CALGARY, AB, Sept. 13, 2021 /PRNewswire/ - Crescent Point
Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) and
(NYSE: CPG) has approved an increase to the Company's quarterly
dividend as a result of significant progress made on improving its
balance sheet strength and sustainability. Crescent Point is also
pleased to announce its preliminary 2022 budget, which is expected
to generate significant excess cash flow that leads to additional
balance sheet strength and the opportunity to create further
shareholder value.
KEY HIGHLIGHTS
- Accelerating shareholder returns by increasing quarterly
dividend to $0.03 per share alongside
continued net debt reduction.
- Preliminary 2022 outlook for production of 131,000 - 135,000
boe/d and development capital expenditures of $825 - $900
million.
- Expected excess cash flow generation of $625 - $875 million
in 2022, after dividends, at US$65/bbl - US$75/bbl WTI.
- On track to attain optimal leverage target in 2022, based on
expected excess cash flow generation at current commodity
prices.
"Our continued execution and capital discipline has positioned
us to begin returning additional capital to shareholders," said
Craig Bryksa, President and CEO of
Crescent Point. "We are prioritizing debt reduction as part of our
capital allocation framework including the establishment of a core
dividend that is sustainable, provides flexibility and has the
ability to grow over time. We are committed to a model that returns
capital to shareholders while also generating returns through
debt-adjusted per share growth."
RETURN OF CAPITAL TO SHAREHOLDERS
Crescent Point's Board of Directors has approved and declared a
fourth quarter dividend increase to $0.03 per share to be paid on January 4, 2022 to shareholders of record on
December 15, 2021. This equates to an
annualized dividend of $0.12 per
share, an increase of $0.11 per share
from the current level. The Company's upcoming third quarter
dividend of $0.0025 per share is
scheduled to be paid on October 1,
2021, as previously announced.
Over the past year Crescent Point has significantly improved its
free cash flow profile through its strategic Kaybob Duvernay
acquisition, ongoing cost improvements and decline mitigation
programs. This execution alongside a disciplined returns-based
capital program have positioned the Company to be able to support a
higher dividend.
Crescent Point's new dividend level equates to a modest payout
ratio of approximately five percent of its expected 2022 adjusted
funds flow assuming a conservative WTI price of US$50/bbl. This payout ratio provides dividend
sustainability at lower commodity prices and allows the Company to
continue prioritizing its balance sheet as it progresses toward its
optimal leverage ratio at or below 1.0 times net debt to adjusted
funds flow. Crescent Point is on track to attain its leverage
target in 2022 based on the Company's expected excess cash flow
generation at forward strip commodity prices, including its current
hedging position.
The Company will seek to return additional capital to
shareholders over time in the context of its capital allocation
framework and leverage targets.
PRELIMINARY 2022 OUTLOOK
Based on its initial budgeting process and the current outlook
for commodity prices, Crescent Point is expecting to generate
annual average production of 131,000 - 135,000 boe/d in 2022 based
on development capital expenditures of $825 - $900
million. Consistent with its capital allocation framework,
the Company's annual budget will continue to include a portion of
capital allocated to long-term projects, such as decline
mitigation, and various environmental initiatives.
Crescent Point's preliminary 2022 budget is expected to generate
significant excess cash flow, after dividends, of approximately
$625 - $875
million at US$65/bbl -
US$75/bbl WTI. Crescent Point has
approximately 30 percent of its oil and liquids production
currently hedged for 2022 and will continue add further protection
in the context of commodity prices.
The Company will retain flexibility in its overall capital
allocation as it formalizes its budget, which is expected to be
released prior to the end of the year. Additional details on
Crescent Point's 2022 program and other guidance information will
be provided at that time.
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 Forward-Looking
Statements sections of this press release, respectively.
|
Non-GAAP Financial Measures
Throughout this press release, the Company uses the terms
"adjusted funds flow", "free cash flow", "excess cash flow", "net
debt", "net debt to adjusted funds flow" and "payout ratio". 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. 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. Adjusted 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.
Free cash flow is defined as adjusted funds flow from operations
less capital expenditures, payments on lease liability,
decommissioning expenditures funded by the Company and other cash
items (excluding net acquisitions and dispositions). Excess cash
flow is calculated as free cash flow less dividends. Management
utilizes free cash flow and excess cash flow as a key measure 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, 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 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.
Payout ratio is calculated on a percentage basis as dividends
declared divided by adjusted funds flow from operations. Payout
ratio is used by management to monitor the dividend policy and the
amount of adjusted funds flow from operations retained by the
Company for capital reinvestment.
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. For reconciliations of the non-GAAP measures present in this
press release to their nearest applicable measure prescribed by
IFRS, please refer to the Company's MD&A for the period ended
June 30, 2021, available at
www.sedar.com.
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",
"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:
Crescent Point's preliminary budget for 2022, which is expected to
generate significant excess cash flow that leads to additional
balance sheet and the opportunity to create further shareholder
value; continued net debt reduction; preliminary 2022 outlook for
production of 131,000 - 135,000 boe/d and development capital
expenditures of $825 - $900 million; generating significant excess cash
flow of $625 - $875 million in 2022, after dividends, at
US$65/bbl - US$75/bbl WTI; on track to attain optimal
leverage target in 2022, based on expected excess cash flow
generation at current commodity prices; debt reduction prioritized
as part of the Company's capital allocation framework; a dividend
and payout ratio that are sustainable, provide flexibility and have
the ability to grow over time; commitment to a dividend as part of
the overall return of capital to shareholders while also generating
returns through debt-adjusted per share growth; expected 2022
payout ratio assuming US$50/bbl WTI;
benefits of the payout ratio; the Company will seek to return
additional capital to shareholders over time; the annual budget
continuing to include a portion of capital allocated to long-term
projects, such as decline mitigation, and various environmental
initiatives; 2022 excess cash flow expected to allow the Company to
continue to strengthen its balance sheet while also providing the
opportunity to create additional shareholder value; hedging
expectations; retained flexibility in overall capital allocation; a
formalized budget to be released prior to year end 2022; and timing
of additional details on Crescent Point's 2022 program and other
guidance information.
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. Unless otherwise noted, reserves referenced herein
are given as at December 31, 2020.
Also, estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates
and future net revenue for all properties due to the effect of
aggregation. All required reserve information for the Company is
contained in its Annual Information Form for the year ended
December 31, 2020, and in its
material change report dated February 26,
2021, which are accessible at www.sedar.com.
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. With respect to disclosure contained herein
regarding resources other than reserves, there is uncertainty that
it will be commercially viable to produce any portion of the
resources and there is significant uncertainty regarding the
ultimate recoverability of such resources.
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,
2020 under "Risk Factors" and our Management's Discussion
and Analysis for the year ended December 31,
2020, and for the quarter ended June
30, 2021, 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 June 30, 2021, under the
headings "Overview", "Commodity Derivatives", "Liquidity and
Capital Resources", and "Guidance" (as updated herein). 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 acquisitions and dispositions; 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; uncertainties associated
with credit facilities and counterparty credit risk; cybersecurity
risks; 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 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:
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.