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Crescent Point Energy First Quarter 2022 Results

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   |    Friday,May 13,2022

Crescent Point Energy Corp. reported its Q1 2022 results..


  • Increasing quarterly dividend by over 40 percent to $0.065 per share, representing an annualized dividend of $0.26 per share.
  • Repurchased approximately 13.5 million shares since December 2021 for total consideration of approximately $110 million.
  • Generated approximately $290 million of excess cash flow in first quarter, supporting further debt reduction and return of capital.
  • On-track to achieve near-term net debt target of $1.3 billion during third quarter 2022 at current commodity prices.
  • Expect to generate significant excess cash flow of $1.2 to $1.4 billion in 2022 at US$80/bbl to US$100/bbl WTI.
  • Achieved emissions intensity reduction target of 50 percent well ahead of 2025 timeframe, demonstrating strong ESG practices.

Craig Bryksa, President and CEO of Crescent Point, said: "As a result of our execution, improving financial position and focus on returning capital to shareholders, we are further increasing our dividend. We also remain active on our share repurchase plan given our compelling valuation and the investment opportunity it provides to enhance our per share metrics. Based on our revised dividend and planned share repurchases, we expect to return approximately 30 percent of our excess cash flow to shareholders during the first half of the year. As we move closer to attaining our near-term net debt target, we expect to release an updated return of capital framework and will be in a better position to further increase the level of excess cash flow currently returned to shareholders."

Operational Highlights:

  • Average production for the quarter ended March 31, 2022 was 132,788 boe/d, comprised of over 80 percent oil and liquids.
  • During first quarter 2022, Crescent Point commenced completion activities on its second fully operated multi-well pad in the Kaybob Duvernay, which it expects to bring on production in second quarter 2022. Initial production rates from the Company's first fully operated multi-well pad in the play, which were previously released, remain strong and continue to demonstrate the high impact nature of the asset. Crescent Point also expects to bring on production the final multi-well pad completed as part of its previously announced farm-in agreement with a Kaybob Duvernay operator in late second quarter. In aggregate, the Company expects to bring on production 18 gross (16 net) additional wells in the Kaybob Duvernay through the balance of the year.
  • In the Kaybob Duvernay, the Company has reduced drilling days by over 30 percent since entering the play, averaging fewer than 15 days per well on its most recent pad. Crescent Point has also enhanced efficiencies in North Dakota by lowering drilling days by 15 percent since 2021. This represents less than 10 days of drilling, which is a new record for the Company in the play.
  • Through its continued commitment to Environmental, Social and Governance ("ESG") practices, Crescent Point has surpassed its emissions intensity reduction target of 50 percent relative to the Company's 2017 baseline, reaching an emissions intensity of approximately 0.02 tCO2e/boe. This achievement is well ahead of its expected timeframe of 2025 and also includes a 70 percent reduction in absolute methane emissions. Crescent Point is currently working to establish new environmental targets and expects to provide more details along with its sustainability report in the early second half of 2022.

Financial Highlights:

  • Adjusted funds flow totaled $534.0 million during first quarter 2022, or $0.92 per share diluted, driven by a strong operating netback of $62.33 per boe.
  • For the quarter ended March 31, 2022, development capital expenditures, which included drilling and development, facilities and seismic costs, totaled $204.3 million.
  • Net debt as at March 31, 2022 equated to approximately $1.8 billion, reflecting approximately $230 million of net debt reduction in the quarter. The Company retains significant liquidity with an unutilized credit capacity of over $2.0 billion as at March 31, 2022.
  • Crescent Point reported net income of approximately $1.2 billion for first quarter 2022, primarily driven by a $1.5 billion ($1.2 billion after-tax) reversal of non-cash impairment resulting from an increase in forward commodity prices and the independent engineers' price forecast. Adjusted net earnings from operations during first quarter was $240.9 million.

Return of Capital Highlights:

  • Given its continued execution and the recent strength in commodity prices, the Company now expects to attain its near-term net debt target of approximately $1.3 billion during third quarter 2022. Consistent with Crescent Point's focus on returning capital to shareholders, the Board of Directors ("Board") has approved and declared a second quarter 2022 dividend increase to $0.065 per share to be paid on July 4, 2022 to shareholders of record on June 15, 2022. This equates to an annualized dividend of $0.26 per share, representing an increase of over 40 percent from the prior level. The Company's dividend policy and payout ratio is based on a framework that targets dividend sustainability at lower commodity prices, allows for flexibility in its capital allocation process and the potential for dividend growth over time.
  • Since initiating its planned share repurchases in December 2021, Crescent Point has repurchased for cancellation approximately 13.5 million shares to-date for total consideration of approximately $110 million. This includes approximately 7.3 million shares repurchased during first quarter 2022 for total consideration of approximately $62 million. The Company is on track to execute the remainder of its previously announced share repurchase plan of up to $150 million by mid-2022. Crescent Point plans to revisit its budget for share repurchases for the second half of the year as part of an updated return of capital framework. The Company has approval to repurchase, for cancellation, up to 10 percent of its public float under its normal course issuer bid ("NCIB") which expires on March 8, 2023.


First quarter 2022 results demonstrated continued capital discipline, resulting in significant excess cash flow generation and the opportunity to create additional value for shareholders.

The Company now expects to generate $1.2 to $1.4 billion of excess cash flow in 2022, at US$80/bbl to US$100/bbl WTI for the remainder of the year, further benefiting in the current environment from its high netback production and significant tax pools.

Crescent Point's 2022 annual average production guidance of 133,000 to 137,000 boe/d, remains unchanged, despite a severe storm affecting electricity distribution in North Dakota during late April that has temporarily impacted the Company's operations. Based on progress to-date and expectations from the local power utility, Crescent Point expects to fully restore the remainder of its North Dakota production by the end of May. The Company estimates that up to 1,500 boe/d of annual average production will be impacted as a result of this unexpected downtime, or approximately one percent of its annual guidance. Crescent Point continues to expect higher production during the second half of the year based on the schedule of its development program.

In light of the current commodity price environment, the Company's development capital expenditures guidance now assumes a slightly higher cost inflation assumption of up to 15 percent. As a result, Crescent Point has narrowed its 2022 development capital expenditures guidance to $875 to $900 million, which is within its prior range of $825 to $900 million.

The Company continues to realize internal efficiencies from its ongoing drilling and completions optimization and other initiatives, which are expected to partially offset higher inflation costs. Crescent Point has also controlled a significant portion of its capital costs through its supply chain management, providing further cost predictability in current environment. The Company will continue to monitor its cost assumptions, net of any potential efficiencies, as the year progresses.

Crescent Point's balance sheet continues to re-rate at a rapid pace given its significant excess cash flow generation in the current commodity price environment. Based on the Company's revised dividend and planned share repurchases, approximately 30 percent of its excess cash flow is expected to be returned to shareholders during the first half of the year. As Crescent Point moves closer to attaining its near-term net debt target, it will be in a position to further increase the level of excess cash flow it currently returns to shareholders.

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