CALGARY,
AB, March 28, 2023 /CNW/ - Crescent Point
Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) (NYSE:
CPG) is pleased to announce that it has entered into an
agreement (the "Agreement") with Spartan Delta Corp. ("Spartan") to
acquire Spartan's oil and liquids-rich Montney assets in Alberta for $1.7
billion in cash (the "Transaction" or "Acquisition").
"Over the past five years, we have fundamentally rebuilt and
strengthened Crescent Point," said Craig
Bryksa, President and CEO of Crescent Point. "As a result of
our efforts, and after closing this transaction, our asset base
will include significant inventory depth in both the Kaybob
Duvernay and the Montney, while
also maintaining significant low-decline assets in Saskatchewan that provide additional excess
cash flow. The Montney acquisition
is immediately accretive to our per share metrics, enhances our
return of capital to shareholders, and is aligned with our
long-term strategy to focus on high quality, scalable resource
plays that meet our defined asset criteria. These assets include
over 20 years of drilling locations and increase our total
corporate inventory of premium locations to 15 years. The acquired
lands are also situated in the volatile oil fairway with similar
resource characteristics to our adjacent Kaybob Duvernay play,
where we have demonstrated significant operational excellence."
KEY HIGHLIGHTS
- Acquisition adds 600 Montney locations in Alberta, or over 20 years of premium drilling
inventory.
- Immediately accretive to excess cash flow per share by 20
percent, resulting in a higher return of capital for
shareholders.
- Maintaining commitment to return approximately 60 percent of
excess cash flow to shareholders, including the base dividend.
- Pro-forma leverage ratio of 1.3 times adjusted funds flow at
closing and 1.0 times at year-end 2023.
- Targeting additional non-core asset dispositions over time to
further optimize portfolio.
STRATEGIC RATIONALE AND ASSET
OVERVIEW
Key attributes of the acquired assets include the following:
- Approximately 38,000 boe/d (55% oil and liquids) with
attractive netbacks generating significant excess cash flow;
- Total drilling inventory of 600 net Montney locations, providing over 20 years of
inventory to sustain current production levels;
- Approximately 235,000 net acres of contiguous land with
Montney rights in Alberta within the Gold Creek and Karr
area;
- Consolidated land base that is primarily Crown with a high
average working interest of 96 percent;
- Situated in the volatile oil fairway with attractive reservoir
characteristics, including pay thickness and permeability;
- Key infrastructure and well licenses in place to support future
development plans;
- Adjacent to Crescent Point's Kaybob Duvernay assets, providing
opportunity for operational efficiencies;
- $1.7 billion of tax pools to
further enhance long-term excess cash flow generation; and
- Low Scope 1 emissions intensity of less than 0.01
tCO2e/boe.
Type wells for the acquired assets are expected to payout in
approximately 10 months from the initial on-stream date, based on
wells booked by the independent engineers and assuming current
commodity prices. These wells are also economic at low commodity
prices with break-evens below US$40/bbl WTI. Returns and economics from these
wells rank in the top quartile within the Company's portfolio,
along with the Kaybob Duvernay asset, providing additional
flexibility within its capital allocation framework. Crescent Point
will seek to further enhance these returns over time, as it has
done when entering other resource plays.
Upon closing, the Company's pro-forma decline rate is expected
to remain below 30 percent. Crescent Point plans to manage the
acquired Montney assets in a
disciplined manner, maintaining a conservative production profile
and targeting a low decline rate to maximize long-term excess cash
flow generation and return of capital for shareholders.
Pro-forma this Acquisition, the Company's total inventory of
premium locations will increase to 15 years, based on the long-term
development plans for its assets.
The Transaction is anticipated to close during second quarter
2023, subject to regulatory approvals and customary closing
conditions.
|
All financial figures
are approximate and in Canadian dollars unless otherwise noted.
This press release contains forward-looking information and
references to specified financial measures including: excess cash
flow, excess cash flow per share, adjusted funds flow, adjusted
funds flow per share, leverage ratio, discretionary excess cash
flow, total return of capital, recycle ratio, base dividend and net
debt. Refer to the Specified Financial Measures section in this
press release for further information. Significant related
assumptions and risk factors, and reconciliations are described
under the Specified Financial Measures and Forward-Looking
Statements sections of this press release.
|
ACCRETION AND RETURN OF CAPITAL TO
SHAREHOLDERS
The Acquisition is expected to be immediately accretive on all
per share metrics. In the 12-month period following the closing of
the Acquisition, adjusted funds flow and excess cash flow per share
are expected to increase by approximately 20 percent.
Based on this expected accretion, this Acquisition is also
immediately accretive to the Company's total return of capital
offering. The Company's long-term return of capital profile has
also been enhanced through this Acquisition with a significant
addition of new premium drilling locations.
In addition to its base dividend, Crescent Point will continue
to return 50 percent of its discretionary excess cash flow to its
shareholders, or approximately 60 percent of its excess cash
flow.
Crescent Point's goal is to increase its base dividend over
time, as part of its framework that targets dividend sustainability
at lower commodity prices. The Company expects to revisit its base
dividend as it continues to strengthen its balance sheet. Share
repurchases remain Crescent Point's current preferred method for
additional return of capital, after its base dividend.
This Transaction is also accretive to Crescent Point's Proved
plus Probable ("2P") net asset value per share by approximately
seven percent, based on year-end 2022 independent engineering
pricing.
TRANSACTION METRICS
Based on production of approximately 38,000 boe/d and assuming
US$70/bbl to US$75/bbl WTI and $3.50/mcf AECO, the Transaction metrics are as
follows:
- 3.2 to 3.4 times annual net operating income;
- $44,740 per flowing boe; and
- $8.23 per boe of 2P reserves of
206.7 MMboe, as assigned by the independent evaluator McDaniel
& Associates Consultants Ltd. Including approximately
$1.7 billion of undiscounted future
development capital, the Acquisition equates to $16.47 per boe of 2P reserves, resulting in a
recycle ratio of approximately 2.2 to 2.3 times.
The net present value ("NPV") of the Proved ("1P") and 2P
reserves of the acquired assets total approximately $1.6 billion and $2.4
billion respectively, based on year-end 2022 independent
engineering pricing. The reserves attributed to the acquired assets
are based on 163 net booked locations, or approximately 25 percent
of the total 600 internally identified net locations.
BALANCE SHEET AND FINANCIAL
FLEXIBILITY
The $1.7 billion purchase price
for the Acquisition will be paid in cash, which is expected to be
funded through the Company's existing credit facilities. To provide
additional liquidity, Crescent Point has also implemented a new
two-year revolving credit facility for $400
million. At closing, the Company's unutilized credit
capacity is expected to total approximately $850 million.
Crescent Point's pro-forma leverage ratio is expected to be
approximately 1.3 times adjusted funds flow at closing and 1.0
times at year end 2023, based on US$75/bbl WTI. Under a lower price scenario of
US$65/bbl WTI, the Company expects to
exit 2023 with a leverage ratio of less than 1.3 times.
In addition to the significant excess cash flow generation that
the Company will utilize to pay down debt, Crescent Point will also
seek to further strengthen its balance sheet through a disciplined
disposition strategy. Under this strategy, the Company will pursue
the potential sale of one or more of its assets. In aggregate,
Crescent Point is looking to reduce its net debt by approximately
$1.0 billion over the next 12 months.
Crescent Point's long-term goal is to maintain significant balance
sheet strength, targeting a leverage ratio of less than 1.0 times
in a low commodity price environment.
Based on current commodity contracts in place, Crescent Point
has hedged over 10 percent of its pro-forma production for the
remainder of 2023 with additional hedges extending into 2024. The
Company will remain disciplined in its approach to layering on
additional protection in the context of commodity prices.
UPDATED 2023 GUIDANCE AND
FIVE-YEAR OUTLOOK
Crescent Point's revised 2023 annual guidance, which
incorporates the impact of the Acquisition following the closing
date, includes annual average production of 160,000 to 166,000
boe/d and development capital expenditures of $1.15 to $1.25
billion. This budget, including the base dividend, continues
to be fully funded at approximately US$50/bbl WTI for the remainder of the year.
The revised 2023 capital expenditures budget incorporates
approximately $150 million of
development capital expenditures associated with the newly acquired
assets. Crescent Point plans to manage the Montney assets by drilling approximately 25
wells per year, which requires approximately $250 million of annual capital expenditures,
inclusive of facilities and infrastructure spending.
The Company's production forecast in its five-year plan is now
expected to grow to 195,000 boe/d by 2027. This forecast is
expected to generate approximately $3.6
billion to $5.2 billion of
cumulative excess cash flow ($6.53 to
$9.57 per share), at US$65/bbl to US$75/bbl WTI, representing an increase of
approximately 20 percent in comparison to its prior outlook.
Crescent Point's Kaybob Duvernay and Montney assets are expected to represent
approximately 45 percent of the Company's pro-forma total
production at closing and increasing to approximately 60 percent
within its five-year plan. This plan remains disciplined with a
continued focus on returns and long-term sustainability.
FINANCIAL ADVISORS
RBC Capital Markets is acting as financial advisor to Crescent
Point on the Transaction and has provided a verbal opinion to
Crescent Point's Board of Directors to the effect that, as of the
date of such opinion and based upon and subject to the assumptions,
limitations and qualifications set forth therein, the consideration
to be paid by Crescent Point pursuant to the Transaction is fair
from a financial point of view to Crescent Point. BMO Capital
Markets and Scotiabank are acting as strategic advisors to Crescent
Point.
The Bank of Nova Scotia and
Royal Bank of Canada are acting as
Co-lead Arrangers and Joint Bookrunners on the Company's new
revolving credit facility.
CONFERENCE CALL DETAILS
Crescent Point management will host a conference call on
Tuesday, March 28, 2023 at
6:30 a.m. MT (8:30 a.m. ET) to discuss the announced
Acquisition. A slide deck will accompany the conference call and
can be found on Crescent Point's website.
Participants can listen to this event online via webcast.
The conference call can be accessed without operator assistance by
registering online to receive an instant automated call back.
Alternatively, the conference call can be accessed with operator
assistance by dialing 1–888–390–0605. The webcast will be archived
for replay and can be accessed on Crescent Point's conference calls
and webcasts webpage. 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 on Crescent Point's website.
2023 GUIDANCE
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Prior
|
Revised
|
Total Annual Average
Production (boe/d) (1)
|
138,000 –
142,000
|
160,000 –
166,000
|
|
|
|
Capital
Expenditures
|
|
|
Development capital
expenditures ($ millions)
|
$1,000 -
$1,100
|
$1,150 -
$1,250
|
Capitalized
administration ($ millions)
|
$40
|
$40
|
Total ($
millions) (2)
|
$1,040 -
$1,140
|
$1,190 -
$1,290
|
|
|
|
Other Information
for 2023 Guidance
|
|
|
Reclamation activities
($ millions) (3)
|
$40
|
$40
|
Capital lease payments
($ millions)
|
$20
|
$20
|
Annual operating
expenses ($/boe)
|
$14.25 -
$15.25
|
$13.75 -
$14.75
|
Royalties
|
13.75% -
14.25%
|
13.25% -
13.75%
|
1)
|
The revised total
annual average production (boe/d) is comprised of approximately 75%
Oil, Condensate & NGLs and 25% Natural Gas
|
2)
|
Land expenditures and
net property acquisitions and dispositions are not included.
Revised development capital expenditures is allocated as follows:
approximately 90% drilling & development and 10% facilities
& seismic
|
3)
|
Reflects Crescent
Point's portion of its expected total budget
|
RETURN OF CAPITAL OUTLOOK
Base
Dividend
|
|
Current quarterly base
dividend per share
|
$0.10
|
Additional Return of
Capital
|
|
% of discretionary
excess cash flow (1) (2)
|
50 %
|
1)
|
Discretionary excess
cash flow is calculated as excess cash flow less base
dividends
|
2)
|
This % is part of a
framework that targets to return up to 50% of discretionary excess
cash flow to shareholders
|
Specified Financial
Measures
Throughout this press release, the Company uses the terms
"adjusted funds flow" (equivalent to "adjusted funds flow from
operations"), "adjusted funds flow per share", "excess cash flow",
"discretionary excess cash flow", "excess cash flow per share",
"net debt" and "net debt to adjusted funds flow" (equivalent to
"net debt to adjusted funds flow from operations" and "leverage
ratio"), "base dividends", "total return of capital" and "recycle
ratio". 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. For
information on the composition of these measures and how the
Company uses these measures, refer to the Specified Financial
Measures section of the Company's MD&A for the year ended
December 31, 2022, which section is
incorporated herein by reference, and available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar. There are no
significant differences in the calculations between historical and
forward-looking specified financial measures.
The most directly comparable financial measure for adjusted
funds flow from operations, excess cash flow and discretionary
excess cash flow disclosed in the Company's primary financial
statements is cash flow from operating activities, which for the
year ended December 31, 2022, was $2.19 billion. The most
directly comparable financial measure for net debt disclosed in the
Company's financial statements is long-term debt, which for the
year ended December 31, 2022, was
$1.44 billion. The most directly
comparable financial measure for base dividends disclosed in the
Company's primary financial statements is dividends declared, which
for the year ended December 31, 2022
was $200.6 million. For the year
ended December 31, 2022, adjusted
funds flow from operations, excess cash flow, discretionary excess
cash flow, net debt and base dividends were $2.23 billion, $1.15
billion, $1.00 billion,
$1.15 billion and $152.2 million, respectively.
Excess cash flow and discretionary excess cash flow forecasted
for 2023 to 2027 are forward-looking non-GAAP measures and are
calculated consistently with the measures disclosed in the
Company's MD&A. Refer to the Specified Financial Measures
section of the Company's MD&A for the year ended December 31, 2022.
Excess cash flow per share is a non-GAAP ratio and calculated as
excess cash flow divided by the number of shares outstanding.
Excess cash flow per share presents a measure of financial
performance to assess the ability of the Company to finance
dividends, potential share repurchases, debt repayments and
returns-based growth. This measure is based on current shares
outstanding.
Adjusted funds flow per share is a supplementary financial
measure and is calculated as adjusted funds flow divided by the
number of shares outstanding. This measure is based on current
shares outstanding.
Total return of capital is a supplementary financial measure and
is comprised of base dividends, special dividends and share
repurchases, adjusted for the timing of special dividend
payments.
Recycle ratio is a non-GAAP ratio and is calculated as operating
netback before hedging divided by FD&A costs. Recycle ratios
may not be comparable year-over-year given significant changes
executed over the last three years. Recycle ratio is a common
metric used in the oil and gas industry and is used to measure
profitability on a per boe basis.
Management believes the presentation of the specified financial
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.
Notice to US Readers
The oil and natural gas reserves contained in this press release
have generally been prepared in accordance with Canadian disclosure
standards, which are not comparable in all respects of United States or other foreign disclosure
standards. For example, the United States Securities and Exchange
Commission (the "SEC") generally permits oil and gas issuers, in
their filings with the SEC, to disclose only proved reserves (as
defined in SEC rules), but permits the optional disclosure of
"probable reserves" (as defined in SEC rules). Canadian securities
laws require oil and gas issuers, in their filings with Canadian
securities regulators, to disclose not only proved reserves (which
are defined differently from the SEC rules) but also probable, as
defined in NI 51-101. Accordingly, "proved reserves" and "probable
reserves" disclosed in this news release may not be comparable to
US standards, and in this news release, Crescent Point has
disclosed reserves designated as "proved plus probable reserves".
Probable reserves are higher-risk and are generally believed to be
less likely to be accurately estimated or recovered than proved
reserves. In addition, under Canadian disclosure requirements and
industry practice, reserves and production are reported using gross
volumes, which are volumes prior to deduction of royalties and
similar payments. The SEC rules require reserves and production to
be presented using net volumes, after deduction of applicable
royalties and similar payments. Moreover, Crescent Point has
determined and disclosed estimated future net revenue from its
reserves using forecast prices and costs, whereas the SEC rules
require that reserves be estimated using a 12-month average price,
calculated as the arithmetic average of the first-day-of-the-month
price for each month within the 12-month period prior to the end of
the reporting period. Consequently, Crescent Point's reserve
estimates and production volumes in this news release may not be
comparable to those made by companies using United States reporting and disclosure
standards. Further, the SEC rules are based on unescalated costs
and forecasts. 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",
"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:
Crescent Point's long-term strategy; Crescent Point's inventory
depth, decline rate, excess cash flow and other expected
characteristics following closing of the Transaction; the acquired
assets' characteristics, including but not limited to over 20 years
of premium drilling locations and the increase to the Company's
inventory of premium locations to approximately 15 years, based on
the long-term development plan for its assets; goal of
approximately $1.0 billion of debt
reduction over the next 12 months, including asset dispositions;
commitment to balance sheet strength; commitment to return
approximately 60 percent of excess cash flow to shareholders
expected accretion; Crescent Point will continue to return 50
percent of its discretionary excess cash flow to its shareholders,
including the base dividend; five-year plan production growing to
195,000 boe/d by 2027, generating $3.6 to $5.2
billion ($6.53 to $9.57 per share) of cumulative excess cash flow
at US$65/bbl to US$75/bbl WTI; leverage ratio of 1.3 times
adjusted funds flow at closing and 1.0 times at year-end 2023;
additional non-core asset dispositions over time; key
infrastructure and well licenses in place to support future
development plans; opportunity for operational efficiencies; timing
for payout of type wells in the Montney, assuming current commodity prices;
Montney wells are economic at low
commodity prices with break-evens of below US$40/bbl WTI; returns form the acquired assets
and enhancing them over time; the Company's pro-forma decline rate
upon closing; plans to manage the acquired Montney assets in a disciplined manner with a
conservative production profile to target a low decline rate and
maximize long-term excess cash flow generation and return of
capital for shareholders; the Transaction's anticipated closing
date; NPV of the acquired assets; the Acquisition is expected to be
immediately accretive on all per share metrics; in the 12-month
period following the closing of the Acquisition, adjusted funds
flow and excess cash flow per share are expected to increase by
approximately 20 percent; long-term return of capital profile has
also been enhanced through this Acquisition; funding of purchase
price; expectations for new term debt facility; under a lower price
scenario of US$65/bbl WTI, the
Company expects to exit the year with a leverage ratio of less than
1.3 times; Crescent Point's long-term debt goal of maintaining
significant balance sheet strength, and targeting a leverage ratio
of less than 1.0 times in a low commodity price environment; the
extent of hedges, plans and expectations; development expenditures
capital budget continues to be fully funded for the remainder of
the year at approximately US$50/bbl
WTI, including the base dividend; revised 2023 capital expenditures
budget incorporates approximately $150
million of development capital expenditures associated with
the newly acquired assets; Crescent Point plans to manage the
Montney assets including expected
wells drilled and related annual capital expenditures; Kaybob
Duvernay and Montney assets
pro-forma corporate total production at closing and portion within
five-year plan; continued focus on returns and long-term
sustainability; Crescent Point's goal to continually increase its
base dividend over time, as part of its framework that targets
dividend sustainability at lower commodity prices; revisiting base
dividend as balance sheet strengthens; and Crescent Point's 2023
production and development capital expenditures guidance; and other
information for Crescent Point's 2023 guidance, including
capitalized administration, reclamation activities, capital lease
payments, annual operating expenses and royalties; and return of
capital outlook, including base dividend, and the additional return
of capital targeted as a percentage of discretionary excess cash
flow.
Statements relating to "reserves" are also deemed to be
forward-looking statements, as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves
described exist in the quantities predicted or estimated and that
the reserves can be profitably produced in the future. Actual
reserve values may be greater than or less than the estimates
provided herein. Unless otherwise noted, reserves referenced herein
are given as at December 31, 2022.
Also, estimates of reserves and future net revenue for individual
properties may not reflect the same confidence level as estimates
and future net revenue for all properties due to the effect of
aggregation. All required reserve information for the Company is
contained in its Annual Information Form for the year ended
December 31, 2022 which is accessible
at www.sedar.com and EDGAR (accessible at
www.sec.gov/edgar) and further supplemented by Material Change
Reports, as applicable.
With respect to disclosure contained herein regarding resources
other than reserves, there is uncertainty that it will be
commercially viable to produce any portion of the resources and
there is significant uncertainty regarding the ultimate
recoverability of such resources.
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,
2022 under "Risk Factors" and our Management's Discussion
and Analysis for the year ended December 31,
2022, under the headings "Risk Factors" and "Forward-Looking
Information". The material assumptions are disclosed in the
Management's Discussion and Analysis for the year ended
December 31, 2022, under the headings
"Overview", "Commodity Derivatives", "Liquidity and Capital
Resources" and "Guidance". In addition, risk factors include:
transactional risks, 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; uncertainty regarding the
benefits and costs of acquisitions and dispositions; failure to
complete 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; uncertainties associated with estimating
oil and natural gas reserves; 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,
including as a result of the COVID-19 pandemic; uncertainties
associated with regulatory approvals; uncertainty of government
policy changes; uncertainty regarding the benefits and costs of
dispositions; failure to complete acquisitions and dispositions;
uncertainties associated with credit facilities and counterparty
credit risk; 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.
Included in this press release are Crescent Point's 2023
guidance in respect of capital expenditures and average annual
production and five-year plan information which are based on
various assumptions as to production levels, commodity prices and
other assumptions and are provided for illustration only and are
based on budgets and forecasts that have not been finalized and are
subject to a variety of contingencies including prior years'
results. The Company's return of capital framework is based on
certain facts, expectations and assumptions that may change and,
therefore, this framework may be amended as circumstances
necessitate or require. To the extent such estimates constitute a
"financial outlook" or "future oriented financial information" in
this presentation, as defined by applicable securities legislation,
such information 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.
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.
Reserves and Drilling
Data
Where applicable, a barrels of oil equivalent ("boe") conversion
rate of six thousand cubic feet of natural gas to one barrel of oil
equivalent (6Mcf:1bbl) has been used based on an energy equivalent
conversion method primarily applicable at the burner tip and does
not represent a value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil as compared to
natural gas is significantly different than the energy equivalency
of the 6:1 conversion ratio, utilizing the 6:1 conversion ratio may
be misleading as an indication of value.
This press release contains metrics commonly used in the oil and
natural gas industry, including "recycle ratio", "future
development capital", and "payout". These terms do not have a
standardized meaning and may not be comparable to similar measures
presented by other companies and, therefore, should not be used to
make such comparisons. Readers are cautioned as to the reliability
of oil and gas metrics used in this press release. Management uses
these oil and gas metrics for its own performance measurements and
to provide investors with measures to compare the Company's
performance over time; however, such measures are not reliable
indicators of the Company's future performance, which may not
compare to the Company's performance in previous periods, and
therefore should not be unduly relied upon.
Recycle ratio is calculated as operating netback divided by
finding and development (F&D) costs. Management uses recycle
ratio for its own performance measurements and to provide
shareholders with measures to compare the Company's performance
over time.
Future development capital reflects the best estimate of the
cost required to bring undeveloped proved and probable reserves on
production. Changes in FDC can result from acquisition and
disposition activities, development plans or changes in capital
efficiencies due to inflation or reductions in service costs and/or
improvements to drilling and completion methods.
Payout is the point at which all costs associated with leasing,
exploring, drilling and operating have been recovered from the
production of a well. It is an indication of profitability.
Certain terms used herein but not defined are defined in
National Instrument 51-101 – Standards of Disclosure for Oil and
Gas Activities ("NI 51-101"), CSA Staff Notice 51-324 – Revised
Glossary to NI 51-101 Standards of Disclosure for Oil and Gas
Activities ("CSA Staff Notice 51-324") and/or the COGE Handbook
and, unless the context otherwise requires, shall have the same
meanings herein as in NI 51-101, CSA Staff Notice 51-324 and the
COGE Handbook, as the case may be.
There are numerous uncertainties inherent in estimating
quantities of crude oil, natural gas and NGL reserves and the
future cash flows attributed to such reserves. The reserve and
associated cash flow information set forth above are estimates
only. In general, estimates of economically recoverable crude oil,
natural gas and NGL reserves and the future net cash flows
therefrom are based upon a number of variable factors and
assumptions, such as historical production from the properties,
production rates, ultimate reserve recovery, timing and amount of
capital expenditures, marketability of oil and natural gas, royalty
rates, the assumed effects of regulation by governmental agencies
and future operating costs, all of which may vary materially. For
these reasons, estimates of the economically recoverable crude oil,
NGL and natural gas reserves attributable to any particular group
of properties, classification of such reserves based on risk of
recovery and estimates of future net revenues associated with
reserves prepared by different engineers, or by the same engineers
at different times, may vary. The Company's actual production,
revenues, taxes and development and operating expenditures with
respect to its reserves will vary from estimates thereof and such
variations could be material.
The estimates for reserves for individual properties may not
reflect the same confidence level as estimates of reserves for all
properties due to the effects of aggregation. This press
release contains estimates of the net present value of the
Company's future net revenue from our reserves. Such amounts do not
represent the fair market value of our reserves. The recovery and
reserve estimates of the Company's reserves provided herein are
estimates only and there is no guarantee that the estimated
reserves will be recovered.
Net asset value (NAV) or 2P NAV is a snapshot in time as at
year-end, and is based on the Company's, or the acquired assets',
reserves evaluated using the independent evaluators' forecast for
future prices, costs and foreign exchange rates. NAV is calculated
on a before tax basis and is the sum of the present value of proved
and probable reserves based on three evaluators' average (McDaniel,
GLJ Ltd. and Sproule Associates Ltd.) December 31, 2022 escalated price forecast, the
fair value for the Company's oil and gas hedges based on such
December 31, 2022 escalated price
forecast, and less outstanding net debt.
The acquired assets production of 38,000 boe/d consists of 40%
light crude oil, 13% NGLs and 47% shale gas.
The reserve data provided in this news release presents only a
portion of the disclosure required under National Instrument
51-101. This press release discloses approximately 600 net drilling
locations associated with the acquired assets, of which 163 are
booked as proved plus probable and approximately 437 are not booked
at year-end 2022. This press release references over 20 years of
inventory in the Montney play and
approximately 15 years of premium locations in corporate inventory,
which amounts include booked and unbooked locations.
NI 51-101 includes condensate within the product type of natural
gas liquids. The Company has disclosed condensate separately from
other natural gas liquids in this press release since the price of
condensate as compared to other natural gas liquids is currently
significantly higher and the Company believes that presenting the
two commodities separately provides a more accurate description of
its operations and results therefrom. This press release discloses
potential net drilling locations, which are not yet booked. The
Company's ability to drill and develop these locations and the
drilling locations on which the Company actually drills wells
depends on a number of uncertainties and factors, including, but
not limited to, the availability of capital, equipment and
personnel, oil and natural gas prices, costs, inclement weather,
seasonal restrictions, drilling results, additional geological,
geophysical and reservoir information that is obtained, production
rate recovery, gathering system and transportation constraints, the
net price received for commodities produced, regulatory approvals
and regulatory changes. As a result of these uncertainties,
there can be no assurance that the potential future drilling
locations that the Company has identified will ever be drilled and,
if drilled, that such locations will result in additional crude
oil, natural gas or NGLs produced. As such, the Company's actual
drilling activities may differ materially from those presently
identified, which could adversely affect the company's
business.
FOR MORE INFORMATION ON CRESCENT POINT ENERGY, PLEASE
CONTACT:
Shant Madian, Vice
President, Capital Markets, or
Sarfraz Somani, Manager,
Investor Relations
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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content:https://www.prnewswire.com/news-releases/crescent-point-announces-strategic-montney-acquisition-301782904.html
SOURCE Crescent Point Energy Corp.