Quarterly / Earnings Reports | Fourth Quarter (4Q) Update | Reserves | Financial Results | Capital Markets | Capital Expenditure | Capital Expenditure - 2020 | 2020 Guidance

Crescent Point Energy Reports Fourth Quarter 2019 Results

Email    |    Print    |    Bookmark

You Need to login first

   |    Thursday,March 05,2020

Crescent Point Energy Corp. reported its operating and financial results for the year ended December 31, 2019.

Highlights:

• Successfully completed 2019 program on budget, demonstrating strong operational execution and capital discipline.
• Reduced net debt by approximately $1.25 billion in 2019, or $1.75 billion including closing of infrastructure sale in January 2020.
• Realized over $170 million of annual internal cost efficiencies across the organization, including continued improvement in operating expenses during fourth quarter.
• Increased Proved Developed Producing (“PDP”) net asset value (“NAV”) per share by over 20 percent from the prior year assuming flat US$55/bbl WTI.
• Reduced future asset retirement obligations (“ARO”) by over $220 million in 2019 and continued to enhance environmental, social and governance (“ESG”) practices, including the launch of its inaugural sustainability report.
• Repurchased approximately five percent of public float, or $135 million of shares, since initiating normal course issuer bid (“NCIB”) in first quarter 2019, including approximately $125 million during 2019.
• Remain on track with 2020 guidance with a flexible budget that is fully funded at approximately US$46/bbl WTI.

Craig Bryksa, President and CEO of Crescent Point, said: “Our 2019 results highlight the Company’s focus on operating a high-return and sustainable portfolio of assets with a strong balance sheet. 2019 was the first full year of our team’s new strategic direction and involved significant realignment in many parts of our business. We substantially reduced our debt and cost structure while also returning a meaningful amount of capital to shareholders.”

2020 Outlook

The Company remains on track with its 2020 budget, which remains unchanged, with annual average production of 140,000 to 144,000 boe/d and capital expenditures of $1.10 to $1.20 billion.

Throughout 2020, Crescent Point will continue to remain proactive in identifying new opportunities to realize additional cost efficiencies and further strengthen overall netbacks. This includes the continued adoption of digital technologies, further optimization of its drilling and completion techniques and rationalizing its asset portfolio, where appropriate. The Company also recently optimized its work space within its Calgary head office, reducing its annual office lease commitments starting in 2020.

Crescent Point’s budget for 2020 is disciplined, returns-focused and flexible. Assuming the low-end of its capital expenditures guidance, the Company’s program is fully funded at approximately US$46/bbl WTI and is still forecast to generate excess cash flow at current strip prices. Crescent Point will remain disciplined in its capital allocation and plans to continue prioritizing further net debt reduction and accretive share repurchases given the current discounted share price.

Financial Highlights

• For the year ended December 31, 2019, the Company’s adjusted funds flow totaled $1.83 billion, or $3.34 per share diluted. In fourth quarter, adjusted funds flow totaled $418.4 million, or $0.78 per share diluted.
• For the year ended December 31, 2019, Crescent Point’s capital expenditures on drilling and development, facilities and seismic totaled $1.25 billion, including $343.4 million spent during fourth quarter. Capital expenditures in 2019 were at the mid-point of the Company’s annual guidance range.
• As at December 31, 2019, the Company’s net debt was approximately $2.8 billion with unutilized credit capacity of approximately $2.2 billion. Subsequent to the quarter, Crescent Point closed its previously announced sale of certain gas infrastructure assets for $500 million, further reducing its net debt and enhancing its unutilized credit capacity to approximately $2.7 billion.
• As part of its risk management program to protect against commodity price volatility, the Company has currently hedged, on average, approximately 50 percent of its oil and liquids production, net of royalty interest, through 2020 at a weighted average price of over CDN$76/bbl. Crescent Point’s oil hedges extend through to first quarter 2021 at attractive prices.
• For the year ended December 31, 2019, the Company incurred a net loss of $1.03 billion, including a non-cash asset impairment charge of $1.21 billion ($884.0 million after-tax) in fourth quarter 2019 primarily due to a decrease in the independent engineering price forecast. The impairment charge does not impact Crescent Point’s adjusted funds flow or its credit capacity, and is reversible in future periods should there be any indicators that the value of the assets has increased.
• Crescent Point reduced its future ARO by over $220 million, or approximately 18 percent since year-end 2018, primarily driven by dispositions of its non-core assets and ongoing reclamation activities. The Company continues to allocate capital towards ARO activities on an annual basis as it remains committed to strong ESG practices.
• Since initiating the NCIB in first quarter 2019, the Company repurchased and canceled 26.2 million shares for total consideration of approximately $135 million, representing approximately five percent of its public float. The Toronto Stock Exchange has accepted Crescent Point’s notice of the intention to renew the NCIB, which expired in first quarter 2020. Refer to the Company’s press release issued on March 5, 2020 for further information.
• Subsequent to the quarter, Crescent Point declared a quarterly cash dividend of $0.01 per share payable on April 1, 2020.

Ops Highlights

• Annual average production in 2019 was 162,230 boe/d, which was at the mid-point of the Company’s guidance range and was comprised of approximately 91 percent oil and liquids. Average production during fourth quarter was 145,191 boe/d, reflecting the impact of asset dispositions executed during the quarter.
• Crescent Point realized operating cost savings of approximately $70 million in 2019, excluding any impact from dispositions, demonstrating an increased focus on new workflow improvements and the continued adoption of digital technologies.
• The Company’s key focus areas continued to generate free cash flow in 2019, with significant contribution from the Viewfield and Shaunavon resource plays. These areas are also benefiting from Crescent Point’s continued advancement of its decline mitigation programs, which included approximately 200 injector conversions in 2019. In Flat Lake, Crescent Point enhanced risk-adjusted returns within its Torquay program through two-mile horizontal development and capital cost reductions of approximately 15 percent. The Company’s North Dakota operations also generated strong results in 2019 driven by successful multi-well pad development and optimization of completion techniques.

Reserves

Bryksa said: “Our 2019 reserves reflect a transformational year that included significant dispositions and a disciplined capital expenditures program which focused on returns and free cash flow generation versus step-out and exploration drilling to add new booked locations. Excluding dispositions and revisions, our proved plus probable reserves additions more than replaced our annual production and resulted in a recycle ratio of approximately two times driven by a strong operating netback of approximately $34 per boe.”

• The Company’s Proved plus Probable (“2P”) NAV was $16.82 per share at year-end 2019, based on independent engineering escalated pricing, or $10.57 per share based on a flat pricing assumption of US$55/bbl WTI, both excluding land and seismic.
• On a PDP basis, NAV per share increased by over 20 percent compared to the prior year based on flat US$55/bbl WTI, excluding land and seismic, or approximately 12 percent incorporating changes to the Canadian Oil and Gas Evaluation Handbook (“COGEH”) adopted in 2019 pertaining to future ARO.
• Crescent Point achieved 2P reserves of 740.2 million boe (“MMboe”) (91 percent oil and liquids), including a decrease of 177.5 MMboe associated with net dispositions. Total 2P reserves benefited from 54.2 MMboe of extensions and improved recovery, which were offset by 55.6 MMboe of technical revisions, primarily comprised of probable reserves revisions. The Company’s 2P reserve life index (“RLI”) is approximately 14.3 years.
• Crescent Point’s Future Development Capital (“FDC”) decreased by over $1.9 billion on a 2P basis, primarily driven by dispositions of its non-core assets which accounted for approximately $1.7 billion of the reduction.
• The Company’s reserves evaluators continue to recognize reserves addition from Crescent Point’s consistent waterflood program, marking the seventh consecutive addition with over 65 MMboe of cumulative additions since 2013.