CALGARY, AB, Feb. 17, 2021 /PRNewswire/ - Crescent Point
Energy Corp. ("Crescent Point" or the "Company") (TSX:
CPG) (NYSE: CPG) is pleased to announce that it has entered
into an agreement (the "Agreement") with Shell Canada Energy
("Shell"), an affiliate of Royal Dutch
Shell plc, to acquire Shell's Kaybob Duvernay assets in
Alberta (the "Assets") for
$900 million (the "Acquisition"). The
total consideration consists of $700
million in cash and 50 million common shares of Crescent
Point.
KEY HIGHLIGHTS
- Strategic entry into a premier and established liquids rich
play with greater than 10 years of high-return, low risk drilling
inventory.
- Strengthens expected 2021 excess cash flow generation to
approximately $375 to $600 million, at US$50/bbl to US$60/bbl WTI.
- Pro-forma 2021 guidance production of approximately 134,000
boe/d, primarily comprised of high-margin oil and liquids.
- Improves netback by over seven percent by lowering royalty
rates and reducing per boe operating and G&A expenses.
- Lowers expected year-end 2021 leverage to approximately 2.3 to
1.6 times adjusted funds flow, at US$50/bbl to US$60/bbl WTI.
- Enhances ESG profile through Assets with a low standing well
count with minimal reclamation and a low emissions intensity.
STRATEGIC RATIONALE AND ASSET OVERVIEW
"We are excited to add the Kaybob Duvernay asset as a strategic
core area to our portfolio, as its significant inventory of
high-return locations and free cash flow profile provide an
attractive and return enhancing opportunity for our shareholders,"
said Craig Bryksa, President and CEO
of Crescent Point. "The Acquisition is aligned with our core
principles to focus on strategic initiatives that enhance our
balance sheet strength and sustainability. It is expected to
enhance our free cash flow generation, leverage ratios and ESG
profile. The depth of high-return drilling inventory also provides
optionality within our capital allocation framework. We view the
Kaybob assets as low-risk given that they have been delineated over
the past decade and key infrastructure and market access are
already in place."
Key attributes of the acquired Assets include the following:
- Production of approximately 30,000 boe/d (57% condensate, 8%
NGL and 35% shale gas);
- Core of the condensate rich fairway with attractive reservoir
characteristics, including higher pressure and pay thickness;
- Approximately 500 net sections of contiguous land in the Kaybob
area (approximately 325 net sections undeveloped);
- 98 percent Crown land with limited expiry concerns and a high
working interest of approximately 100 percent;
- Approximately 200 net internally identified drilling locations,
based on conservative well spacing of 600 meters, of which only 36
are booked as Proved plus Probable ("2P") in the independent
evaluators report prepared by McDaniel & Associates Consultants
Ltd. (the "McDaniel Report"). These locations are primarily
comprised of two-mile horizontal wells;
- High quality type wells with strong liquids rates and
competitive full-cycle economics;
- Significant owned and third party infrastructure currently in
place, leading to lower expected future capital requirements;
and
- A royalty rate of approximately five percent and expected
operating expenses of approximately $7.25 per boe.
Prior to the expected closing of the Acquisition in April 2021, Shell plans to bring a number of
drilled and uncompleted wells on stream. As a result, production
from the acquired Assets is expected to increase to approximately
35,000 boe/d during second quarter 2021. Crescent Point plans to
manage these Assets to target a lower decline rate and longer-term
production of approximately 30,000 boe/d. Following the initial
period of flush production, the Company's pro-forma decline rate is
expected to remain unchanged at approximately 25 percent.
Crescent Point will also seek opportunities to enhance returns
over time through potential operational efficiencies and effective
knowledge transfer. Crescent Point will combine its significant
expertise in multi-well pad development and field technology,
including experience gained from other North American resource
plays with similar geology, along with the technical expertise
provided by the Shell staff that will be joining the Company.
TRANSACTION DETAILS, METRICS AND FINANCIAL ACCRETION
As part of this Agreement, Crescent Point has agreed to acquire
the Assets for $900 million. The
Acquisition will be funded through a combination of $700 million in cash, accessed through the
Company's credit facility, and 50 million Crescent Point common
shares. Upon closing, Shell will own approximately 8.6 percent of
the outstanding Crescent Point common shares.
With approximately 30,000 boe/d of production and assuming
US$50/bbl WTI, the estimated
acquisition metrics are as follows:
- Less than 3.0 times net operating income based on an operating
netback of approximately $30 per
boe;
- $30,000 per flowing boe; and
- $12.87 per boe of 2P reserves of
107.4 MMboe as assigned by the independent evaluator, equating to a
recycle ratio of over 2.0 times, including $483 million of undiscounted future development
capital.
The acquired Assets are estimated to require approximately
$180 million of annual capital to
sustain approximately 30,000 boe/d of production, further enhancing
the Company's free cash flow generation.
This Acquisition is expected to be accretive on all per share
metrics. In particular, in the 12 month period following the
closing of the Acquisition, excess cash flow per share is expected
to double with adjusted funds flow per share increasing by greater
than 25 percent, compared to Crescent Point's pre-acquisition
expectations. These accretion metrics improve further on a
debt-adjusted basis. In addition, the Company's adjusted funds flow
netback is also expected to increase by over seven percent, driven
by a lower royalty rate and anticipated per boe operating and
general and administrative expense reductions.
The above mentioned transaction metrics and financial accretion
are based on a price forecast of US$50/bbl WTI, CDN$2.50/mcf AECO and a US$/CDN $0.78 exchange rate. The effective date of the
Acquisition is January 1, 2021.
Scotiabank and BMO Capital Markets acted as financial advisors
to Crescent Point on this transaction. The Acquisition is subject
to the satisfaction of customary closing conditions, consents and
regulatory approvals.
BALANCE SHEET AND FINANCIAL FLEXIBILITY
Crescent Point's pro-forma leverage ratio is expected to improve
to approximately 2.3 to 1.6 times net debt to adjusted funds flow
at the end of 2021, based on US$50/bbl to US$60/bbl WTI.
Upon closing of the Acquisition, Crescent Point's unutilized
credit capacity on its current facilities is expected to total
approximately $2.0 billion. The
Company will continue to prioritize its balance sheet with the
allocation of its excess cash flow and will remain active on
potential acquisitions and dispositions as part of its focused
asset strategy.
COMMITMENT TO ENVIRONMENTAL, SOCIAL AND GOVERNANCE
("ESG")
Crescent Point's purpose for 'Bringing energy to our world – the
right way' highlights the Company's role to produce responsibly
developed energy with ESG standards being top of mind.
This Acquisition further bolsters Crescent Point's ESG profile
due to the low standing well count and minimal undiscounted
uninflated asset retirement obligations of approximately
$50 million associated with the
Assets. The Liability Management Rating ("LMR") associated with
these Assets is 7.9, well above the peer average in Alberta. The Company's corporate emissions
intensity is also expected to improve with the addition of the
Assets.
UPDATED 2021 GUIDANCE AND EXCESS CASH FLOW GENERATION
Crescent Point's revised annual guidance for 2021, which
incorporates the impact of the announced Acquisition for the
remainder of the year, assuming the anticipated closing in
April 2021, includes annual average
production of 132,000 to 136,000 boe/d and development capital
expenditures of $575 million to
$625 million. The Company's revised
budget includes approximately $100
million of development capital expenditures expected to be
directed to the newly acquired Kaybob Duvernay assets, with the
balance of its program remaining unchanged from prior guidance.
On an annual pro-forma basis, Crescent Point's sustaining
development capital expenditures are now expected to be
approximately $800 to $850 million to generate annual production that
is in-line with, or exceeds, the current 2021 annual guidance
range.
The Company's revised 2021 guidance is now expected to generate
excess cash flow of approximately $375
million to $600 million, at
US$50/bbl to US$60/bbl WTI, providing an increased opportunity
to further enhance shareholder value. The Company will have
approximately 30 percent of its pro-forma oil and liquids
production, net of royalty interest, hedged through the remainder
of 2021 upon closing of the Acquisition.
CONFERENCE CALL DETAILS
Crescent Point management will host a conference call on
Wednesday, February 17, 2021 at
4:00 p.m. MT (6:00 p.m. ET) to discuss the announced
Acquisition. A slide deck will accompany the conference call and
can be found on Crescent Point's home page.
Participants can listen to this event online via webcast.
Alternatively, the conference call can be accessed by dialing
1–888–390–0605.
The webcast will be archived for replay and can be accessed on
Crescent Point's conference calls and webcasts webpage under the
invest tab. The replay will be available approximately one hour
following completion of the call.
Shareholders and investors can also find the Company's most
recent investor presentation on Crescent Point's website.
2021 GUIDANCE
The Company's revised guidance for 2021 is as follows:
|
Prior
|
Revised
|
Total Annual
Average Production (boe/d) (1)
|
108,000 –
112,000
|
132,000 –
136,000
|
|
|
|
Capital
Expenditures
|
|
|
Development capital
expenditures ($ million)
|
$475 -
$525
|
$575 -
$625
|
Capitalized G&A
($ million)
|
$33
|
$35
|
Total ($
million) (2)
|
$508 -
$558
|
$610 -
$660
|
|
|
|
Other Information
for 2021 Guidance
|
|
|
Reclamation
activities ($ million) (3)
|
$15
|
$15
|
Capital lease
payments ($ million)
|
$20
|
$20
|
Annual operating
expenses
|
$560 - $580
million
($14.00 -
$14.50/boe)
|
$625 - $645
million
($12.75 -
$13.25/boe)
|
Royalties
|
12.5% -
13.5%
|
11.5% -
12.5%
|
|
|
1)
|
The revised total
annual average production (boe/d) is comprised of ~87% Oil &
NGLs and 13% Natural Gas
|
2)
|
Land expenditures and
net property acquisitions and dispositions are not included.
Revised development capital expenditures is allocated as follows:
87% drilling & development and 13% facilities &
seismic
|
3)
|
Reflects Crescent
Point's portion of its expected total budget
|
Non-GAAP Financial Measures
Throughout this press release, the Company uses the terms
"adjusted funds flow", "adjusted funds flow from operations",
"adjusted funds flow from operations per share", "operating
netback", "netback", "adjusted funds flow netback", "excess cash
flow", "excess cash flow per share", "free cash flow" and "net debt
to adjusted 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.
Adjusted funds flow is equivalent to adjusted funds flow from
operations. Adjusted 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
funded by the Company. Adjusted funds flow from operations per
share is calculated as adjusted funds flow from operations divided
by the number of weighted average diluted common shares
outstanding. Transaction costs are excluded as they vary based on
the Company's acquisition and disposition activity and to ensure
that this metric is more comparable between periods.
Decommissioning expenditures are discretionary and are excluded as
they may vary based on the stage of the Company's assets and
operating areas. Management utilizes adjusted funds flow from
operations and adjusted funds flow per share as a key measures to
assess the ability of the Company to finance dividends, operating
activities, capital expenditures and debt repayments. Adjusted
funds flow from operations as presented is not intended to
represent cash flow from operating activities, net income or loss
or other measures of financial performance calculated in accordance
with IFRS.
Operating netback is calculated on a per boe basis as oil and
gas sales (based on average price received), less royalties,
operating and transportation expenses. Netback is equivalent to
adjusted funds flow from operations netback. Adjusted funds flow
from operations netback is calculated on a per boe basis as
operating netback less net purchased products, realized derivative
gains and losses, general and administrative expenses, interest on
long-term debt, foreign exchange, cash-settled share-based
compensation and certain cash items, excluding transaction costs,
foreign exchange on US dollar long-term debt and certain non-cash
items. Operating netback and adjusted funds flow from operations
netback are common metrics used in the oil and gas industry and are
used by management to measure operating results on a per boe basis
to better analyze performance against prior periods on a comparable
basis. Readers are cautioned that reliance on such information may
not be appropriate for other purposes.
Excess cash flow is calculated as free cash flow less dividends.
Free cash flow is calculated as adjusted funds flow from operations
less capital expenditures, payments on lease liability, asset
retirement obligations and other cash items (excluding net
acquisitions and dispositions). Excess cash flow per share is
calculated as excess cash flow divided by the number of weighted
average diluted shares outstanding. Management utilizes free cash
flow and excess cash flow as key measures to assess the ability of
the Company to finance dividends, potential share repurchases, debt
repayments and returns-based growth.
Net debt is calculated as long-term debt plus accounts payable
and accrued liabilities and long-term compensation liability net of
equity derivative contracts, less cash, accounts receivable,
prepaids and deposits, 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 adjusted funds flow from operations is calculated as
the period end net debt divided by the sum of adjusted funds flow
from operations for the trailing four quarters. The ratio of net
debt to adjusted 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.
Notice to US Readers
The oil and natural gas reserves contained in this press release
have generally been prepared in accordance with Canadian disclosure
standards, which are not comparable in all respects of United States or other foreign disclosure
standards. For example, the United States Securities and Exchange
Commission (the "SEC") generally permits oil and gas issuers, in
their filings with the SEC, to disclose only proved reserves (as
defined in SEC rules), but permits the optional disclosure of
"probable reserves" and "possible reserves" (each as defined in SEC
rules). Canadian securities laws require oil and gas issuers, in
their filings with Canadian securities regulators, to disclose not
only proved reserves (which are defined differently from the SEC
rules) but also probable reserves and permits optional disclosure
of "possible reserves", each as defined in NI 51-101. Accordingly,
"proved reserves", "probable reserves" and "possible reserves"
disclosed in this news release may not be comparable to US
standards, and in this news release, Crescent Point has disclosed
reserves designated as "proved plus probable reserves". Probable
reserves are higher-risk and are generally believed to be less
likely to be accurately estimated or recovered than proved
reserves. "Possible reserves" are higher risk than "probable
reserves" and are generally believed to be less likely to be
accurately estimated or recovered than "probable reserves". In
addition, under Canadian disclosure requirements and industry
practice, reserves and production are reported using gross volumes,
which are volumes prior to deduction of royalties and similar
payments. The SEC rules require reserves and production to be
presented using net volumes, after deduction of applicable
royalties and similar payments. Moreover, Crescent Point has
determined and disclosed estimated future net revenue from its
reserves using forecast prices and costs, whereas the SEC rules
require that reserves be estimated using a 12-month average price,
calculated as the arithmetic average of the first-day-of-the-month
price for each month within the 12-month period prior to the end of
the reporting period. Consequently, Crescent Point's reserve
estimates and production volumes in this news release may not be
comparable to those made by companies using United States reporting and disclosure
standards. Further, the SEC rules are based on unescalated costs
and forecasts. All amounts in the news release are stated in
Canadian dollars unless otherwise specified.
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",
"expected unutilized credit capacity", "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: the
expectation of greater than 10 years of high-return, low risk
drilling inventory in the Assets; 2021 excess cash flow generation
of approximately $375 to $600 million, at US$50/bbl to US$60/bbl WTI; pro-forma 2021 production guidance
of approximately 134,000 boe/d; improved netback of over seven
percent; leverage expectations of approximately 2.3 to 1.6 times
adjusted funds flow at the end of 2021, at US$50/bbl to US$60/bbl WTI; expected benefits of the
Acquisition including improved free cash flow generation, reduced
financial leverage; enhanced ESG profile, and a significant depth
of high-return drilling inventory creating additional optionality
within the Company's capital allocation framework; that the Kaybob
assets are low-risk; the Assets key attributes, including expected
production of 30,000 boe/d, approximately 200 net internally
identified drilling locations, lower expected future capital
requirements, and excepted royalty rates and operating expenses;
the Acquisition's expected closing timing; Shell's plans to bring a
number of drilled and uncompleted wells on-stream prior to closing
of the Acquisition and the corresponding expected production
increases of the Assets in Q2 2021; Crescent Point's management
plans for the assets and the corresponding decline rate and
production; Shell's percentage ownership of Crescent Point common
shares following the Acquisition; estimated acquisition metrics,
including net operating income, operating netback, price per
flowing boe and price per 2P reserves; estimated capital required
to sustain the Assets' production of approximately 30,000 boe/d;
that the Acquisition is accretive on all per share metrics and are
expected to improve further on a debt-adjusted basis; the
expectation that Crescent Point's excess cash flow per share is
expected to double with adjusted funds flow per share increasing by
over 25 percent, in the 12 month period following the closing of
the Acquisition; the expectation that the Company's adjusted funds
flow netback is expected to increase by over seven percent; the
Company's expected pro-forma leverage ratio; Crescent Point's
expected unutilized credit capacity on its current facilities
following the Acquisition; the Company's continued prioritization
of its balance sheet with the allocation of its excess cash flow
and its expectation that it will remain active on potential
acquisitions and dispositions as part of its focused asset
strategy; the expectation that the acquisition further bolsters
Crescent Point's ESG profile due to the low standing well count and
minimal undiscounted uninflated asset retirement obligations of
approximately $50 million associated
with the Assets; the expectation that the Company's corporate
emissions intensity will improve with the addition of the Assets;
Crescent Point's revised annual guidance for 2021, including annual
average production of 132,000 to 136,000 boe/d and development
capital expenditures of $575 to
$625 million, capitalized G&A of
$35 million, reclamation activities
of $15 million, capital lease
payments of $20 million, annual
operating expenses of $625
-$645 million (and associated boe
amounts), and royalties of 11.5%-12.5%; the Company's revised
budget including approximately $100
million of development capital expenditures expected to be
directed to the newly acquired Kaybob Duvernay Assets, with the
balance of its program remaining unchanged from prior guidance; on
an annual pro-forma basis, Crescent Point's sustaining development
capital expenditures to generate annual production that is in-line
with, or exceeds, the current 2021 annual guidance range; the
expectation of generating 2021 excess cash flow of approximately
$375 to $600
million, at US$50/bbl to
US$60/bbl WTI; and hedging
expectations.
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future. Actual
reserve values may be greater than or less than the estimates
provided herein.
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,
2019 under "Risk Factors", our Management's Discussion and
Analysis for the year ended December 31,
2019, under the headings "Risk Factors" and "Forward-Looking
Information" and for the quarter ended September 30, 2020 under "Risk Factors",
"Commodity Derivatives", "Liquidity and Capital Resources",
"Changes in Accounting Policy" and "Guidance". The material
assumptions are disclosed herein and in the Management's Discussion
and Analysis for the year ended December 31,
2019, 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, 2020
under the headings "Commodity Derivatives", "Liquidity and Capital
Resources", "COVID-19", "Critical Accounting Estimates", "Changes
in Accounting Policy" and "Guidance". 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; 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; 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; 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
acquisitions and dispositions, including the Acquisition; failure
to complete acquisitions and dispositions, including the
Acquisition; 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.
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. 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.
Reserves and Drilling Data
Where applicable, a barrels of oil equivalent ("boe") conversion
rate of six thousand cubic feet of natural gas to one barrel of oil
equivalent (6Mcf:1bbl) has been used based on an energy equivalent
conversion method primarily applicable at the burner tip. Given
that the value ratio based on the current price of crude oil as
compared to natural gas is significantly different than the energy
equivalency of the 6:1 conversion ratio, utilizing the 6:1
conversion ratio may be misleading as an indication of value.
This press release contains metrics commonly used in the oil and
natural gas industry, including "netback", "recycle ratio" and
"decline rate". These terms do not have a standardized meaning and
may not be comparable to similar measures presented by other
companies and, therefore, should not be used to make such
comparisons. Readers are cautioned as to the reliability of oil and
gas metrics used in this press release. Management uses these oil
and gas metrics for its own performance measurements and to provide
investors with measures to compare the Company's performance over
time; however, such measures are not reliable indicators of the
Company's future performance, which may not compare to the
Company's performance in previous periods, and therefore should not
be unduly relied upon.
Recycle ratio is calculated as operating netback divided by
finding and development (F&D) costs. Management uses recycle
ratio for its own performance measurements and to provide
shareholders with measures to compare the Company's performance
over time.
Operating netback is calculated on a per boe basis as oil and
gas sales, less royalties, operating and transportation expenses.
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.
Decline rate is the reduction in the rate of production from one
period to the next. This rate is usually expressed on an annual
basis. Management uses decline rate to assess future productivity
of the Company's assets.
Certain terms used herein but not defined are defined in
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"), CSA Staff Notice 51-324 –
Revised Glossary to NI 51-101 Standards of Disclosure for Oil
and Gas Activities ("CSA Staff Notice 51-324") and/or the COGE
Handbook and, unless the context otherwise requires, shall have the
same meanings herein as in NI 51-101, CSA Staff Notice 51-324 and
the COGE Handbook, as the case may be.
For additional information regarding netbacks, see "Non-GAAP
Financial Measures" in this press release.
The Company retained McDaniel to evaluate the reserves
associated with the Assets and prepare the McDaniel Report on the
Assets. The statement of reserves data and other oil and gas
information set forth in this press release is dated February 11, 2021. The effective date of
the reserves information provided herein is December 31, 2020, unless otherwise indicated,
and the preparation date is February 11,
2021, and McDaniel prepared the McDaniel Report in
accordance with the standards contained in NI 51-101 and the COGE
Handbook that were in effect at the relevant time. 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 estimates for reserves for individual properties may not
reflect the same confidence level as estimates of reserves for all
properties due to the effects of aggregation. This press
release contains estimates of the net present value of the
Company's future net revenue from our reserves. Such amounts do not
represent the fair market value of our reserves. The recovery and
reserve estimates of the Company's reserves provided herein are
estimates only and there is no guarantee that the estimated
reserves will be recovered.
NI 51-101 includes condensate within the product type of natural
gas liquids. The Company has disclosed condensate separately from
other natural gas liquids in this press release since the price of
condensate as compared to other natural gas liquids is currently
significantly higher and the Company believes that presenting the
two commodities separately provides a more accurate description of
its operations and results therefrom. This press release discloses
approximately 200 potential net drilling locations of which 36 are
booked as proved plus probable. Proved plus probable locations
consist of proposed drilling locations identified in the McDaniel
Report that have proved and/or probable reserves, as applicable,
attributed to them. The Company's ability to drill and develop
these locations and the drilling locations on which the Company
actually drills wells depends on a number of uncertainties and
factors, including, but not limited to, the availability of
capital, equipment and personnel, oil and natural gas prices,
costs, inclement weather, seasonal restrictions, drilling results,
additional geological, geophysical and reservoir information that
is obtained, production rate recovery, gathering system and
transportation constraints, the net price received for commodities
produced, regulatory approvals and regulatory changes. As a
result of these uncertainties, there can be no assurance that the
potential future drilling locations that the Company has identified
will ever will be drilled and, if drilled, that such locations will
result in additional crude oil, natural gas or NGLs produced. As
such, the Company's actual drilling activities may differ
materially from those presently identified, which could adversely
affect the company's business.
FOR MORE INFORMATION ON CRESCENT POINT ENERGY, PLEASE
CONTACT:
Brad Borggard, Senior
Vice President, Corporate Planning and Capital Markets, or
Shant Madian, Vice
President, Investor Relations and Corporate Communications
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.