CALGARY, AB, Dec. 6, 2021 /CNW/ - Crescent Point Energy Corp.
("Crescent Point" or the "Company") (TSX: CPG) and (NYSE: CPG)
is pleased to announce its formal 2022 capital expenditures budget
and production guidance, another quarterly dividend increase
beginning first quarter 2022, planned share repurchases and the
renewal of its credit facilities.
KEY HIGHLIGHTS
- Increased 2022 production guidance to 133,000 to 137,000 boe/d
from the preliminary range of 131,000 to 135,000 boe/d.
- Disciplined capital expenditures budget of $825 to $900
million, which remains unchanged from the preliminary 2022
guidance.
- Strong execution in the Kaybob Duvernay resulting in additional
well cost reductions that now total approximately 15 percent to
date.
- Further increasing quarterly dividend by 50 percent and
targeting up to $100 million of share
repurchases over the next six months.
- Expected 2022 excess cash flow of $750
million to $1.0 billion at
US$65/bbl to US$75/bbl WTI, supported by a strong hedge
book.
- Successfully renewed unsecured, covenant-based credit
facilities totaling $2.3 billion and
extended maturity to November
2025.
"We have established a disciplined budget for 2022 and expect to
generate strong returns and significant excess cash flow for our
shareholders," said Craig Bryksa,
President and CEO of Crescent Point. "In the coming year, we plan
to build on our track record of strong performance focused on our
key pillars of balance sheet strength and sustainability. Through
our discipline and execution, including recent successes in the
Kaybob Duvernay, we continue to make significant progress toward
meeting our debt targets. As a result, we are accelerating our
plans to return additional capital to shareholders in the form of
another dividend increase and share repurchases. As we continue to
strengthen our balance sheet, we expect to further increase our
return of capital offering to shareholders in the context of our
capital allocation framework."
2022 PRODUCTION AND CAPITAL EXPENDITURES
BUDGET
Crescent Point's 2022 capital expenditures budget of
$825 to $900
million is expected to generate annual average production of
133,000 to 137,000 boe/d. This production range represents an
increase from the Company's preliminary 2022 guidance of 131,000 to
135,000 boe/d and reflects the positive impact of Crescent Point's
strong operational performance, primarily driven by its Kaybob
Duvernay asset.
The Company's capital expenditures budget remains unchanged from
its preliminary guidance. Crescent Point increased its cost
inflation assumption for 2022, however, the assumed increase has
been completely offset by well cost reductions recently realized in
the Kaybob Duvernay.
Consistent with its capital allocation framework, the Company
plans to allocate approximately 15 percent of its annual budget to
long-term projects, including the advancement of various decline
mitigation programs and environmental initiatives. Crescent Point's
decline mitigation projects during 2022 include additional
waterflood conversions, the expansion of its polymer floods and a
pilot program to test carbon dioxide (CO2) sequestration
and enhanced oil recovery in Saskatchewan. The Company's 2022 budget
includes capital allocated to environmental projects designed to
further reduce Crescent Point's overall emissions and inactive well
inventory.
The Company's 2022 budget is focused, with approximately 90
percent of total development capital allocated to the Kaybob
Duvernay, Viewfield, Shaunavon,
Flat Lake and North Dakota
plays.
KAYBOB DUVERNAY
During fourth quarter 2021, Crescent Point successfully
concluded drilling its first multi-well pad in the Kaybob Duvernay,
with completion operations currently underway. The Company also
recently started drilling its second multi-well pad in the play,
with completions expected in the first half of 2022.
Crescent Point's Kaybob Duvernay well costs, including drilling,
completion, equip and tie-in, are now approximately $8.75 million. Current well costs are now down
approximately $1.50 million, or 15
percent, from estimated costs when the Company originally entered
the play in second quarter 2021. These initial savings, which
include the previously announced completion cost reductions of
approximately 20 percent, or $1.00
million per well, were realized despite using a larger frac
design to increase recoverable reserves. The Company will continue
to focus on cost improvements and enhancing overall returns with
ongoing drilling and completions optimization.
Crescent Point expects to release production data for its
initial wells, including partner wells completed as part of its
recent farm-in agreement, in early 2022 after attaining 30-day
rates. Those wells that are currently onstream, or awaiting tie-in,
have demonstrated strong initial flowback results.
Crescent Point's strategic entry into the Kaybob Duvernay in
2021 has significantly enhanced the Company's balance sheet
strength and sustainability. The Kaybob Duvernay represents the
largest allocation by area within Crescent Point's 2022 budget at
over 25 percent, given the play's competitive economics, strong
initial operational results and production growth outlook. This
asset is expected to generate approximately $275 to $350
million of net operating income less capital expenditures in
2022 at US$65/bbl to US$75/bbl WTI and production of approximately
37,000 boe/d on average, up from approximately 30,000 boe/d when it
originally entered the play. The Company now expects to repay the
entire cash portion of the Kaybob Duvernay acquisition by
year-end 2021.
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.
|
RETURN OF ADDITIONAL CAPITAL TO SHAREHOLDERS
The Company's Board of Directors has approved and declared a
first quarter 2022 dividend of $0.045 per share to be
paid on April 1, 2022 to shareholders of record
on March 15, 2022, which represents a 50 percent increase from
its fourth quarter 2021 dividend. On an annualized basis, this
equates to a dividend payment of $0.18 per share. The
Company's previously announced fourth quarter 2021 dividend
of $0.03 per share is scheduled to be paid
on January 4, 2022.
The new dividend level equates to a payout ratio of
approximately seven percent of Crescent Point's expected 2022
adjusted funds flow at US$50/bbl WTI.
This payout ratio provides dividend sustainability at lower
commodity prices, with the ability to grow over time. It also
provides flexibility, allowing the Company to continue to
prioritize its balance sheet by allocating the majority of its
near-term excess cash flow to debt repayment.
In addition to increasing its base dividend, Crescent Point also
plans to allocate up to $100 million
to share repurchases over the following six months. The Company
believes the current value of its common shares does not reflect
its underlying fundamental value and that share repurchases provide
an attractive opportunity to improve Crescent Point's per share
metrics. The planned share repurchases, which equate to over three
percent of the Company's current market capitalization, are
expected to be partially completed under Crescent Point's existing
normal course issuer bid ("NCIB") which expires in March 2022. The Company plans to renew its NCIB
with the Toronto Stock Exchange in first quarter 2022.
Crescent Point expects to fully fund its 2022 capital
expenditures budget and planned return of capital to shareholders
at a low oil price of approximately US$40/bbl WTI. Assuming US$65/bbl to US$75/bbl WTI, the Company expects to generate
excess cash flow of approximately $750
million to $1.0 billion in
2022, prior to dividends and expected share repurchases, providing
Crescent Point with significant flexibility to create additional
shareholder value in the current oil price environment. As the
Company continues to strengthen its balance sheet it will look to
further increase its return of capital offering to shareholders in
the context of its capital allocation framework.
Approximately 50 percent of Crescent Point's oil and liquids
production in 2022, net of royalty interest, is now hedged to
further protect its balance sheet and expected excess cash flow
generation. Crescent Point's leverage ratio is expected to be
at or below 1.0 times net debt to adjusted funds flow in early
2022, based on current forward strip commodity prices.
RENEWAL OF CREDIT FACILITIES
During fourth quarter 2021, Crescent Point successfully renewed
and extended its unsecured, covenant-based credit facilities with a
maturity date of November 2025. Given
its significant unutilized credit capacity, the Company downsized
its credit facilities to $2.3
billion, better aligning the facilities with the size of the
organization while reducing the carrying cost of maintaining
undrawn credit capacity. Crescent Point expects to have an
unutilized credit capacity of approximately $1.8 billion at year-end 2021.
2022 BUDGET AND GUIDANCE SUMMARY
Total Annual
Average Production (boe/d) (1)
|
133,000 –
137,000
|
|
|
Capital
Expenditures
|
|
Development capital
expenditures ($ million)
|
$825 -
$900
|
Capitalized G&A
($ million)
|
$40
|
Total ($
million) (2)
|
$865 -
$940
|
|
|
Other Information
for 2022 Guidance
|
|
Reclamation
activities ($ million) (3)
|
$20
|
Capital lease
payments ($ million)
|
$20
|
Annual operating
expenses ($/boe)
|
$13.25 -
$13.75
|
Royalties
|
12.5% -
13.0%
|
|
|
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 is allocated on an
approximate basis as follows: 85% drilling & development and
15% 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", "net
debt to adjusted funds flow" and "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.
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.
Excess 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). Management
utilizes 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. The Company has previously
presented excess cash flow as net of dividends. To provide a more
comparable definition of excess cash flow to other issuers, excess
cash flow is now prior to dividends.
Net debt is calculated as long-term debt plus accounts payable
and accrued liabilities, dividends payable 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 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 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.
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",
"plans", "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: 2022
production guidance of 133,000 to 137,000 boe/d; 2022 development
capital expenditures budget of $825
to $900 million; a 50% quarterly
dividend increase; a target of up to $100
million of share repurchases over the next six months;
estimated 2022 excess cash flow of $750
million to $1.0 billion at US$65/bbl to
US$75/bbl WTI, supported by a strong
hedge book; planned capital allocated to environmental projects
designed to further reduce overall emissions and inactive well
inventory; expectations of returning additional capital to
shareholders, as balance sheet strengthens; continued strong
execution; significant ongoing progress toward debt targets;
expected 2022 production reflecting strong operational performance
in the Company's assets, primarily driven by the Kaybob Duvernay
asset; 2022 cost inflation expectations and how Kaybob Duvernay
well cost reductions are expected to offset such inflation; plans
to allocate approximately 15 percent of the Company's annual budget
to long-term projects, including decline mitigation programs and
environmental initiatives; decline mitigation initiatives planned
for 2022, including additional waterflood conversions, the planned
expansion of polymer floods and a pilot program to test carbon
dioxide (CO2) sequestration and enhanced oil recovery in
Saskatchewan; allocation of 2022
development capital to plays, and in particular to the Kaybob
Duvernay play; expected Kaybob Duvernay production of approximately
37,000 boe/d in 2022 and 30,000 boe/d in 2021; assuming
US$65/bbl to US$75/bbl WTI, estimated net operating income
less capital expenditures of approximately $275 to $350
million from the Kaybob Duvernay in 2022; Kaybob Duvernay
second multi-well pad completion expected in the first half of
2022; expected additional Kaybob Duvernay well cost improvements
and enhancement of overall returns with ongoing drilling and
completions optimization; timing for release of production data for
the Company's second multi-well pad in the Kaybob Duvernay;
attributes and benefits of the Kaybob Duvernay; anticipated timing
to repay the entire cash portion of the Kaybob Duvernay
acquisition; timing and amount of 2022 dividends; percentage of the
Company's expected 2022 adjusted funds flow at US$50/bbl WTI that the increased, annualized,
dividend represents; characteristics of the increased 2022
dividend, including flexibility, ability to grow and
sustainability; prioritization of the Company's balance sheet with
the majority of near-term excess cash flow allocated to debt
repayment; timing of leverage ratio to be at or below 1.0 times net
debt to adjusted funds flow; plans to allocate up to $100 million to share repurchases over the
following six months; NCIB renewal plans, approvals and
expectations; fully funded 2022 capital expenditures budget and
planned return of capital to shareholders, at an oil price of
approximately US$40/bbl WTI;
anticipated significant flexibility in 2022 to create additional
shareholder value in the current oil price environment; continued
strengthening in the Company's balance sheet; potential to increase
the Company's return of capital offering to shareholders in the
context of the Company's capital allocation framework; how hedges
are expected to protect the Company's balance sheet and expected
excess cash flow generation; expected unutilized credit capacity of
approximately $1.8 billion at
year-end 2021; and 2022 budget and guidance including: 2022
capitalized G&A, reclamation activities, capital lease
payments, annual operating expenses and royalties.
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 September 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 and nine months ended September 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, including current and new
variants thereof; 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; 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.