News CALGARY, AB, July 28, 2021 /PRNewswire/ - Crescent Point Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) (NYSE: CPG) is pleased to announce its operating and financial results for the quarter ended June 30, 2021.
KEY HIGHLIGHTS
- Successfully closed the acquisition of Kaybob Duvernay assets and disposition of southeast Saskatchewan conventional assets, both as previously announced, further enhancing the Company's balance sheet strength and sustainability.
- Reduced net debt by approximately $360 million following the closing of the Kaybob Duvernay acquisition.
- Upwardly revised 2021 production guidance while keeping capital expenditures within the previously indicated range.
- Released third annual sustainability report highlighting Crescent Point's increased commitment to strong ESG performance through its enhanced targets, compensation framework and capital allocation process.
- Received recognition of improved ESG practices from MSCI Inc., which upgraded its rating on the Company to "A" from "BBB".
"Our second quarter results demonstrate our continued focus on maximizing excess cash flow generation through our strong capital discipline and successful operational execution", said Craig Bryksa, President and CEO of Crescent Point. "We also closed two strategic transactions during the quarter, further enhancing our asset portfolio and long-term sustainability. The seamless integration of the Kaybob Duvernay assets and the constructive commodity price environment have set us up for a strong second half of the year and into 2022. We expect to generate significant excess cash flow in the current commodity price environment, allowing for further net debt reduction and return of capital to shareholders."
FINANCIAL HIGHLIGHTS
- Adjusted funds flow totaled $387.8 million during second quarter 2021, or $0.66 per share diluted, driven by a strong operating netback of $39.87 per boe.
- For the quarter ended June 30, 2021, the Company's development capital expenditures, which included drilling and development, facilities and seismic costs, totaled $88.4 million.
- Crescent Point's net debt as at June 30, 2021 totaled approximately $2.3 billion, including approximately $670 million in cash consideration paid for the acquisition of Kaybob Duvernay assets, which closed on April 1, 2021. Subsequent to the closing of the acquisition, the Company successfully reduced its net debt during the quarter by approximately $360 million, or over half of the cash portion of the purchase price of the Kaybob Duvernay assets. This reduction was achieved through significant excess cash flow generation and the proceeds from the previously announced disposition, and is in addition to over $135 million of net debt reduction in first quarter 2021.
- During second quarter, the Company repaid senior note maturities totaling approximately $185 million. Crescent Point's next senior note maturities, totaling approximately $225 million, are not due until second quarter 2022. The Company retains significant liquidity and its credit facilities are not due for renewal until October 2023.
- As part of its risk management program to protect cash flow generation and returns, the Company maintains an active hedging portfolio. Crescent Point currently has over 40 percent of its oil and liquids production, net of royalty interest, hedged for the second half of 2021 at a weighted average price of approximately CDN$66/bbl. The Company also has approximately 20 percent of its oil and liquids production hedged for 2022. Crescent Point plans to remain disciplined in its approach to layering on additional protection in the context of commodity prices.
- The Company reported net income of $2.1 billion for the three month period ending June 30, 2021, primarily resulting from a $2.5 billion ($1.9 billion after-tax) reversal of non-cash impairment due to an increase in forward commodity prices and the independent engineers' price forecast. Crescent Point's second quarter net income also included a gain on sale of over $70 million related to the previously announced disposition. Adjusted net earnings from operations during second quarter was $117.6 million, or $0.20 per share diluted.
- Subsequent to the quarter, the Company declared a quarterly cash dividend of $0.0025 per share payable on October 1, 2021.
| These are non-GAAP measures. 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. |
OPERATIONAL HIGHLIGHTS
- Crescent Point's average production in second quarter 2021 was 148,641 boe/d, comprised of approximately 85 percent oil and liquids.
- The Company recently commenced drilling the first pad of its second half 2021 development program in the Kaybob Duvernay, with production expected to be onstream toward the end of the year. Crescent Point is pursuing a conservative development plan with a focus on generating strong full-cycle returns. The Company will seek to leverage its significant expertise in horizontal multi-well pad development and field technology to further optimize efficiencies and returns in the play.
- Within the Company's southeast and southwest Saskatchewan resource plays, Crescent Point continued to focus on low-risk, high-return infill drilling and the advancement of its decline mitigation programs. During the first half of the year, Crescent Point converted approximately 55 producing wells to water injection wells and remains on track with its plan to convert a total of over 135 wells in 2021. The Company is also advancing other decline mitigation programs and enhanced oil recovery techniques, including the continued development of its polymer floods in southwest Saskatchewan, to further enhance long-term free cash flow and sustainability.
- During second quarter 2021, the Company released its third annual sustainability report, outlining its latest progress and commitment to strong environmental, social and governance ("ESG") practices. The 2021 Sustainability Report was highlighted by an increased target for emissions intensity reduction to 50 percent by 2025, including a 70 percent reduction in absolute methane emissions, relative to a 2017 baseline. Crescent Point also introduced a target to reduce its inactive well inventory by 30 percent over the next 10 years, excluding the impact of the previously announced disposition and including the planned safe retirement of approximately 400 wells in 2021. In addition, the Company is progressing the development of freshwater use targets, which are anticipated to be released later this year. In order to support these initiatives and additional ESG progress, Crescent Point will allocate three to five percent of its annual maintenance capital budget to environmental stewardship moving forward.
- Crescent Point's commitment to strong ESG practices was recognized with an improved rating of "A" in the Morgan Stanley Capital International ("MSCI") Inc. ESG Ratings assessment. This rating was released prior to the issuance of the Company's 2021 Sustainability Report which included several enhanced ESG targets.
OUTLOOK
The Company's second quarter results highlight management's continued strong execution and capital discipline.
Crescent Point's recent strategic acquisition and disposition activities are expected to deliver meaningful improvements to the business by enhancing the Company's free cash flow generation and deleveraging profile, improving its cost structure, increasing overall scalability and reducing future decommissioning liabilities.
Crescent Point is upwardly revising its 2021 annual average production guidance to be 130,000 to 134,000 boe/d, up from its prior range of 128,000 to 132,000 boe/d. This increase reflects the Company's continued operational outperformance in addition to the reactivation of higher cost production that was previously shut-in during a lower commodity price environment. Crescent Point is also narrowing its 2021 development capital expenditures guidance, within its prior range, to approximately $600 to $625 million.
Crescent Point anticipates generating excess cash flow of approximately $675 to $775 million in 2021 at US$65/bbl to US$75/bbl WTI for the remainder of the year. The Company's improved excess cash flow outlook is expected to accelerate its deleveraging process, increasing its ability to further enhance shareholder value.
As Crescent Point's balance sheet continues to strengthen toward its leverage targets, the Company will evaluate the return of additional capital to shareholders, including its current dividend, in the context of its capital allocation framework.
CONFERENCE CALL DETAILS
Crescent Point management will hold a conference call on Wednesday, July 28, 2021 at 10:00 a.m. MT (12:00 p.m. ET) to discuss the Company's results and outlook. A slide deck will accompany the conference call and can be found on Crescent Point's website.
Participants can listen to this event online. Alternatively, the conference call can be accessed by dialing 1–888–390–0605.
The webcast will be archived for replay and can be accessed on Crescent Point's website. The replay will be available approximately one hour following completion of the call.
Shareholders and investors can also find the Company's most recent investor presentation and sustainability report on Crescent Point's website.
2021 GUIDANCE
The Company's guidance for 2021 is as follows:
| | Prior | Revised |
| Total Annual Average Production (boe/d) (1) | 128,000 - 132,000 | 130,000 - 134,000 |
| | | |
| Capital Expenditures | | |
| Development capital expenditures ($ million) | $575 - $625 | $600 - $625 |
| Capitalized G&A ($ million) | $35 | $35 |
| | | |
| Total ($ million) (2) | $610 - $660 | $635 - $660 |
| | | |
| Other Information for 2021 Guidance | | |
| Reclamation activities ($ million) (3) | $15 | $15 |
| Capital lease payments ($ million) | $20 | $20 |
| Annual operating expenses | $595 - $615 million
($12.45 - $12.95/boe) | $615 - $635 million
($12.75 - $13.25/boe) |
| Royalties | 11.5% - 12.5% | 12.0% - 12.5% |
| 1) | Total annual average production (boe/d) is comprised of 86% Oil & Liquids and 14% Natural Gas |
| 2) | Land expenditures and net property acquisitions and dispositions are not included. Development capital expenditures spend is allocated as follows: 84% drilling & development and 16% facilities
& seismic |
| 3) | Reflects Crescent Point's portion of its expected total budget |
The Company's unaudited financial statements and management's discussion and analysis for the period ended June 30, 2021, will be available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on Crescent Point's website at www.crescentpointenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
| | Three months ended June 30 | Six months ended June 30 |
| (Cdn$ millions except per share and per boe amounts) | 2021 | 2020 | 2021 | 2020 |
| Financial | | | | |
| Cash flow from operating activities | 285.5 | 66.6 | 589.2 | 359.9 |
| Adjusted funds flow from operations (1) | 387.8 | 109.0 | 650.5 | 418.5 |
| Per share (1) (2) | 0.66 | 0.21 | 1.16 | 0.79 |
| Net income (loss) | 2,143.3 | (145.1) | 2,165.0 | (2,469.2) |
| Per share (2) | 3.65 | (0.27) | 3.85 | (4.67) |
| Adjusted net earnings from operations (1) | 117.6 | (27.9) | 212.7 | 20.8 |
| Per share (1) (2) | 0.20 | (0.05) | 0.38 | 0.04 |
| Dividends declared | 1.5 | 1.4 | 2.8 | 6.7 |
| Per share (2) | 0.0025 | 0.0025 | 0.0050 | 0.0125 |
| Net debt (1) | 2,324.2 | 2,308.6 | 2,324.2 | 2,308.6 |
| Net debt to adjusted funds flow from operations (1) (3) | 2.1 | 1.9 | 2.1 | 1.9 |
| Weighted average shares outstanding | | | | |
| Basic | 581.7 | 529.3 | 556.2 | 528.8 |
| Diluted | 587.8 | 531.2 | 562.1 | 529.7 |
| Operating | | | | |
| Average daily production | | | | |
| Crude oil and condensate (bbls/d) | 107,444 | 94,900 | 101,394 | 103,414 |
| NGLs (bbls/d) | 18,608 | 14,210 | 15,978 | 15,852 |
| Natural gas (mcf/d) | 135,531 | 70,391 | 100,327 | 70,921 |
| Total (boe/d) | 148,641 | 120,842 | 134,093 | 131,086 |
| Average selling prices (4) | | | | |
| Crude oil and condensate ($/bbl) | 75.88 | 26.74 | 70.88 | 38.90 |
| NGLs ($/bbl) | 36.78 | 8.11 | 37.16 | 13.17 |
| Natural gas ($/mcf) | 3.64 | 2.74 | 3.92 | 2.88 |
| Total ($/boe) | 62.78 | 23.55 | 60.95 | 33.84 |
| Netback ($/boe) | | | | |
| Oil and gas sales | 62.78 | 23.55 | 60.95 | 33.84 |
| Royalties | (7.90) | (2.77) | (7.93) | (4.34) |
| Operating expenses | (12.63) | (11.89) | (12.91) | (12.12) |
| Transportation expenses | (2.38) | (2.24) | (2.36) | (2.24) |
| Operating netback (1) | 39.87 | 6.65 | 37.75 | 15.14 |
| Realized gain (loss) on commodity derivatives | (7.22) | 8.15 | (6.48) | 6.12 |
| Other (5) | (3.98) | (4.89) | (4.46) | (3.72) |
| Adjusted funds flow from operations netback (1) | 28.67 | 9.91 | 26.81 | 17.54 |
| Capital Expenditures | | | | |
| Capital acquisitions (6) | 936.3 | — | 936.3 | 1.4 |
| Capital dispositions (6) | (87.9) | (1.5) | (95.1) | (508.4) |
| Development capital expenditures | | | |
| Drilling and development | 57.9 | 64.0 | 163.5 | 357.6 |
| Facilities and seismic | 30.5 | 8.0 | 44.1 | 34.5 |
| Total | 88.4 | 72.0 | 207.6 | 392.1 |
| Land expenditures | 2.0 | 0.8 | 2.9 | 1.6 |