of the basin.”
Throughout 2017, Crescent Point advanced its Injection Control
Device (ICD) waterflood systems, which resulted in improved water
injectivity and production rates. Within the Company’s Bakken
waterflood in the Williston Basin, ICDs doubled water injectivity
and increased oil production by approximately 25 percent. In 2018,
Crescent Point is targeting total waterflood capital expenditures
of approximately $35 million, an amount similar to the prior year.
The Company’s 2018 budget also includes investments in climate
change initiatives as well as additional remote field monitoring
and automation pilots to further improve efficiencies.
During fourth quarter 2017, Crescent Point executed additional
non-core asset dispositions for a total value of
approximately $40 million, of which approximately $20 million
are expected to close in first quarter 2018. These transactions are
in addition to the $280 million of previously announced 2017
dispositions. The Company continues to market non-core asset
packages, with proceeds providing increased balance sheet strength
and financial flexibility.
“In 2017, we captured over 400,000 net acres in our core areas
that provide three times the potential upside relative to the
non-core assets we disposed throughout the year," said Saxberg.
"These transactions provide us with significant future production,
reserves and inventory growth potential. We are currently marketing
non-core asset packages and may also look to sell larger non-core
assets to further strengthen our balance sheet, should market
conditions allow.”
Crescent Point continues to remain active on its hedging
program, which provides increased stability to the Company’s funds
flow from operations and planned growth objectives. As at January
4, 2018, Crescent Point had 49 percent of its liquids production,
net of royalty interest, hedged for first half of 2018 at a
weighted average market value price of approximately CDN$73.00/bbl.
For the second half of 2018, 32 percent of its liquids production
is hedged at a weighted average market value price of approximately
CDN$71.00/bbl. The Company's commodity hedges extend through 2019,
including a significant amount of natural gas production hedged at
a weighted average price of CDN$2.79/GJ.
"Our light oil-weighted asset base continues to generate
top-quartile netbacks," said Saxberg. "The recent widening of oil
differentials is expected to have a moderate impact on
our cash flows of approximately CDN$1.50/bbl in 2018, which has
already been offset by the recent increase in WTI prices."
Crescent Point retains significant financial flexibility and
liquidity with no material near-term debt maturities and
approximately $1.5 billion of cash and unutilized credit capacity
on its covenant-based, unsecured credit facility, as at September
30, 2017.
Non-GAAP Financial Measures
Throughout this press release, the Company uses
the terms “total payout”, “funds flow from operations”, “funds flow
from operations netback”, “net debt”, and “net debt to funds flow
from operations”. 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.
Total payout is calculated on a percentage basis
as capital expenditures and dividends declared divided by funds
flow from operations. Total payout is used by management to monitor
the Company’s capital reinvestment and dividend policy, as a
percentage of the amount of funds flow from operations.
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. Transaction costs are excluded as they vary based on
the Company's acquisition activity, and to ensure that this metric
is more comparable between periods. Decommissioning expenditures
are excluded as the Company has a voluntary reclamation fund to
fund decommissioning costs. Funds flow from operations netback is
calculated on a per boe basis as funds flow from operations divided
by total production. 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.
Net debt is calculated as long-term debt plus
accounts payable and accrued liabilities, dividends payable and
long-term compensation liability, less cash, accounts receivable,
prepaids and deposits and long-term investments, excluding the
unrealized foreign exchange on translation of US dollar long-term
debt. Management utilizes net debt as a key measure to assess the
liquidity of the Company.
Net debt to funds flow from operations is
calculated as the period end net debt divided by the sum of funds
flow from operations for the trailing four quarters. The ratio of
net debt to funds flow from operations is used by management to
measure the Company’s overall debt position and to measure the
strength of the Company’s balance sheet. Crescent Point monitors
this ratio and uses this as a key measure in making decisions
regarding financing, capital spending and dividend levels.
Management believes the presentation of the
Non-GAAP measures above provide useful information to investors and
shareholders as the measures provide increased transparency and the
ability to better analyze performance against prior periods on a
comparable basis.
Forward-Looking Statements and Other
Matters
Any "financial outlook" or "future oriented financial
information" in this press release, as defined by applicable
securities legislation has been approved by management of Crescent
Point. Such financial outlook or future oriented financial
information is provided for the purpose of providing information
about management’s current expectations and plans relating to the
future. Readers are cautioned that reliance on such information may
not be appropriate for other purposes.
Certain statements contained in this press release constitute
"forward-looking statements" within the meaning of section 27A of
the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934 and "forward-looking information" for the
purposes of Canadian securities regulation (collectively,
"forward-looking statements"). The Company has tried to identify
such forward-looking statements by use of such words as "could",
"should", "can", "anticipate", "expect", "believe", "will", "may",
"intend", "projected", "sustain", "continues", "strategy",
"potential", "projects", "grow", "take advantage", "estimate",
"well-positioned" and other similar expressions, but these words
are not the exclusive means of identifying such statements.
In particular, this press release contains forward-looking
statements pertaining, among other things, to the following:
expected production growth in 2018; expected payout rates for 75%
of net wells planned to be drilled in 2018; expected 2018 annual
average and exit production and related expected year-over-year
growth rates; the potential production possible from new higher
rate locations identified in the Uinta Basin and the potential
impact of the new locations on the productive capacity of the
Company’s drilling inventory; the estimated original oil-in-place
for the Uinta Basin; the potential to increase the Company’s net
locations in the Uinta Basin through continued success, new zone
development and additional down-spacing; the Company's capital
allocation strategy; budgeted 2018 capital expenditures (broken
down into drilling and development and into facilities and seismic
and before land and property acquisitions), net wells drilled,
funds flow from operations netback based on current strip pricing,
cash dividends, total payout ratio based on strip pricing, net debt
to funds flow from operations, and funds flow from operations
sensitivity for every US$1.00/bbl WTI; planned 2018 capital
allocation and expected annual average production, exit-to-exit
growth and net wells, in each case by core area; the Company’s
expectation that each of its core areas are expected to generate
growth in 2018; the expected continued generation of free cash
flows in the Company’s Williston Basin and southwest Saskatchewan
areas; the Company’s expectation that, in Uinta, it will focus on
two-mile horizontal wells, multi-well pad drilling for improved
efficiencies, new zone development and further expansion on the
western portion of the basin in 2018; targeted 2018 waterflood
expenditures and investments in climate change initiatives, remote
field monitoring and automation pilots; the expected proceeds from
non-core asset dispositions expected to close in first quarter
2018; the Company’s plans to continue to market additional non-core
asset packages and the anticipated use of the proceeds therefrom,
including to increase balance sheet strength and provide financial
flexibility; the relative potential upside of the core area
acquisitions completed in 2017 compared to non-core assets disposed
of during the year and expected to be disposed of in first quarter
2018; the future production reserves and inventory growth potential
associated with the core area acquisitions completed in 2017; and
the expected impact of the Company’s hedging strategy on the
stability of the Company’s funds flow from operations and the
ability of the Company to meet its planned growth objectives.
All forward-looking statements are based on Crescent Point’s
beliefs and assumptions based on information available at the time
the assumption was made. Crescent Point believes that the
expectations reflected in these 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. 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, expressed or implied by such statements, including
those material risks discussed in the Company’s Annual Information
Form for the year ended December 31, 2016 under "Risk Factors," in
our Management’s Discussion and Analysis for the year ended
December 31, 2016, under the headings "Risk Factors" and
"Forward-Looking Information" and for the quarter ended September
30, 2017 under “Derivatives”, “Liquidity and Capital Resources”,
“Changes in Accounting Policies” and “Outlook”. The material
assumptions are disclosed in the Management’s Discussion and
Analysis for the year ended December 31, 2016, under the headings
"Capital Expenditures", "Liquidity and Capital Resources",
"Critical Accounting Estimates", "Risk Factors", "Changes in
Accounting Policies" and "Outlook" and are disclosed in the
Management’s Discussion and Analysis for the quarter ended
September 30, 2017 under the headings “Derivatives”,
“Liquidity and Capital Resources”, “Changes in Accounting Policy”
and “Outlook”. In addition, risk factors include: 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 and the
adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced; risks and uncertainties
related to all oil and gas interests and operations on tribal
lands; uncertainties associated with estimating oil and natural gas
reserves; 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;
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; and other factors, many of which are outside the
control of Crescent Point. The impact of any one risk, uncertainty
or factor on a particular forward-looking statement is not
determinable with certainty as these are interdependent and
Crescent Point’s future course of action depends on management’s
assessment of all information available at the relevant time.
This press release refers to drilling locations in two
categories: (i) risked locations and (ii) unrisked locations which
combined, represent the Company's total drilling inventory. In
addition, locations are subdivided into (a) booked locations and
(b) unbooked locations. The booked locations are derived from the
Corporation's most recent independent reserves evaluation as
prepared by GLJ Petroleum Consultants Ltd. and Sproule Associates
Limited, both as at December 31, 2016, and were aggregated by GLJ
and account for drilling locations that have associated proved
and/or probable reserves, as applicable, unless otherwise
stated.
Of the approximately 850 risked net Uinta horizontal locations
disclosed in this press release, 23 are booked as at December 31,
2016. Based on continued success on the western portion of the
Uinta Basin, new zone development and additional down-spacing, the
Company's Uinta Basin horizontal inventory has the potential to
increase to over 1,700 locations, of which 23 are booked as at
December 31, 2016. The remaining net risked and unrisked locations
are internally identified and unbooked.
References to the "total corporate productive capacity” are
derived from the sum of the 30-day initial production rates of the
Company's total drilling inventory, both on a risked and unrisked
basis. References to the “potential upside” of asset acquisitions
relative to non-core asset dispositions are derived from the
before-tax net present value of unrisked drilling locations,
discounted at 10 percent, in comparison to the total value of
dispositions executed in 2017.
Original Oil-In-Place (OOIP) means Discovered Petroleum
Initially-In-Place (DPIIP) as at December 31, 2017 based on
internal estimates, but excluding gas. DPIIP, as defined in the
Canadian Oil and Gas Evaluations Handbook (COGEH), is that quantity
of petroleum that is estimated, as of a given date, to be contained
in known accumulations prior to production. The recoverable portion
of DPIIP includes production, reserves and contingent resources;
the remainder is unrecoverable. There is significant uncertainty
regarding the ultimate recoverable OOIP/DPIIP.
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 and U.S.
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. Crescent
Point undertakes no obligation to update publicly or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, unless required to do so pursuant to
applicable law. All subsequent forward-looking statements, whether
written or oral, attributable to Crescent Point or persons acting
on the Company’s behalf are expressly qualified in their entirety
by these cautionary statements.
CRESCENT POINT ENERGY
Scott Saxberg, President and Chief Executive Officer
FOR MORE INFORMATION ON CRESCENT POINT ENERGY, PLEASE
CONTACT:
Ken Lamont, Chief Financial Officer, or Brad Borggard, Vice
President, Corporate Planning and Investor Relations
Telephone: (403) 693-0020 Toll-free (US &
Canada): 888-693-0020
Fax: (403)
693-0070 Website:
www.crescentpointenergy.com
Crescent Point shares are traded on the Toronto Stock
Exchange and New York Stock Exchange under the symbol
CPG.
Crescent Point Energy Corp.Suite 2000, 585 - 8th
Avenue S.W.Calgary, Alberta T2P 1G1
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