CALGARY, AB, June 7, 2021 /PRNewswire/ - Crescent Point
Energy Corp. ("Crescent Point" or the "Company") (TSX:
CPG) and (NYSE: CPG) has completed the disposition of its
remaining non-core southeast Saskatchewan conventional assets ("Assets"),
which were previously identified as disposition candidates, for
cash proceeds of $93 million
("Transaction"). As a result of the Transaction, Crescent Point
also reduced asset retirement obligations ("ARO") by approximately
$220 million, or nearly 25 percent of
its ARO balance as at March 31, 2021.
Proceeds from the disposition have been directed to the Company's
balance sheet.
Crescent Point considered the Assets to be non-core due to the
significant associated ARO, operating expenses that were
substantially higher than the corporate average and limited
scalability. The Assets also generated minimal free cash flow,
after incorporating development capital required to sustain
production and reclamation activities, despite contributing annual
net operating income of approximately $55
million based on current production of approximately 6,500
boe/d and US$60/bbl WTI.
Crescent Point's 2021 budgeted development capital expenditures
range remains unchanged, as minimal development capital was
allocated to these Assets for the remainder of the year.
Reclamation activities that were previously budgeted for these
Assets for the balance of 2021 will be redirected to reclaiming
other properties as part of the Company's commitment to strong
environmental, social and governance ("ESG") practices.
Crescent Point's acquisition and disposition strategy remains
centered on its strategic priorities of enhancing the Company's
balance sheet strength and sustainability. Crescent Point's revised
2021 guidance, which incorporates the Transaction, is expected to
generate significant excess cash flowŦ of approximately
$500 to $625
million at US$55/bbl to
US$65/bbl WTI.
TD Securities Inc. acted as financial advisor to Crescent Point
with respect to the Transaction. Peters & Co. Limited
represented the Company as its strategic advisor.
2021 GUIDANCE
The Company's revised guidance for 2021 is as follows:
|
Prior
|
Revised
|
Total Annual
Average Production (boe/d) (1)
|
132,000 –
136,000
|
128,000 –
132,000
|
|
|
|
Capital
Expenditures
|
|
|
Development capital
expenditures ($ million)
|
$575 -
$625
|
$575 -
$625
|
Capitalized G&A
($ million)
|
$35
|
$35
|
Total ($
million) (2)
|
$610 -
$660
|
$610 -
$660
|
|
|
|
Other Information
for 2021 Guidance
|
|
|
Reclamation
activities ($ million) (3)
|
$15
|
$15
|
Capital lease
payments ($ million)
|
$20
|
$20
|
Annual operating
expenses
|
$625 - $645
million
($12.75 -
$13.25/boe)
|
$595 - $615
million
($12.45 -
$12.95/boe)
|
Royalties
|
11.5% -
12.5%
|
11.5% -
12.5%
|
1)
|
The revised total
annual average production (boe/d) is comprised of ~86% Oil &
NGLs and 14% Natural Gas
|
2)
|
Land expenditures and
net property acquisitions and dispositions are not included.
Revised development capital expenditures is allocated as follows:
86% drilling & development and 14% 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
"excess cash flow" and "free cash flow". 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.
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). 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.
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. 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 Company's assets and operating
areas. Management utilizes adjusted 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.
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
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 direction of
proceeds from the disposition of the Assets; the benefits of
disposing of the Assets, including to the Company's ARO;
characteristics of the Assets; the annual net operating income
generated by, and production from, the Assets; development capital
required to sustain production with the Assets; non-development
capital and development capital allocations and directions; ESG
commitments; acquisition and disposition strategy priorities;
Crescent Point's revised 2021 guidance, which incorporates the
Transaction, generating significant excess cash flow of
approximately $500 to $625 million at US$55/bbl to US$65/bbl WTI; the Company's 2021 guidance,
including: total annual average production, capital expenditures
(including development capital expenditures and capitalized
G&A), reclamation activities, capital lease payments, annual
operating expenses, and royalties); and the allocations of
development capital expenditures to drilling & development and
facilities & seismic.
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 Company 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, 2020 under
"Risk Factors" and our Management's Discussion and Analysis for the
year ended December 31, 2020, and for
the quarter ended March 31, 2021,
under the headings "Risk Factors" and "Forward-Looking
Information".
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.
Product Type Production Information
The current production associated with disposed Assets reported
in this Press Release consist of the following product types, as
defined in NI 51-101 and using a conversion ratio of 6 Mcf : 1 Bbl
where applicable: Light & Medium Crude Oil (85%), NGLs (8%) and
Conventional Natural Gas (7%).
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 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.
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.