CALGARY, April 20, 2020 /CNW/ - Crescent Point Energy
Corp. ("Crescent Point" or the "Company") (TSX and NYSE: CPG) is
taking additional action to further enhance the Company's long-term
sustainability through additional cost reductions, and is including
a revised 2020 outlook.
KEY HIGHLIGHTS
- Lowering 2020 capital expenditures guidance by $75 million, or 10 percent, with no associated
impact to production.
- Maintaining flexibility to further reduce capital expenditures,
if necessary.
- Enhancing sustainability by reducing 2020 operating expenses by
$140 million.
- Reduced salaries for executive team and Board of Directors.
- Lowering annual production guidance by 15 percent, primarily
due to the voluntary shut-in of higher cost production.
- Retains significant liquidity of over $2.5 billion, with no material near-term debt
maturities.
"We have taken, and continue to take, meaningful action to
enhance our long-term sustainability during this period of low
commodity prices," said Craig
Bryksa, President and CEO of Crescent Point. "We have
further lowered our cost structure and also elected to shut-in
production that is currently uneconomic to further enhance our cash
flow. We are continuously monitoring the commodity price
environment and will make further adjustments throughout the year,
if necessary."
REVISED 2020 CAPITAL EXPENDITURES AND ADDITIONAL COST
REDUCTIONS
Crescent Point's capital expenditures for 2020 are now forecast
to be approximately $650 to
$700 million, or $75 million below its recently revised guidance
of $700 to $800 million, based on the mid-point of the
range. This capital reduction, which has no associated impact to
production, is a combination of internal efficiencies and
operational outperformance resulting in lower expenditures during
the balance of the year.
Since the release of its original 2020 budget, the Company has
lowered its capital expenditures guidance by over 40 percent and
retains the ability to further reduce expenditures later in the
year, if necessary. Approximately half of Crescent Point's revised
annual budget is expected to occur subsequent to first quarter. Due
to a shift in the scheduled timing of its planned capital program,
approximately 65 percent of the Company's remaining 2020 budget is
expected during fourth quarter. The majority of these expenditures
are discretionary and dependent on commodity prices. Management
continues to work on realizing additional efficiencies and intends
to balance annual cash outflows, including capital expenditures,
with inflows.
Crescent Point forecasts that its operating expenses for the
current fiscal year will be approximately $140 million, or approximately 20 percent, below
its initial 2020 expectations. Approximately $50 million of this reduction is sustainable and
is expected to be driven by internal initiatives with the remaining
reduction achieved through lower activity levels and cost savings
from shut-in production. Since the beginning of 2019, Crescent
Point has permanently removed approximately $120 million, or over 15 percent, of its annual
operating expenses due to its enhanced and ongoing focus on new
workflow improvements and the adoption of digital technologies.
In light of the current environment, the President and CEO's
current base salary will be reduced by 15 percent with the
remaining members of the executive team taking a 10 percent
reduction to current base salaries. The cash component of the Board
of Directors retainer will also be reduced by 15 percent.
REVISED 2020 PRODUCTION GUIDANCE
The Company's annual average production is now forecast to be
110,000 to 114,000 boe/d for 2020. This represents a reduction of
20,000 boe/d, or approximately 15 percent, from Crescent Point's
prior annual average guidance of 130,000 to 134,000 boe/d, based on
the mid-point of the range. This revision is largely due to the
shut-in of higher cost production, as well as the Company's
decision to shift capital to the latter part of the year with
flexibility to further reduce capital, if necessary.
In aggregate, Crescent Point is voluntarily shutting-in
approximately 25,000 boe/d of its current production, of which
approximately 70 percent is oil. This production is primarily
located outside of the Company's key focus areas and carries costs
above the corporate average. As a result of these shut-ins, and at
current prices, Crescent Point expects to achieve cost savings in
excess of the potential revenue.
The Company expects to restore production from shut-in wells,
with minimal impact to long-term production, when warranted.
Management continues to evaluate market conditions, including
market access constraints and the potential for involuntary
shut-ins.
All financial figures
are approximate and in Canadian dollars unless otherwise noted.
This press release contains forward-looking information.
Significant related assumptions and risk factors, and
reconciliations are described under the Forward-Looking Statements
section of this press release, respectively.
|
FINANCIAL LIQUIDITY
The Company retains significant liquidity with over $2.5 billion of cash and unutilized capacity on
its credit facilities. Crescent Point does not have any material
near-term debt maturities, with its next set of senior notes due in
second quarter 2021 for a total of approximately $185 million.
HEDGING
The Company has over 65 percent of its revised oil production
guidance hedged for the remainder of the year. Crescent Point
recently layered additional hedges for second and third quarter
2020 in order to help protect against any further weakness in
near-term commodity prices. The Company forecasts hedging gains of
approximately $330 million in 2020
based on current strip prices.
COVID-19
In response to the continued uncertainty pertaining to the
global pandemic of COVID-19, Crescent Point has taken strict
measures to protect the health and safety of all stakeholders
including its employees, community members and vendor partners. The
Company has instituted physical distancing protocols within its
field operations, advanced digital technology throughout the
organization and seamlessly adopted a work from home policy for
employees whose work can be performed remotely. Crescent Point has
a long history of operational excellence with a motivated staff
that continues to exceed expectations despite having to adapt to a
new challenging environment. Management is continually monitoring
the health and safety of its employees with no positive cases of
COVID within the Company.
2020 BUDGET AND GUIDANCE SUMMARY
|
|
|
Total annual average production (boe/d)
|
Prior
130,000 –
134,000
91%
|
Revised
110,000 –
114,000
90%
|
% Oil and
NGLs
|
Development capital
expenditures ($ millions) (1)
|
$700 –
$800
91%
9%
|
$650 –
$700
91%
9%
|
Drilling and
development (%)
Facilities and seismic (%)
|
(1)
|
Development capital
expenditures excludes approximately $80 million of capitalized
G&A, land acquisitions, capital leases and reclamation
activities.
|
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:
expected 2020 capital expenditures, production and operating
expenses; the expected impact of lowered capital spending on 2020
production; the ability of the Company to further reduce capital
expenditures, if necessary; expected 2020 operating expense; the
Company's plan to continue to lower its cost structure and hence
its flexibility during a period of low commodity prices; Crescent
Point's plans to make further adjustments during the year if
necessary in light of the commodity price environment; when the
Company expects to spend capital during the remainder of 2020; how
the Company expects to achieve its planned 2020 capital reduction;
the Company's expectation that it will incur approximately 65% of
its remaining capital during fourth quarter; management's plan to
continue to work on realizing additional efficiencies and balance
annual cash outflows with inflows; how the Company expects to
achieve its planned operating expense reductions; planned salary
reductions for the CEO and other executive team members and planned
Board compensation reductions; Crescent Point's plan to voluntarily
shut-in approximately 25,000 boe/d of production, the percentage of
the shut-in volumes that are expected to be oil, how the Company
plans to make shut-in decisions and when these shut-ins are
expected to occur; the Company's plan to restore production from
shut-in wells, with minimal impact to long-term production, when
warranted; management's plan to continue to evaluate market
conditions, including market access constraints and the potential
for involuntary shut-ins; the expectation that the Company's recent
additional hedges for second and third quarter 2020 will help
protect against any further weakness in near term commodity prices;
expected 2020 hedging gains; and Crescent Point's plans to continue
to monitor the health and safety of its employees with no positive
cases of COVID within the Company.
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,
2019 under "Risk Factors" and in our Management's Discussion
and Analysis for the year ended December 31,
2019, under the headings "Risk Factors" and "Forward-Looking
Information"; and the heightened uncertainty caused by current
commodity prices, the impact of the COVID-19 pandemic on the
Company's business and prospects and other global macroeconomic
factors. The material assumptions are disclosed herein and 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", "Outlook" and "Forward-Looking Statements".
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.