Veren Inc T.VRN

RBC

[retiredcf]

July 26, 2023

Crescent Point Energy Corp.
Q2/23 - AFFO Ahead of Street; Special Dividend

TSX: CPG | CAD 10.41 | Outperform | Price Target CAD 13.00

Sentiment: Positive

Our View: CPG's Q2/23 results featured solid operating results (despite Alberta wildfire related downtime) alongside AFFO ahead of street driven by stronger realizations with ~$93.1 million in share repurchases delivered during the quarter (and ~$158 million YTD). The company announced a special dividend of $0.035/sh for shareholders on record in Q2/23. Production and capital spending guidance remains unchanged with a view to continued returns to shareholders via the return of 60% of FCF.

• Q2/23 Results - FFO Slightly Ahead of Street. CPG reported Q2/23 production of 155,031 boe/d (RBC: 154,945 boe/d; Street: 152,912 boe/d) driving AFFO (f.d.) of $1.01/sh (RBC/Street: $0.98/0.97). Capital expenditures came in at $230 million (RBC/ Street: $295mm/$227mm). Beat vs. our model included a higher liquids mix of 78% vs our 76% that drove stronger realizations.

2023 Capital Guidance - Unchanged. CPG reiterated its 2023 E&P capital guidance of $1.2 billion (excl. $100 million of capitalized G&A, lease, ARO, etc.). Production guidance range of 160,000-166,000 boe/d remains unchanged, with op cost and royalties assumptions unchanged. CPG expects to average 179 mboe/d of production in H2/23. The company has hedged approximately 20% of its liquids production for H2/23 and will continue to layer in hedges depending on market conditions.

• Return of Capital - Special Dividend $0.035/sh. During Q2, CPG returned 60% of its FCF for a total of $166.7mm via dividends and share repurchases. CPG announced a special dividend of $0.035/sh payable on August 15, 2023 for shareholders on record, as of August 8, 2023. YTD, CPG has so far repurchased 16.5 million shares for a total of ~$158 million. CPG repaid senior note maturities totalling $445mm. CPG's next senior note maturity ($315mm) does not occur until Q2/24. As of July 26, CPG's net debt of ~$3.0 billion (<1.4x D/CF) with an anticipated 2023 exit of 1.0x D/CF giving the company financial flexibility. CPG anticipates returning $600 million (60% of FCF at $75 WTI) to shareholders in 2023 via base dividends, shares repurchases and special dividends, with a continued preference toward share repurchases.

• Kaybob & Gold Creek Operations Update. At Gold Creek, three multi-well pads (11 wells) came onstream in Q2 and are currently averaging 1.3 mboe/d (65% liquids) while continuing to trend higher post initial cleanup, with the company noting the highest producing wells coming from Gold Creek West that are currently averaging ~1.6 mboe/d per well (76% liquids). The company remains on track to drill 15 wells in the Montney for 2023 based on a one rig program with the potential to add a second rig over time. At Kaybob, a total of 13of regional type curve (IP90: ~1.1 mboe/d per well). CPG expects to drill 15 wells in Kaybob in H2/23 while adding a second rig in Q4/23 to accelerate development.

• Conference Call. July 26th at 10:00 a.m. MT | 1-800-390-0605|.wells came on-stream between late 2022 and Q2/23, with production rates remaining in line