CALGARY,
AB, Dec. 9, 2022 /CNW/ - Crescent Point Energy
Corp. ("Crescent Point" or the "Company") (TSX: CPG) (NYSE: CPG) is
pleased to announce it has entered into an agreement to acquire
additional Kaybob Duvernay assets and is increasing its base
dividend.
KEY HIGHLIGHTS
- Kaybob Duvernay acquisition adds 130 net locations and
increases drilling inventory in the play to over 20 years.
- Increasing first quarter 2023 base dividend by 25 percent to
$0.10 per share, or $0.40 per share annually.
- Excess cash flow of $1.25 billion
expected in 2023, at US$80 WTI, based
on annual production of 138,000 to 142,000 boe/d.
- Significant return of capital to shareholders including 50
percent of discretionary excess cash flow, in addition to base
dividend.
- Renewed and extended credit facilities with a new maturity date
of November 2026.
KAYBOB DUVERNAY ACQUISITION
AND OPERATIONS UPDATE
Crescent Point has entered into a purchase and sale agreement to
acquire certain Kaybob Duvernay assets from Paramount Resources
Ltd. for cash consideration of $375
million (the "Assets"). These Assets are adjacent to
Crescent Point's existing land base and further enhance the
Company's scale, high-return drilling inventory and development
opportunities within the basin. This acquisition will be funded
through existing credit facilities and is expected to close during
January 2023.
The Assets include approximately 130 net drilling locations
across nearly 65,000 net acres of crown land (90% average working
interest) with no expiries. The acquired Assets currently produce
over 4,000 boe/d (50% liquids) and include a gas plant, associated
pipelines, water infrastructure and seismic data.
"We continue to generate strong full cycle returns from our
Kaybob Duvernay assets, which are top quartile within our overall
portfolio," said Craig Bryksa,
President and CEO of Crescent Point. "Through this acquisition, we
are increasing our drilling inventory in the play to over 20 years,
based on current production. In addition, our land position will
increase to approximately 400,000 net acres. We are also adding
base production with an estimated net present value of
approximately $200 million at current
strip commodity prices. The acquisition includes an attractive ESG
profile, consistent with our existing Kaybob Duvernay assets,
including low emissions intensity and minimal asset retirement
obligations."
Crescent Point plans to grow its Kaybob Duvernay asset from
approximately 35,000 boe/d in 2022 to over 55,000 boe/d within its
five-year plan. The significant inventory depth this asset provides
also underpins the Company's 10-year plan. Crescent Point's
disciplined development program includes adding a second rig in the
Kaybob Duvernay in 2024.
Crescent Point is currently drilling its seventh pad in the play
and expects to bring its sixth fully operated pad on-stream in
early 2023. The Company's fourth and fifth fully operated
multi-well pads were recently brought on-stream and are generating
strong initial production ("IP") results that are in-line with, or
ahead of, its internal type wells. Average IP rates for the fourth
and fifth pads are approximately 785 boe/d per well (IP90) (75%
liquids) and approximately 950 boe/d per well (IP30) (65% liquids),
respectively.
The Company has also successfully lowered drilling days to
between 11 to 13 days per well on its recent pads, a reduction of
over 40 percent since entering the play. Crescent Point continues
to seek opportunities to further enhance returns and overall
recoveries through additional efficiencies and optimization of its
drilling and completions design.
BASE DIVIDEND INCREASE AND UPDATED 2023 GUIDANCE
Given the Company's strong operational results in 2022, its
continued success in improving its financial position and the
additional excess cash flow it expects to generate from the Assets,
the Board of Directors has approved and declared a 25 percent
increase to the quarterly base dividend to $0.10 per share, or $0.40 per share annually, up from $0.32 per share previously. This increased base
dividend is payable on April 3, 2023
to shareholders of record at the close of business on March 15, 2023.
Crescent Point's 2023 annual average production guidance is now
138,000 to 142,000 boe/d, an increase of 4,000 boe/d, with
development capital expenditures unchanged at $1.0 to $1.1
billion. The Company now expects to generate approximately
$1.25 billion of excess cash flow at
US$80/bbl WTI. This budget, including
the base dividend, is fully funded at US$50/bbl WTI.
Crescent Point continues to return 50 percent of its
discretionary excess cash flow to its shareholders, in addition to
its base dividend. Under this framework, the Company expects to
return over $700 million directly to
shareholders in 2023, based on current guidance at US$80/bbl WTI. These returns are further
supplemented with per-share growth and debt reduction. Crescent
Point remains active on its normal course issuer bid and has
repurchased over 6.2 million shares during fourth quarter 2022
to-date for approximately $65
million.
RENEWAL OF CREDIT FACILITIES
During fourth quarter 2022, Crescent Point successfully renewed
and extended its unsecured, covenant-based credit facilities with a
maturity date of November 2026. The size of the Company's
credit facilities is currently $2.36
billion, which is expected to remain primarily undrawn upon
closing of the announced acquisition.
PRELIMINARY 2023 GUIDANCE
|
Prior
|
Revised
|
Total Annual Average
Production (boe/d) (1)
|
134,000 –
138,000
|
138,000 –
142,000
|
|
|
|
Capital
Expenditures
|
|
|
Development capital
expenditures ($ million)
|
$1,000 -
$1,100
|
$1,000 -
$1,100
|
Capitalized
administration ($ million)
|
$40
|
$40
|
Total ($
million) (2)
|
$1,040 -
$1,140
|
$1,040 -
$1,140
|
|
|
|
Other Information
for 2023 Guidance
|
|
|
Reclamation activities
($ million) (3)
|
$40
|
$40
|
Capital lease payments
($ million)
|
$20
|
$20
|
Annual operating
expenses ($/boe)
|
$14.25 -
$15.25
|
$14.25 -
$15.25
|
Royalties
|
13.75% -
14.25%
|
13.75% -
14.25%
|
1)
|
The revised total
annual average production (boe/d) is comprised of approximately 80%
Oil & NGLs and 20% Natural Gas
|
2)
|
Land expenditures and
net property acquisitions and dispositions are not included.
Revised development capital expenditures spend is allocated on an
approximate basis as follows: 90% drilling & development and
10% facilities & seismic
|
3)
|
Reflects Crescent
Point's portion of its expected total budget
|
|
|
RETURN OF CAPITAL OUTLOOK
|
|
Base
Dividend
|
|
Fourth quarter 2022
base dividend per share
|
$0.08
|
First quarter
2023 base dividend per share
|
$0.10
|
|
|
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)
|
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" and "discretionary excess 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. 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 September 30, 2022, which section is incorporated
herein by reference, and available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar. There are no
significant differences in the calculations between historical and
forward-looking specified financial measures.
The most directly comparable financial measure for excess cash
flow and discretionary excess cash flow disclosed in the Company's
primary financial statements is cash flow from operating
activities, which, for the three and nine months ended September 30, 2022, was $647.0 million and $1.60
billion, respectively. For the three and nine months ended
September 30, 2022, excess cash flow
was $233.7 million and $900.8 million, respectively. Discretionary
excess cash flow for the three and nine months ended September 30, 2022 was $188.8 million and $819.0
million, respectively.
Excess cash flow and discretionary excess cash flow for 2023 are
forward-looking non-GAAP measures and are calculated consistently
with the measures disclosed in the Company's MD&A. Refer to the
Specified Financial Measures section of the Company's MD&A for
the period ended September 30,
2022.
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",
"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:
drilling inventory in the Kaybob Duvernay (location numbers and
length of time); dividend expectations; excess cash flow of
$1.25 billion in 2023, at
US$80 WTI, based on annual production
of 138,000 to 142,000 boe/d; returning significant capital to
shareholders including 50 percent of discretionary excess cash flow
in addition to the base dividend; benefits of acquiring the Assets,
expected timing of closing of the acquisitions of the Assets (the
"Acquisition"); net present value of the Assets' base production;
plans to grow production from its Kaybob Duvernay asset to over
55,000 boe/d under its five-year plan; the significant inventory
depth within the Kaybob Duvernay; underpinnings of the Company's
10-year plan; disciplined development program; adding a second rig
in the Kaybob Duvernay in 2024; timing to bring Crescent Point's
sixth fully operated pad in the Kaybob Duvernay on-stream;
additional excess cash flow expected to be generated from the
Assets; credit facility expectations; capital expenditures budget,
including the base dividend, fully funded at US$50/bbl WTI; capital returns framework expected
to result in over $700 million being
returned directly to shareholders in 2023, based on guidance at
US$80/bbl WTI; preliminary 2023
guidance, including, but not limited to: total annual average
production, capital expenditures (including development capital
expenditures and capitalized administration), and other information
for 2023 guidance (including reclamation activities, capital lease
payments, annual operating expenses and royalties); and Crescent
Point's return of capital outlook, including fourth quarter 2022
base dividend per share and first quarter 2023 base dividend per
share, and additional return of capital (up to 50% of discretionary
excess cash flow).
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, 2021.
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, 2021 which is accessible
at www.sedar.com.
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,
2021 under "Risk Factors" and our Management's Discussion
and Analysis for the year ended December 31,
2021, and for the quarter ended September 30, 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 and nine months ended September 30, 2022, under the headings
"Overview", "Commodity Derivatives", "Liquidity and Capital
Resources", "Guidance", "Royalties" and "Operating Expenses" and
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, including
current and new variants thereof; 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; 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;
changes in interest rates and inflation; uncertainties associated
with regulatory approvals; geopolitical conflicts, including the
Russian invasion of Ukraine;
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 financing the Acquisition, 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.
Included in this press release are Crescent Point's 2022 and
2023 guidance in respect of capital expenditures and average annual
production, 5-year outlook, and 2022 and 2023 expectations, which
are based on various assumptions as to production levels, commodity
prices and other assumptions and are provided for illustration only
and are based on budgets and forecasts that have not been finalized
and are subject to a variety of contingencies including prior
years' results. To the extent such estimates constitute a
"financial outlook" or "future oriented financial information" in
this presentation, as defined by applicable securities legislation,
such information 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.
Dividends on the Company's common shares are variable and may be
reduced or eliminated in the sole discretion of the Board of
Directors. 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.
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. 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.
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.
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.
The net present value ("NPV") of the Assets' base production is
a snapshot in time as at the date of this press release, and is
based on the reserves evaluated using current strip commodity
prices, costs and foreign exchange rates. The Assets' NPV is
calculated using a discount rate of 10%, on a before tax basis and
is the sum of the present value of proved plus probable developed
producing reserves based on strip commodity price as of
November 28, 2022, the fair value for
the Company's oil and gas hedges, less outstanding net debt.
It should not be assumed that the undiscounted or discounted NPV
of future net revenue attributable to the Assets represents the
fair market value of those Assets. 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. The recovery and reserve estimates of crude oil, NGL
and natural gas reserves are estimates only and there is no
guarantee that the estimated reserves will be recovered. Actual
reserves may be greater than or less than the estimates relied upon
for NPV calculations, herein.
The Asset's current production of over 4,000 boe/d consists of
35% condensate, 15% NGL and 50% shale gas. Average 90-day initial
production ("IP90") per well on the Company's fourth Kaybob
Duvernay pad consisted of 65% condensate, 10% NGL and 25% shale
gas. Average 30-day initial production ("IP30") per well on the
Company's fifth Kaybob Duvernay pad consisted of 50% condensate,
15% NGL and 35% shale gas.
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 130 potential internally identified
net drilling locations, of which 39 are proved locations and an
incremental 28 are probable locations, as derived from the
Company's internal reserves evaluation in accordance with NI 51-101
and the COGE Handbook. 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 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:
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.