CALGARY,
AB, July 6, 2022 /CNW/ - Crescent Point Energy
Corp. ("Crescent Point" or the "Company") (TSX: CPG) and (NYSE:
CPG) is pleased to announce an increase to its quarterly dividend,
an updated return of capital framework, the disposition of non-core
assets, updated 2022 guidance and the release of its annual
Sustainability Report.
KEY HIGHLIGHTS
- Achieved near-term net debt target earlier than anticipated,
benefitting from proceeds of $300
million from asset dispositions.
- Increasing quarterly base dividend over 20 percent to
$0.08 per share, representing an
annualized dividend of $0.32 per
share.
- Executed $150 million of planned
share repurchases, representing 17.5 million shares, since
December 2021.
- Updated framework targeting the return of up to 50 percent of
discretionary excess cash flow, in addition to base dividends.
- Expect to return over $430
million to shareholders in the second half of 2022 based on
US$100/bbl WTI.
- Introduced new targets to reduce scope 1 and 2 emissions
intensity and freshwater use, further enhancing ESG practices.
"Through our continued execution and capital discipline we have
achieved our near-term net debt target ahead of our expected
timeline," said Craig Bryksa,
President and CEO of Crescent Point. "This success has allowed us
to further increase our base dividend and provide shareholders with
an updated return of capital framework, with a target to return the
majority of our excess cash flow to shareholders. Our business
model remains centered around our key pillars of balance sheet
strength and sustainability, which allows us to create long-term
value for shareholders."
INCREASING RETURN OF CAPITAL
The Company's Board of Directors has approved and declared a
third quarter 2022 base dividend increase to $0.08 per
share to be paid on October 3, 2022 to shareholders of
record on September 15, 2022. This equates to an annualized
base dividend of $0.32 per share, representing an
increase of over 20 percent from the prior level and marking
Crescent Point's fourth dividend increase in less than one year.
The Company's dividend policy and payout ratio are based on its
framework which targets dividend sustainability at lower commodity
prices, allows for flexibility in its capital allocation process
and provides the potential to grow the base dividend over time.
Given continued improvement in Crescent Point's financial
position and outlook, the Company is seeking to further increase
its current return of capital offering. On a quarterly basis and
beginning in third quarter 2022, Crescent Point will target the
return of up to 50 percent of its discretionary excess cash flow to
shareholders. Discretionary excess cash flow is calculated as
excess cash flow less base dividends.
This additional return of capital will be provided to
shareholders within the Company's updated framework that utilizes a
combination of accretive share repurchases and special dividends.
Given Crescent Point's current valuation relative to its intrinsic
value at mid-cycle commodity prices, the Company initially plans to
utilize a greater proportion of share repurchases within its return
of capital framework. The Company successfully executed its
previously announced planned share repurchases of approximately
$150 million, repurchasing
approximately 17.5 million shares since December 2021. Crescent Point has approval to
repurchase, for cancellation, up to 10 percent of its public float
under its normal course issuer bid ("NCIB"), which expires on
March 8, 2023.
Crescent Point expects to generate over $1.4 billion of excess cash flow in 2022, of
which approximately $775 million is
expected to be realized during the second half of the year based on
a WTI price of approximately US$100/bbl. The Company plans to return over
$430 million of capital directly to
shareholders, including its base dividend, based on current
guidance and expectations for the second half of 2022, or
approximately $865 million on an
annualized basis. To supplement its return of capital offering to
shareholders, Crescent Point also plans to further strengthen its
balance sheet.
All financial figures
are approximate and in Canadian dollars unless otherwise noted.
This press release contains forward-looking information and
references to the specified financial measures: excess cash flow,
discretionary excess cash flow and net debt. Refer to the Specified
Financial Measures and Forward-Looking Information sections in this
press release for further information.
|
ASSET DISPOSITIONS AND 2022 GUIDANCE
Crescent Point has completed the disposition of its non-core
Saskatchewan Viking assets ("Assets"), which were previously
identified as disposition candidates, for total cash consideration
of approximately $260 million, prior
to closing adjustments.
The Assets included approximately 4,000 boe/d of production,
comprised primarily of oil and liquids. Crescent Point
considered these Assets to be non-core due to their limited
scalability. These Assets also possessed a higher decline rate and
emissions intensity profile in comparison to the Company's
corporate average. During second quarter 2022, Crescent Point also
completed the disposition of certain non-core East Shale Duvernay
assets for approximately $40 million,
which included approximately 1,000 boe/d of production (50 percent
oil and liquids). Proceeds from these transactions have been
directed toward the Company's balance sheet.
National Bank Financial Inc. acted as financial advisor and ATB
Capital Markets Inc. acted as strategic advisor to the Company with
respect to these transactions.
Crescent Point has updated its 2022 annual average production
guidance to 130,000 to 134,000 boe/d to reflect the impact of the
non-core asset dispositions. The Company's 2022 development capital
expenditures guidance remains unchanged at $875 to $900
million, as minimal development capital was allocated to
these assets for the remainder of the year.
As previously announced, Crescent Point's North Dakota operations were temporarily
impacted by a severe storm that affected electricity distribution
beginning late April 2022. The
Company is pleased to report that operations returned to full
capacity toward the end of May 2022,
slightly earlier than anticipated. This unexpected downtime
impacted annual average production by approximately 1,000
boe/d.
ANNUAL SUSTAINABILITY REPORT
"Our 2022 Sustainability Report demonstrates our strong
execution over the past year and sets new performance targets to
help us deliver on our purpose of 'Bringing Energy To Our World -
The Right Way'," said Bryksa. "We ensure that accountability is
aligned throughout the organization, including our compensation
program. By embedding ESG perspectives throughout our business, we
are better able to mitigate risks and capitalize on opportunities
to ensure we are delivering safe, secure and responsibly developed
energy to our world."
As part of its goal to reduce emissions, Crescent Point is
targeting a further reduction of 38 percent in its scope 1 and 2
emissions intensity by 2030, relative to the Company's 2020
baseline. This achievement would result in a combined emissions
intensity of 0.020 tCO2e/boe. This target builds upon
Crescent Point's recent achievement that reduced scope 1 emissions
intensity by 50 percent at year-end 2021, well ahead of its
expected timeframe.
The Company is also announcing two new water targets to build
upon its existing strong water management performance, including a
50 percent reduction in surface freshwater use in southeast
Saskatchewan by 2025. Crescent
Point's environmental stewardship also includes a previously
announced target to reduce its inactive well inventory by 30
percent by 2031.
Safety remains a top priority for the Company and through
engagement with its employees and contractors, Crescent Point is
pleased to report that it achieved a new six year low in Serious
Incident Frequency ("SIF") in 2021.
Additional details on the Company's ESG performance, including
its strong governance practices, diversity initiatives and
significant community investment, and a full copy of the
Sustainability Report can be found on Crescent Point's website at
www.crescentpointenergy.com.
2022 GUIDANCE
The Company's guidance for 2022 is as follows:
|
Prior
|
Revised
|
Total Annual Average
Production (boe/d) (1)
|
133,000 –
137,000
|
130,000 –
134,000
|
|
|
|
Capital
Expenditures
|
|
|
Development capital
expenditures ($ millions)
|
$875 - $900
|
$875 - $900
|
Capitalized G&A ($
millions)
|
$40
|
$40
|
Total ($
millions) (2)
|
$915 - $940
|
$915 - $940
|
|
|
|
Other Information
for 2022 Guidance
|
|
|
Reclamation activities
($ millions) (3)
|
$20
|
$20
|
Capital lease payments
($ millions)
|
$20
|
$20
|
Annual operating
expenses ($/boe)
|
$13.75 -
$14.25
|
$13.75 -
$14.25
|
Royalties
|
13.5% -
14.0%
|
13.5% -
14.0%
|
1)
|
Total annual average
production (boe/d) is comprised of approximately 80% Oil,
Condensate & NGLs and 20% Natural Gas
|
2)
|
Land expenditures and
net property acquisitions and dispositions are not included.
Development capital expenditures spend is allocated on an
approximate basis as follows: 85% drilling & development and
15% facilities & seismic
|
3)
|
Reflects Crescent
Point's portion of its expected total budget
|
|
|
RETURN OF CAPITAL OUTLOOK
|
|
Base
Dividend
|
|
Current quarterly base
dividend per share
|
$0.08
|
Additional Return of
Capital
|
|
% of discretionary
excess cash flow (1) (2)
|
50 %
|
1)
|
Discretionary excess
cash flow is calculated as excess cash flow less base
dividends
|
2)
|
Additional return of
capital % to begin in third quarter 2022. This % is part of a
framework that targets to return up to 50% of discretionary excess
cash flow to shareholders
|
|
|
Specified Financial Measures
Throughout this press release, the Company uses the terms
"excess cash flow", "discretionary excess cash flow" and "net
debt". 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. For
information on the composition of these measures and how the
Company uses these measures, refer to the Specified Financial
Measures section of the Company's MD&A for the period ended
March 31, 2022, which sections are
incorporated herein by reference, and available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar.
The most directly comparable financial measure to excess cash
flow disclosed in the Company's primary financial statements is
cash flow from operating activities, which for the period ended
March 31, 2022 was $426.1 million.
Excess cash flow forecasted for 2022 is a forward-looking
non-GAAP measure and is calculated consistently with the measure
disclosed in the Company's MD&A. Refer to the Specified
Financial Measures section of the Company's MD&A for the period
ended March 31, 2022.
Discretionary excess cash flow is a historical non-GAAP
financial measure and is defined as excess cash flow less base
dividends. The most directly comparable financial measure to
discretionary excess cash flow disclosed in the Company's financial
statements is cash flow from operating activities. Discretionary
excess cash flow is a key measure that assesses the funds available
for reinvestment in the Company's business or for return of capital
to shareholders beyond the base dividend.
Discretionary excess cash flow forecasted for 2022 is a
forward-looking non-GAAP measure and is calculated consistently
with the historical measure disclosed herein.
The following table reconciles cash flow from operating
activities to discretionary excess cash flow:
|
Three months ended
March 31
|
|
($ millions)
|
2022
|
|
2021
(1)
|
|
% Change
|
|
Cash flow from
operating activities
|
426.1
|
|
303.7
|
|
40
|
|
Changes in non-cash
working capital
|
101.4
|
|
(47.2)
|
|
(315)
|
|
Transaction
costs
|
0.1
|
|
0.1
|
|
—
|
|
Decommissioning
expenditures (2)
|
6.4
|
|
6.1
|
|
5
|
|
Adjusted funds flow
from operations
|
534.0
|
|
262.7
|
|
103
|
|
Capital
expenditures
|
(226.8)
|
|
(134.4)
|
|
69
|
|
Payments on lease
liability
|
(5.1)
|
|
(5.1)
|
|
—
|
|
Decommissioning
expenditures
|
(6.4)
|
|
(6.1)
|
|
5
|
|
Other items
(3)
|
(6.4)
|
|
12.8
|
|
(150)
|
|
Excess cash
flow
|
289.3
|
|
129.9
|
|
123
|
|
Dividends(4)
|
0.2
|
|
(1.3)
|
|
(115)
|
|
Discretionary excess
cash flow
|
289.5
|
|
128.6
|
|
125
|
|
(1)
|
Comparative period
revised to reflect current period presentation.
|
(2)
|
Excludes amounts
received from government subsidy programs.
|
(3)
|
Other items include,
but are not limited to, unrealized gains and losses on equity
derivative contracts and transaction costs. Other items exclude net
acquisitions and dispositions.
|
(4)
|
The March 31, 2022
dividend was accrued based on shares outstanding as of December 31,
2021. As a result of common shares purchased and cancelled under
the NCIB during the first quarter of 2022, dividends declared to
the shareholders was reduced by $0.2 million.
|
|
|
Management believes the presentation of the specified financial
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
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:
dividend amounts, record dates, payment dates and annualized
amounts; the return of capital framework including the return of up
to 50 percent of discretionary excess cash flow, in addition to
base dividends; expectations of returning over $430 million to shareholders in the second half
of 2022 based on US$100/bbl WTI;
targeting the return of a majority of the Company's excess cash
flow to shareholders; the Company's business model creating
long-term value for shareholders; the return of capital framework
targeting dividend sustainability at lower commodity prices,
allowing for flexibility in the capital allocation process and the
potential for dividend growth over time; beginning third quarter
2022, a target to return up to 50 percent of the Company's
discretionary excess cash flow to shareholders through a
combination of accretive share repurchases and special dividends;
the belief that the Company's common shares remain undervalued
relative to intrinsic value, assuming mid-cycle commodity prices;
at current strip commodity prices, Crescent Point expecting to
generate over $1.4 billion of excess
cash flow in 2022, of which approximately $775 million is expected to be realized during
the second half of 2022 based on a WTI price of approximately
US$100/bbl; plans to return over
$430 million of capital directly to
shareholders, including base dividend, based on current guidance
and expectations for the second half of 2022, or approximately
$865 million on an annualized basis;
plans to supplement the return of capital offering to shareholders
by further strengthening the balance sheet; goals to reduce
emissions; targeted reduction of scope 1 and 2 greenhouse gas
emissions intensity of 38 percent by 2030 relative to the Company's
2020 baseline, with combined emissions intensity of 0.020
tCO2e/boe; new water targets, including a 50 percent
reduction in surface freshwater use in southeast Saskatchewan by 2025; a target to reduce
inactive well inventory by 30 percent by 2031; the Company's 2022
annual average production guidance of 130,000 to 134,000 boe/d;
2022 development capital expenditures guidance of $875 to $900
million; 2022 capitalized G&A of $40 million; total 2022 capital expenditures of
$915 - $940
million; 2022 reclamation activities of $20 million, capital lease payments of
$20 million, annual operating
expenses of $13.75-$14.25/boe, and royalties of 13.5% to 14.0%; and
return of capital outlook including a quarterly base divided per
share of $0.08, and an additional
return of capital of 50% of discretionary cash flow.
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,
2021 under "Risk Factors" and our Management's Discussion
and Analysis for the year ended December 31,
2021, and for the quarter ended March
31, 2022, under the headings "Risk Factors" and
"Forward-Looking Information". The material assumptions are
disclosed in the Management's Discussion and Analysis for the three
months ended March 31, 2022, under
the headings "Overview", "Commodity Derivatives", "Liquidity and
Capital Resources", "Guidance", "Royalties" and "Operating
Expenses". 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, decisions or
actions of OPEC and non-OPEC countries in respect of supplies of
oil and gas; delays in business operations or delivery of services
due to pipeline restrictions, rail blockades, outbreaks, blowouts
and business closures and social distancing measures mandated by
public health authorities in response to COVID-19; uncertainty
regarding the benefits and costs of the Acquisition; failure to
complete the Acquisition; 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; risks and uncertainties related to oil and gas
interests and operations on Indigenous lands; economic risk of
finding and producing reserves at a reasonable cost; uncertainties
associated with partner plans and approvals; geopolitical conflict,
including the Russian invasion of Ukraine; 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 and likelihood of
acquisitions and dispositions, and exploration and development
programs; unexpected geological, technical, drilling, construction,
processing and transportation problems; the impact of severe
weather events; availability of insurance; fluctuations in foreign
exchange and interest rates; stock market volatility; general
economic, market and business conditions, including uncertainty in
the demand for oil and gas and economic activity in general as a
result of the COVID-19 pandemic; uncertainties associated with
regulatory approvals; uncertainty of government policy changes; the
impact of the implementation of the Canada-United States Mexico
Agreement; uncertainty regarding the benefits and costs of
dispositions; failure to complete acquisitions and dispositions;
uncertainties associated with credit facilities and counterparty
credit risk; changes in income tax laws, tax laws, crown royalty
rates and incentive programs relating to the oil and gas industry;
the wide-ranging impacts of the COVID-19 pandemic, including on
demand, health and supply chain; and other factors, many of which
are outside the control of the Company. 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.
The Company's return of capital framework is based on certain
facts, expectations and assumptions that may change and, therefore,
this framework may be amended as circumstances necessitate or
require.
Barrels of oil equivalent ("boe") 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. Given that the value ratio based
on the current price of crude oil and condensate as compared to
natural gas is significantly different from the energy equivalency
of oil, utilizing a conversion on a 6:1 basis may be misleading as
an indication of value.
The annual aggregate production for 2021 for the Assets
consisted of the following product types: 28% Light & Medium
Crude Oil (bbl/d), 70% Tight Crude Oil (bbl/d) and 2% Conventional
Natural Gas (mcf/d); and the annual aggregate production for 2021
for certain non-core East Shale Duvernay assets consisted of the
following product types: 8% Tight Crude Oil (bbl/d), 43% NGLs
(bbl/d) and 49% Shale Gas (mcf/d), as defined in NI 51-101 and
using a conversion ratio of 6 mcf : 1 bbl where applicable.
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.
FOR MORE INFORMATION ON CRESCENT POINT ENERGY, PLEASE
CONTACT:
Shant Madian, Vice
President, Capital Markets, or
Sarfraz
Somani, Manager, Investor Relations
Telephone: (403) 693-0020 Toll-free (US and Canada): 888-693-0020 Fax: (403)
693-0070
Address: Crescent Point Energy Corp. Suite 2000, 585 - 8th
Avenue S.W. Calgary AB T2P 1G1
www.crescentpointenergy.com
Crescent Point shares are traded on the Toronto Stock Exchange
and New York Stock Exchange under the symbol CPG.
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SOURCE Crescent Point Energy Corp.