CALGARY, AB, Dec. 4, 2020 /CNW/ - Crescent Point Energy Corp.
("Crescent Point" or the "Company") (TSX and NYSE: CPG) is pleased
to announce its formal 2021 capital expenditures budget and
production guidance.
KEY HIGHLIGHTS
- Capital expenditures of $475 to
$525 million and annual average
production guidance of 108,000 to 112,000 boe/d.
- Disciplined, flexible and returns focused budget fully funded
at approximately US$40/bbl WTI.
- Excess cash flow of approximately $150 to $300
million expected in 2021 at US$45/bbl to US$50/bbl WTI with a target reinvestment ratio of
less than 75 percent.
- Continued to incorporate ESG initiatives within budgeting
process, including emissions reduction and environmental
targets.
"We remained disciplined and flexible throughout 2020 and, as a
result of our efforts, we are on track to execute our annual
program on budget with net debt reduction of approximately
$600 million during the year," said
Craig Bryksa, President and CEO of
Crescent Point. "Our plans for 2021 remain aligned with our returns
based capital allocation framework, with a continued focus on
further enhancing our balance sheet strength and sustainability.
The 2021 budget is designed to position the Company defensively
given the current volatility in commodity prices, while also
providing exposure to significant excess cash flow generation in a
rising oil price environment."
2021 PRODUCTION AND CAPITAL EXPENDITURES
BUDGET
Crescent Point's 2021 capital expenditures budget of
$475 to $525
million is expected to generate annual average production of
108,000 to 112,000 boe/d. The Company's 2021 capital expenditures
budget is reduced in comparison to 2020, highlighting a lower pace
of activity, improved capital efficiencies and a moderation in its
decline rate to 25 percent from approximately 30 percent.
The majority of Crescent Point's 2021 capital expenditures
budget is allocated to its key focus areas in Viewfield,
Shaunavon and Flat Lake, which
continue to provide attractive risk-adjusted returns. The Company
plans to allocate approximately 15 percent of its budget to
discretionary long-term projects, such as decline mitigation and
continued advancement of its operational technology ("OT") platform
which has successfully reduced operating expenses and enhanced
environmental, social and governance ("ESG") practices.
Crescent Point is also dedicating incremental funds to proactive
environmental stewardship initiatives, including asset retirement,
emission reductions, and asset integrity projects. The Company is
currently on track to meet or exceed its emissions intensity
reduction target of 30 percent by 2025, including a 50 percent
reduction in methane emissions, and is finalizing plans to set
additional environmental targets.
Approximately 40 percent of the Company's estimated first half
2021 oil and liquids production, net of royalty interest, is
currently hedged. These hedges consist primarily of swaps with an
average price of approximately CDN$60/bbl. Crescent Point plans to continue to
increase its hedge position throughout 2021 and expects to layer on
additional protection, in the context of commodity prices. To
provide additional flexibility in its capital program throughout
the year, approximately 60 percent of the Company's 2021 annual
budget has been scheduled for the second half 2021.
EXCESS CASH FLOW AND PRIORITIES
Crescent Point's 2021 budget is fully funded at approximately
US$40/bbl WTI. The Company expects to
generate approximately $150 million
to $300 million of excess cash flow
at US$45/bbl to US$50/bbl WTI, and has targeted a reinvestment
ratio of less than 75 percent.
Crescent Point will remain disciplined with a focus on
sustaining production and maximizing excess cash flow in a higher
commodity price environment, with approximately $35 million of funds flow sensitivity for every
US$1/bbl change in WTI. The Company
plans to initially prioritize its balance sheet with the allocation
of its excess cash flow. As market conditions improve, Crescent
Point will also evaluate other opportunities to further enhance
value, including additional development capital and returning
capital to shareholders.
The Company retains significant liquidity with over $2.5 billion of unutilized credit capacity, as at
September 30, 2020, with no material
near-term senior note debt maturities. Similar to prior years,
Crescent Point will remain flexible in the event of lower commodity
prices in order to preserve its strong liquidity
position.
All financial figures
are approximate and in Canadian dollars unless otherwise noted.
This press release contains forward-looking information and
references to non-GAAP financial measures. Significant related
assumptions and risk factors, and reconciliations are described
under the Non-GAAP Financial Measures and Forward-Looking
Statements sections of this press release, respectively.
|
2021 BUDGET AND GUIDANCE SUMMARY
Total annual average
production (boe/d)
|
108,000 -
112,000
|
% Oil and
NGLs
|
91%
|
Development capital
expenditures ($ millions) (1)
|
$475 -
$525
|
Drilling and
development (%)
|
88%
|
Facilities and seismic
(%)
|
12%
|
|
(1) Development
capital expenditures excludes approximately $70 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", "reinvestment ratio" 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.
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.
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).
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.
Reinvestment ratio is calculated on a percentage basis as
development capital and other capital expenditures, which excludes
acquisitions and dispositions, plus payments on principal portion
of lease liability, divided by adjusted funds flow from operations.
Management utilizes reinvestment ratio to assist in guiding its
capital allocation framework.
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, 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", "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: the
expectation that the Company's 2021 budget will be fully funded at
approximately US$40/bbl WTI; the
Company's expected excess cash flow generation at US$45/bbl to US$50/bbl WTI and the associated target
reinvestment ratio; expected 2021 capital expenditures and 2021
annual average production guidance; the Company's plans to continue
to incorporate ESG targets within its budgeting process; the
Company's expectation that it will execute its 2020 annual program
on budget with net debt reduction of approximately $600 million; the Company's 2021 plan to further
enhance its balance sheet strength and sustainability; the
significant upside the Company believes it has to potential rising
oil prices over 2021; the expected moderation in the Company's
decline rate and its expected improved efficiencies in 2021; where
the Company expects to spend its 2021 capital budget; the
expectation that Viewfield, Shaunavon and Flat Lake will continue to
provide attractive risk-adjusted returns; the percentage of the
Company's 2021 budget allocated to discretionary long-term projects
and the nature of those projects; the Company's plan to dedicate
incremental funds to proactive environmental initiatives and the
nature of those initiatives; the Company's view that it remains on
track to meet or exceed its emissions intensity reduction target;
the Company's emissions intensity reduction target of 30 percent by
2025, including a 50 percent reduction in methane emissions; the
Company's ongoing efforts to set additional environmental targets;
the Company's 2021 hedging plans; the expected timing of the
Company's 2021 capital spend; Crescent Point's plan to remain
disciplined with a focus on sustaining production and maximizing
excess cash flow; the Company's funds flow sensitivity; Crescent
Point's initial prioritization of its balance sheet and its plan to
evaluate other opportunities to further enhance shareholder value
as market conditions improve; and the Company's ability to remain
flexible in the event of lower commodity prices and how this
flexibility can preserve the Company's liquidity 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 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 September 30, 2020 under "Risk Factors",
"Derivatives", "Liquidity and Capital Resources", "Changes in
Accounting Policy" and "Outlook". 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" and "Outlook" and are disclosed in
the Management's Discussion and Analysis for the quarter ended
September 30, 2020 under the headings
Derivatives", "Liquidity and Capital Resources", "COVID-19",
"Critical Accounting Estimates", "Changes in Accounting Policy" and
"Outlook". 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; delays in
business operations, pipeline restrictions, blowouts; the risk of
carrying out operations with minimal environmental impact; industry
conditions, including changes in laws and regulations and the
adoption of new environmental laws and regulations and changes in
how they are interpreted and enforced; uncertainties associated
with estimating oil and natural gas reserves; 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 of
acquisitions and exploration and development programs; unexpected
geological, technical, drilling, construction and processing
problems; availability of insurance; fluctuations in foreign
exchange and interest rates; stock market volatility; failure to
realize the anticipated benefits of acquisitions and dispositions;
general economic, market and business conditions; uncertainties
associated with regulatory approvals; uncertainty of government
policy changes; uncertainties associated with credit facilities and
counterparty credit risk; and changes in income tax laws, tax laws,
crown royalty rates and incentive programs relating to the oil and
gas industry; COVID-19; and other factors, many of which are
outside the control of Crescent Point. 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.