CALGARY, AB, Sept. 1, 2020 /PRNewswire/ - Crescent Point
Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) and
(NYSE: CPG) is pleased to announce reactivation of economic volumes
previously shut-in and provide revised 2020 guidance along with a
preliminary outlook for 2021.
KEY HIGHLIGHTS
- Reactivated shut-in volumes, resulting in second half 2020
production increasing by approximately 20 percent.
- Capital expenditures expected to be approximately $665 million in 2020, in-line with the lower end
of the prior range.
- Generating approximately $125
million of excess cash flow in second half of 2020.
- Preliminary 2021 outlook to sustain or exceed second half 2020
production with continued excess cash flow generation.
"Our process to shut-in and reactivate economic production
demonstrates our continued focus on returns in a disciplined
manner," said Craig Bryksa,
President and CEO of Crescent Point. "We expect to generate excess
cash flow in the current price environment and have further
increased our downside protection through our strong hedging
portfolio. We have also enhanced our sustainability in a low price
environment through both ongoing improvements to our cost structure
and the expected moderation in our decline rate."
REACTIVATION OF SHUT-IN VOLUMES AND REVISED 2020
GUIDANCE
During second quarter, Crescent Point shut-in certain higher
cost production to preserve value and enhance its financial
flexibility. The Company's reactivation plan is now complete and
all economic production has been brought back on-line.
Crescent Point's annual average production guidance is now
forecast to be 119,000 to 121,000 boe/d. The mid-point of the
Company's revised 2020 guidance implies second half production of
approximately 110,000 boe/d, which is approximately 20 percent
higher in comparison to its previous guidance. Crescent Point's
2020 capital expenditures are now expected to be approximately
$665 million, in-line with the lower
end of its prior guidance range of $650 to $700
million. The Company also retains continued flexibility and
discretion to adjust capital expenditures, if necessary.
Crescent Point expects to generate approximately $125 million of excess funds flow during the
second half of 2020, based on guidance at current strip prices,
which it plans to allocate to continued net debt reduction. Given
the Company's strong results and execution during the first half of
the year, total net debt reduction during 2020 is now expected to
total approximately $600
million.
Approximately 70 percent of Crescent Point's second half of 2020
oil and liquids production, net of royalty interest, is hedged
primarily through swaps with an average price of over CAD$65/bbl WTI. The Company has also hedged into
2021, and will remain disciplined in its approach to layering on
additional hedges in the context of commodity
prices.
OUTLOOK
Based on preliminary work done on its 2021 program and current
market expectations, Crescent Point anticipates being able to
generate annual average production in 2021 that is in-line with, or
exceeds, its estimated second half 2020 production while spending
approximately $500 to $550 million in development capital. The Company
continues to work through its plans for 2021 and expects to
formalize its annual guidance early in the new year.
This 2021 preliminary program is expected to be fully funded in
the low US$40/bbl WTI range and
generate excess cash flow at current strip prices. Crescent Point's
current funds flow sensitivity in 2021 is approximately
$45 million for every US$1/bbl change in WTI.
The Company retains flexibility and discretion in the allocation
of its capital and overall operations in the event lower commodity
prices, or other market developments, impacts its plans. Crescent
Point will continue to focus on its key value drivers of
disciplined capital allocation, cost efficiencies and balance sheet
strength.
Crescent Point remains in a strong financial position, having
over $2.4 billion of available
liquidity as at June 30, 2020 and no
material near term debt maturities.
2020 BUDGET AND GUIDANCE SUMMARY
Total annual average
production (boe/d) % Oil and
NGLs
|
Prior
110,000 –
114,000
90%
|
Revised
119,000 –
121,000
91%
|
Development capital
expenditures ($ millions) (1) Drilling and
development (%) Facilities
and seismic (%)
|
$650 – $700
91%
9%
|
$665
90%
10%
|
(1)
|
Development capital
expenditures excludes approximately $80 million of capitalized
G&A, land acquisitions, capital leases and reclamation
activities.
|
Non-GAAP Financial Measures
Throughout this press release, the Company uses the terms
"excess cash flow", and "net debt". These terms do not have any
standardized meaning as prescribed by IFRS and, therefore, may not
be comparable with the calculation of similar measures presented by
other issuers.
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.
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 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 is calculated as
free cash flow less dividends. 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 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.
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
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", "sustain", "continues", "strategy", "potential", "grow",
"estimate" 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: second
half 2020 production increases and the reason for the increase;
2020 capital expenditures, including how such expenditures are
allocated to drilling and development and to facilities and
seismic; 2020 total annual average production including production
from oil and from NGLs; amount of excess cash flow generated during
the second half of 2020 based on guidance at strip prices; the
ability to sustain or exceed second half 2020 production in 2021
within funds flow in the low US$40/bbl WTI range; focus on returns in a
disciplined manner; generating excess cash flow in the current
price environment; expected total net debt reduction in 2020;
downside protection hedging provides; key actions expected to
enhance sustainability in a low price environment; 2020 annual
average production guidance; second half 2020 production guidance;
flexibility and discretion in capital budget; the allocation of
excess cash flow to net debt reduction; 2021 annual average
production based on preliminary work, current market outlook and
2021 development capital expenditures of approximately $500-$550 million;
timing to formalize 2021 guidance; expectations that the
preliminary 2021 program will be fully funded in the low
US$40/bbl WTI range and generate
excess cash flow at current strip prices; current 2021 funds flow
sensitivity for every US$1/bbl change
in WTI; capital allocation and operations remaining flexible;
continued focus on disciplined capital allocation, cost
efficiencies and balance sheet strength; and a strong financial
position.
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 assumptions and 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 June 30,
2020 under "Derivatives", "Liquidity and Capital Resources",
"Changes in Accounting Policies", "Risk Factors" and
"Outlook". The material assumptions are disclosed 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 June 30, 2020
under the headings "Derivatives", "Liquidity and Capital
Resources", "Changes in Accounting Policies" and "Outlook".
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.