PR Newswire
CALGARY, AB, July 26, 2023
CALGARY, AB, July 26, 2023 /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, 2023.
KEY HIGHLIGHTS
- Closed the strategic acquisition of Alberta Montney assets, adding 600 premium locations and enhancing excess cash flow profile.
- Maintained 2023 production and capital expenditures guidance despite recent wildfires, highlighting operational outperformance.
- Generated $278 million of excess cash flow in second quarter, supporting debt reduction and return of capital to shareholders.
- Returned $167 million, or 60 percent of excess cash flow, to shareholders during the quarter.
- Repurchased 16.5 million shares year-to-date, including 9.7 million shares during the quarter.
- Continue to achieve strong results in Alberta Montney, which recently included four of the top five producing wells in the WCSB.
- Released fifth annual Sustainability Report, highlighting record safety scores and continued progress on environmental targets.
"Our second quarter and year-to-date results demonstrate our strategic approach to building our asset portfolio and generating long-term returns for shareholders", said Craig Bryksa, President and CEO of Crescent Point. "Through our recent Alberta Montney acquisition, we have bolstered our portfolio of high-return, scalable drilling locations while enhancing our per-share metrics and return of capital profile. This acquisition also provides us with the opportunity to create additional value for shareholders over time through productivity enhancements, cost efficiencies and reserves growth."
FINANCIAL HIGHLIGHTS
- Adjusted funds flow totaled $552.6 million during second quarter 2023, or $1.01 per share diluted, driven by a strong operating netback of $41.02 per boe.
- Development capital expenditures for the quarter, which included drilling and development, facilities and seismic costs, totaled $230.1 million.
- Crescent Point's net debt as at June 30, 2023 totaled approximately $3.0 billion, or less than 1.4 times adjusted funds flow. The Company's net debt includes cash consideration of $1.7 billion paid for the acquisition of Alberta Montney assets, which closed on May 10, 2023.
- During second quarter, Crescent Point repaid senior note maturities totaling $445 million. The Company's next senior note maturities, totaling $316 million, do not occur until second quarter 2024.
- Crescent Point currently has over 20 percent of its oil and liquids production hedged for the second half of 2023, net of royalty interest. The Company has also hedged approximately 15 percent of its natural gas production for the second half of the year, with hedges extending to the end of 2024. Crescent Point will continue to layer on additional protection in the context of market conditions.
- Net income for the quarter totaled $212.3 million, or $0.39 per share diluted.
RETURN OF CAPITAL HIGHLIGHTS
- Crescent Point's total return of capital to shareholders in second quarter 2023, including the base dividend, was $166.7 million, or 60 percent of its excess cash flow. In the first half of 2023, the Company returned a total of approximately $270 million.
- Share repurchases continue to account for the largest allocation within Crescent Point's return of capital framework. During second quarter, the Company repurchased 9.7 million shares for $93.1 million. Subsequent to the quarter, Crescent Point repurchased an additional 1.7 million shares for $16.0 million for a total of 16.5 million shares year-to-date.
- The Company's Board of Directors ("Board") has declared a special cash dividend, based on second quarter 2023 results, of $0.035 per share payable on August 15, 2023, to shareholders of record as of the close of business on August 8, 2023.
- Subsequent to the quarter, the Board also declared a quarterly cash base dividend of $0.10 per share payable on October 2, 2023, to shareholders of record on September 15, 2023.
OPERATIONAL HIGHLIGHTS
- Average production in second quarter 2023 was 155,031 boe/d (78% oil and liquids), which included the impact of approximately 7,000 boe/d of downtime in the Kaybob Duvernay related to the recent Alberta wildfires. Due to the Company's strong operational execution and production outperformance from its Kaybob Duvernay asset in the first half of the year, Crescent Point was able to maintain its annual average production guidance with its capital expenditures budget remaining unchanged.
- During late 2022 and in the first half of 2023, Crescent Point brought on stream 13 wells across three multi-well pads in the Kaybob Duvernay. These wells achieved significant 30-day initial production ("IP30") rates averaging approximately 1,150 boe/d per well (58% condensate, 13% NGLs) and continue to outperform type wells in the area with recent 90-day initial production ("IP90") rates averaging approximately 1,100 boe/d per well (54% condensate, 14% NGLs). Crescent Point plans to drill 15 wells in the Kaybob Duvernay during the second half of 2023, adding a second rig in fourth quarter to further accelerate the development of its inventory.
- In second quarter 2023, three multi-well pads with a total of 11 wells were brought on stream in the Alberta Montney, delivering strong IP30 rates averaging approximately 1,050 boe/d per well (69% light crude oil, 5% NGLs). These wells continue to trend higher post initial cleanup and are currently averaging approximately 1,300 boe/d (57% light crude oil, 8% NGLs). During the month of May, Crescent Point's Montney results included four of the top five oil and liquids producing wells in the Western Canadian Sedimentary Basin ("WCSB").
- The Company's highest producing wells in the Alberta Montney were in its Gold Creek West area, which came on stream during the month of June, achieving IP30 rates of approximately 1,500 boe/d (76% light crude oil, 3% NGLs). These wells are currently averaging approximately 1,600 boe/d (72% light crude oil, 4% NGLs), similar to a recent Company well in the same area which generated an IP30 and IP90 rate of approximately 1,900 boe/d (86% light crude oil, 2% NGLs). Crescent Point remains on track to drill 15 wells in the play in 2023 based on a one rig program, with the potential to add a second rig over time.
- During the quarter, the Company released its 2023 Annual Sustainability Report highlighting Crescent Point's strong performance and strategic approach in managing its environmental, social and governance ("ESG") initiatives. The Company achieved its safest year on record in 2022, demonstrating Crescent Point's strong safety culture and active engagement with staff and contractors. Over the past five years, the Company has significantly improved its environmental profile, including by reducing both its Scope 1 emissions intensity and asset retirement liabilities by approximately 50 percent. Crescent Point continues to progress toward each of its environmental targets which are centered around further reductions in emissions, freshwater use and inactive well inventory across its land base.
OUTLOOK
Crescent Point continues to execute operationally and remains on track to meet its 2023 annual average production guidance of 160,000 to 166,000 boe/d with development capital expenditures expected to be in-line with its budget of $1.15 to $1.25 billion.
In the second half of 2023, Crescent Point's production is expected to average approximately 179,000 boe/d, reflecting the recent Alberta Montney acquisition and continued momentum in the Kaybob Duvernay. This strong second half outlook is expected to generate over $1.0 billion of excess cash flow on an annualized basis at US$75/bbl WTI.
Crescent Point plans to return approximately 60 percent of its excess cash flow to shareholders, including its base dividend, with the balance directed toward debt reduction. The Company expects to exit the year with a leverage ratio of approximately 1.0 times adjusted funds flow, at US$75/bbl WTI, and will continue to evaluate asset dispositions to further reinforce its financial position.
Crescent Point is in the initial stages of its annual budgeting process and plans to provide a preliminary 2024 outlook along with an updated five-year plan this fall. The Company's capital allocation decisions remain driven by risk-adjusted returns with a continued focus on disciplined growth and generating excess cash flow. The Kaybob Duvernay and Alberta Montney assets, which rank in the top quartile in the Company's portfolio, are expected to garner a growing proportion of capital in future years, alongside continued investment in decline mitigation programs throughout Saskatchewan to further enhance Crescent Point's excess cash flow profile.
The Company's strategy is centered around creating sustainable long-term returns for shareholders through a combination of per share growth, return of capital and balance sheet strength.
CONFERENCE CALL DETAILS
Crescent Point management will hold a conference call on Wednesday, July 26, 2023 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. To join the call without operator assistance, participants may register online by entering their phone number to receive an instant automated call back. Alternatively, the conference call can be accessed with operated assistance by dialing 1‑888‑390‑0605. Participants will be able to take part in a question and answer session following management's opening remarks through both the webcast dashboard and the conference line.
The webcast will be archived for replay and can be accessed online at Crescent Point's conference calls and webcasts page. The replay will be available shortly after the completion of the call.
Shareholders and investors can also find the Company's most recent investor presentation on Crescent Point's website.
2023 GUIDANCE
Total Annual Average Production (boe/d) (1) | 160,000 - 166,000 |
Capital Expenditures | |
Development capital expenditures ($ millions) | $1,150 - $1,250 |
Capitalized administration ($ millions) | $40 |
Total ($ millions) (2) | $1,190 - $1,290 |
Other Information for 2023 Guidance | |
Reclamation activities ($ millions) (3) | $40 |
Capital lease payments ($ millions) | $20 |
Annual operating expenses ($/boe) | $13.75 - $14.75 |
Royalties | 13.25% - 13.75% |
1) | 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. Development capital expenditures spend is allocated on an approximate basis as follows: 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 | $0.10 |
Total Return of Capital (1) | |
% of excess cash flow | ~60% |
1) | Total return of capital is based on a framework that targets to return to shareholders the base dividend plus up to 50% of discretionary excess cash flow |
The Company's unaudited financial statements and management's discussion and analysis for the quarter ended June 30, 2023, will be available on the System for Electronic Document Analysis and Retrieval + ("SEDAR+") at www.sedarplus.com, on EDGAR at www.sec.gov/edgar and on Crescent Point's website at www.crescentpointenergy.com
FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended June 30 | Six months ended June 30 | |||
(Cdn$ millions except per share and per boe amounts) | 2023 | 2022 | 2023 | 2022 |
Financial | ||||
Cash flow from operating activities | 462.1 | 529.6 | 935.5 | 955.7 |
Adjusted funds flow from operations (1) | 552.6 | 599.1 | 1,077.5 | 1,133.1 |
Per share (1) (2) | 1.01 | 1.04 | 1.96 | 1.96 |
Net income | 212.3 | 331.5 | 429.0 | 1,515.1 |
Per share (2) | 0.39 | 0.58 | 0.78 | 2.62 |
Adjusted net earnings from operations (1) | 205.4 | 272.1 | 424.3 | 513.0 |
Per share (1) (2) | 0.38 | 0.47 | 0.77 | 0.89 |
Dividends declared | 54.8 | 37.1 | 71.9 | 36.9 |
Per share (2) | 0.100 | 0.065 | 0.132 | 0.065 |
Net debt (1) | 3,000.7 | 1,467.9 | 3,000.7 | 1,467.9 |
Net debt to adjusted funds flow from operations (1) (3) | 1.4 | 0.7 | 1.4 | 0.7 |
Weighted average shares outstanding | ||||
Basic | 543.0 | 571.4 | 545.9 | 574.2 |
Diluted | 545.3 | 575.9 | 549.0 | 579.2 |
Operating | ||||
Average daily production | ||||
Crude oil and condensate (bbls/d) | 101,347 | 91,250 | 97,045 | 92,106 |
NGLs (bbls/d) | 18,911 | 16,139 | 18,443 | 16,586 |
Natural gas (mcf/d) | 208,640 | 130,724 | 190,268 | 133,679 |
Total (boe/d) | 155,031 | 129,176 | 147,199 | 130,972 |
Average selling prices (4) | ||||
Crude oil and condensate ($/bbl) | 92.26 | 134.50 | 93.18 | 124.04 |
NGLs ($/bbl) | 26.45 | 50.57 | 32.16 | 49.17 |
Natural gas ($/mcf) | 2.81 | 8.02 | 3.46 | 6.77 |
Total ($/boe) | 67.31 | 109.44 | 69.93 | 100.36 |
Netback ($/boe) | ||||
Oil and gas sales | 67.31 | 109.44 | 69.93 | 100.36 |
Royalties | (8.79) | (14.69) | (9.33) | (13.46) |
Operating expenses | (14.40) | (15.36) | (14.85) | (14.73) |
Transportation expenses | (3.10) | (2.82) | (2.97) | (2.78) |
Operating netback (1) | 41.02 | 76.57 | 42.78 | 69.39 |
Realized gain (loss) on commodity derivatives | 1.79 | (22.17) | 0.67 | (17.97) |
Other (5) | (3.64) | (3.43) | (3.01) | (3.62) |
Adjusted funds flow from operations netback (1) | 39.17 | 50.97 | 40.44 | 47.80 |
Capital Expenditures | ||||
Capital acquisitions (6) | 1,702.7 | 0.3 | 2,074.7 | 1.2 |
Capital dispositions (6) | (8.4) | (37.8) | (11.0) | (40.7) |
Development capital expenditures | ||||
Drilling and development | 212.2 | 182.8 | 492.7 | 371.0 |
Facilities and seismic | 17.9 | 14.1 | 51.6 | 30.2 |
Total | 230.1 | 196.9 | 544.3 | 401.2 |
Land expenditures | 7.1 | 3.6 | 8.4 | 9.3 |
(1) | Specified financial measure that does not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section for further information. |
(2) | The per share amounts (with the exception of dividends per share) are the per share – diluted amounts. |
(3) | Net debt to adjusted funds flow from operations is calculated as the period end net debt divided by the sum of adjusted funds flow from operations for the trailing four quarters. |
(4) | The average selling prices reported are before realized derivatives and transportation. |
(5) | Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items. |
(6) | Capital acquisitions and dispositions represent total consideration for the transactions, including long-term debt and working capital assumed, and exclude transaction costs. |
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 from operations per share - diluted", "adjusted net earnings from operations", "adjusted net earnings from operations per share - diluted", "total return of capital", "excess cash flow", "discretionary excess cash flow", "base dividends", "net debt", "net debt to adjusted funds flow" (equivalent to "net debt to adjusted funds flow from operations" and "leverage ratio"), "total operating netback", "total netback", "operating netback", "netback", "adjusted funds flow from operations netback" and "adjusted working capital (surplus) deficiency". 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 period ended June 30, 2023, which section is incorporated herein by reference, and available on SEDAR+ at www.sedarplus.com and on EDGAR at www.sec.gov/edgar.
Adjusted funds flow from operations netback is a non-GAAP financial ratio and is calculated as adjusted funds flow from operations divided by total production. Adjusted funds flow from operations netback is a common metric used in the oil and gas industry and is used to measure operating results on a per boe basis.
The following table reconciles oil and gas sales to total operating netback, total netback and adjusted funds flow from operations netback:
Three months ended June 30 | Six months ended June 30 | |||||||||||
($ millions) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||
Oil and gas sales | 949.6 | 1,286.5 | (26) | 1,863.2 | 2,379.2 | (22) | ||||||
Royalties | (124.0) | (172.7) | (28) | (248.5) | (319.1) | (22) | ||||||
Operating expenses | (203.2) | (180.5) | 13 | (395.6) | (349.2) | 13 | ||||||
Transportation expenses | (43.7) | (33.2) | 32 | (79.2) | (65.8) | 20 | ||||||
Total operating netback | 578.7 | 900.1 | (36) | 1,139.9 | 1,645.1 | (31) | ||||||
Realized gain (loss) on commodity derivatives | 25.3 | (260.6) | (110) | 17.9 | (426.0) | (104) | ||||||
Total netback | 604.0 | 639.5 | (6) | 1,157.8 | 1,219.1 | (5) | ||||||
Other (1) | (51.4) | (40.4) | 27 | (80.3) | (86.0) | (7) | ||||||
Total adjusted funds flow from operations netback | 552.6 | 599.1 | (8) | 1,077.5 | 1,133.1 | (5) | ||||||
(1) | Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items. |
The following table reconciles dividends declared to base dividends:
Three months ended June 30 | Six months ended June 30 | |||||||||||
($ millions) | 2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||
Dividends declared (1) | 54.8 | 37.1 | 48 | 71.9 | 36.9 | 95 | ||||||
Dividend timing adjustment (2) | — | — | — | 55.1 | 26.1 | 111 | ||||||
Special dividends | — | — | — | (17.5) | — | — | ||||||
Base dividends | 54.8 | 37.1 | 48 | 109.5 | 63.0 | 74 | ||||||
(1) | Includes the impact of shares repurchased for cancellation under the NCIB on dividends payable. |
(2) | Dividends declared where the declaration date and record date are in different periods. |
The following table reconciles cash flow from operating activities to adjusted funds flow from operations, excess cash flow and discretionary excess cash flow:
Three months ended June 30 | Six months ended June 30 | |||||||||||
($ millions) | 2023 | 2022 (1) | % Change | 2023 | 2022 (1) | % Change | ||||||
Cash flow from operating activities | 462.1 | 529.6 | (13) | 935.5 | 955.7 | |||||||
