CALGARY, May 6, 2020 /CNW/ - Crescent Point Energy Corp.
("Crescent Point" or the "Company") (TSX and NYSE: CPG) is pleased
to announce its operating and financial results for the quarter
ended March 31, 2020.
KEY HIGHLIGHTS
- Successfully closed the sale of certain gas infrastructure
assets for $500 million.
- Delivered $50 million of
permanent operating expense savings, as previously announced.
- Recently announced $75 million
reduction to capital budget with no associated impact to
production.
- Took decisive actions to revise 2020 capital expenditures and
voluntarily shut-in production, preserving long-term value.
- Reduced net debt by $437 million
in first quarter.
- Strong operational execution, which has continued despite a
modified work environment due to COVID-19 pandemic.
"Over the past two years, our team has worked diligently to
reposition the Company", said Craig
Bryksa, President and CEO of Crescent Point. "Our efforts
have centered on enhancing our long-term sustainability, including
strengthening our balance sheet and lowering our cost structure.
During this period of uncertainty and volatility, we have and will
continue to prioritize the safety of our employees and the
communities in which we operate, and continue to protect our
financial flexibility while remaining focused on returns, capital
discipline and realizing additional cost savings."
FINANCIAL HIGHLIGHTS
- Adjusted funds flow totaled $309.5
million during first quarter 2020, or $0.59 per share diluted, driven by a strong
operating netback of $22.41 per
boe.
- For the quarter ended March 31,
2020, Crescent Point's development capital expenditures
totaled $320.1 million. The Company's
first quarter capital expenditures represent close to half of its
revised annual budget. As a result of the recent shift in its
capital program, Crescent Point expects to incur its remaining
capital expenditures primarily during fourth quarter 2020. The
majority of this capital is discretionary and will depend on
commodity prices, providing additional flexibility.
- Net debt as at March 31, 2020
equated to approximately $2.3
billion, and reflects $437.4
million of net debt reduction in the quarter. Cash and
unutilized credit capacity was approximately $2.5 billion as at March
31, 2020. The Company has no material near-term senior note
debt maturities and its credit facilities are not due for renewal
until October 2023.
- During the quarter, the Company repaid a senior note maturity
of $158.3 million. Crescent Point
does not have any other senior note maturities until second quarter
2021 of approximately $185
million.
- As part of its risk management program to protect against
commodity price volatility, the Company has currently hedged, on
average, over 65 percent of its oil and liquids production, net of
royalty interest, through the remainder of 2020. Management will
remain disciplined in its approach to layering on additional
hedges, in the context of commodity prices, to further protect its
funds flow.
- Due to a significant decrease in the independent engineers'
price forecast resulting from current concerns over global demand
and supply for oil, Crescent Point incurred a non-cash impairment
charge of $3.56 billion ($2.65 billion after-tax), driving a net loss of
$2.32 billion for the quarter ended
March 31, 2020. This impairment
charge does not impact the Company's adjusted funds flow or its
credit capacity, and is reversible in future periods should there
be indications of change in value, including higher forecast
commodity prices.
- Subsequent to first quarter, the Company declared a quarterly
cash dividend of $0.0025 per share
payable on July 2, 2020.
OPERATIONAL HIGHLIGHTS
- The Company's average production in first quarter 2020 was
141,330 boe/d, comprised of over 90 percent oil and
liquids.
- Crescent Point continued to realize internal efficiencies and
operational outperformance during the quarter, allowing it to
reduce its budgeted capital expenditures and operating expenses for
2020, as previously announced. The Company reduced its annual
capital expenditures guidance by approximately $75 million with no associated impact to
production. Crescent Point is also forecasting lower annual
operating expenses, including $50
million of sustainable savings. Since the beginning of 2019,
the Company has now permanently removed approximately $120 million, or over 15 percent, of its annual
operating expenses.
- As previously announced on April 20,
2020, Crescent Point elected to shut-in approximately 25,000
boe/d of production. The majority of this shut-in production is
outside of the Company's key focus areas and carries costs above
the corporate average.
OUTLOOK
Year-to-date, Crescent Point has made significant revisions to
its operations and capital program. The Company took early and
decisive actions to respond to the current commodity price
environment to preserve the long-term value of its assets. The
Company has also realized additional efficiencies across the
organization, including lowering its capital costs and operating
and general and administrative expenses.
Crescent Point will remain flexible in its operations and
remaining capital program, and will continue to focus on returns
and balance sheet strength. Management will continue to work on
realizing additional savings throughout the year and intends to
align cash outflows, including capital expenditures, with inflows
in order to protect its financial liquidity.
The Company expects to restore production from shut-in wells,
with minimal impact to long-term production, when warranted.
Management continues to evaluate the commodity price environment,
including market access constraints and the potential for
involuntary shut-ins.
Crescent Point remains committed and focused on its
Environmental, Social and Governance ("ESG") practices. The
Company's strong safety culture was evident during first quarter,
including through the adoption of heightened safety protocols as a
result of the COVID-19 pandemic. Crescent Point instituted physical
distancing protocols within its field operations, advanced digital
technology throughout the organization and adopted work from home
policy for employees whose work can be performed remotely. The
Company expects to release its second annual sustainability report
during second quarter 2020, which will further highlight the
Company's progress over the past year.
Crescent Point is on track with its 2020 budget, with expected
annual average production of 110,000 to 114,000 boe/d, which
assumes shut-in production remains off line for the remainder of
the year, and planned development capital expenditures of
$650 to $700
million.
ANNUAL GENERAL MEETING
Crescent Point's 2020 Annual General Meeting ("AGM") will be
held on May 14, 2020. The Company is
proceeding with the AGM solely by virtual means as previously
announced. For more information, please review the press release
dated April 21, 2020.
CONFERENCE CALL DETAILS
Crescent Point management will hold a conference call on
Wednesday, May 6, 2020 at
10:00 a.m. MT (12:00 p.m. ET) to discuss the Company's results
and outlook. A slide deck will accompany the conference call and
can be found on Crescent Point's home page.
Participants can listen to this event online. Alternatively, the
conference call can be accessed by dialing 1‑888‑390‑0605.
The webcast will be archived for replay and can be accessed on
Crescent Point's website. The replay will be available
approximately one hour following completion of the call.
Shareholders and investors can also find the Company's most
recent investor presentation on Crescent Point's website.
2020 GUIDANCE
The Company's guidance for 2020 is as follows:
|
|
Total annual average
production (boe/d)
% Oil and
NGLs
|
110,000 -
114,000
90%
|
Development capital
expenditures ($ millions) (1)
Drilling and
development (%)
Facilities and
seismic (%)
|
$650 to
$700
91%
9%
|
(1)
|
Development capital
expenditures excludes approximately $80 million of capitalized
G&A, land acquisitions, capital leases and reclamation
activities.
|
The Company's unaudited financial statements and management's
discussion and analysis for the quarter ended March 31, 2020, will be available on the System
for Electronic Document Analysis and Retrieval ("SEDAR") at
www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on Crescent
Point's website at www.crescentpointenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
|
|
|
Three months ended
March 31
|
(Cdn$ millions except
per share and per boe amounts)
|
2020
|
2019
|
Financial
|
|
|
Cash flow from
operating activities
|
329.3
|
416.8
|
Adjusted funds flow
from operations (1)
|
309.5
|
514.0
|
Per share (1)
(2)
|
0.59
|
0.93
|
Net income
(loss)
|
(2,324.1)
|
1.9
|
Per share
(2)
|
(4.40)
|
-
|
Adjusted net earnings
from operations (1)
|
48.7
|
158.3
|
Per share (1)
(2)
|
0.09
|
0.29
|
Dividends
declared
|
5.3
|
5.6
|
Per share
(2)
|
0.01
|
0.01
|
Net debt
(1)
|
2,327.9
|
3,905.5
|
Net debt to adjusted
funds flow from operations (1) (3)
|
1.4
|
2.1
|
Weighted average
shares outstanding
|
|
|
Basic
|
528.3
|
550.3
|
Diluted
|
528.3
|
550.3
|
Operating
|
|
|
Average daily
production
|
|
|
Crude oil
(bbls/d)
|
111,928
|
139,911
|
NGLs
(bbls/d)
|
17,493
|
20,097
|
Natural gas
(mcf/d)
|
71,451
|
95,679
|
Total
(boe/d)
|
141,330
|
175,955
|
Average selling
prices (4)
|
|
|
Crude oil
($/bbl)
|
49.21
|
64.65
|
NGLs
($/bbl)
|
17.28
|
25.58
|
Natural gas
($/mcf)
|
3.03
|
3.72
|
Total
($/boe)
|
42.64
|
56.35
|
Netback ($/boe)
|
|
|
Oil and gas
sales
|
42.64
|
56.35
|
Royalties
|
(5.68)
|
(7.53)
|
Operating
expenses
|
(12.31)
|
(12.77)
|
Transportation
expenses
|
(2.24)
|
(2.10)
|
Operating netback
(1)
|
22.41
|
33.95
|
Realized gain (loss)
on derivatives
|
4.38
|
0.73
|
Other
(5)
|
(2.73)
|
(2.22)
|
Adjusted funds flow
from operations netback (1)
|
24.06
|
32.46
|
Capital
Expenditures
|
|
|
Capital dispositions,
net (6)
|
(505.5)
|
(2.8)
|
Development capital
expenditures
|
|
|
Drilling and
development
|
293.6
|
359.6
|
Facilities and
seismic
|
26.5
|
20.6
|
Total
|
320.1
|
380.2
|
Land
expenditures
|
0.8
|
4.0
|
|
|
(1)
|
Adjusted funds flow
from operations, adjusted funds flow from operations per share,
adjusted net earnings from operations, adjusted net earnings from
operations per share, net debt, net debt to adjusted funds flow
from operations, operating netback and adjusted funds flow from
operations netback as presented do not have any standardized
meaning prescribed by IFRS and, therefore, may not be comparable
with the calculation of similar measures presented by other
entities.
|
(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 dispositions,
net represent total consideration for the transactions, including
long-term debt and working capital assumed, and exclude transaction
costs.
|
Non-GAAP Financial Measures
Throughout this press release, the Company uses the terms
"adjusted funds flow", "adjusted funds flow from operations",
"funds flow", "adjusted funds flow from operations per share -
diluted", "adjusted net earnings from operations", "adjusted net
earnings from operations per share - diluted", "net debt", "net
debt to adjusted funds flow from operations", "netback", "operating
netback" and "adjusted funds flow from operations netback".
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.
Adjusted funds flow and funds flow is equivalent to adjusted
funds flow from operations. 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. Adjusted funds flow from operations
per share - diluted is calculated as adjusted funds flow from
operations divided by the number of weighted average diluted shares
outstanding. 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. Adjusted funds flow from operations as presented is not
intended to represent cash flow from operating activities, net
earnings or other measures of financial performance calculated in
accordance with IFRS.
The following table reconciles cash flow from operating
activities to adjusted funds flow from operations:
|
|
|
Three months ended
March 31
|
($
millions)
|
2020
|
2019
|
Cash flow from
operating activities
|
329.3
|
416.8
|
Changes in non-cash
working capital
|
(33.1)
|
91.0
|
Transaction
costs
|
4.7
|
0.9
|
Decommissioning
expenditures
|
8.6
|
5.3
|
Adjusted funds flow
from operations
|
309.5
|
514.0
|
Adjusted net earnings from operations is calculated based on net
income before amortization of exploration and evaluation
("E&E") undeveloped land, impairment or impairment recoveries,
unrealized derivative gains or losses, unrealized foreign exchange
gain or loss on translation of hedged US dollar long-term debt,
unrealized gains or losses on long-term investments, gains or
losses on the sale of long-term investments and gains or losses on
capital acquisitions and dispositions. Adjusted net earnings from
operations per share - diluted is calculated as adjusted net
earnings from operations divided by the number of weighted average
diluted shares outstanding. Management utilizes adjusted net
earnings from operations to present a measure of financial
performance that is more comparable between periods. Adjusted net
earnings from operations as presented is not intended to represent
net earnings or other measures of financial performance calculated
in accordance with IFRS.
The following table reconciles net income to adjusted net
earnings from operations:
|
|
|
Three months ended
March 31
|
($
millions)
|
2020
|
2019
|
Net income
(loss)
|
(2,324.1)
|
1.9
|
Amortization of
E&E undeveloped land
|
21.7
|
38.3
|
Impairment
|
3,557.8
|
8.5
|
Unrealized derivative
(gains) losses
|
(418.5)
|
270.4
|
Unrealized foreign
exchange (gain) loss on translation of hedged US dollar long-term
debt
|
135.9
|
(96.7)
|
Unrealized loss on
long-term investments
|
5.5
|
0.5
|
Gain on capital
dispositions
|
(307.5)
|
(5.3)
|
Deferred tax relating
to adjustments
|
(622.1)
|
(59.3)
|
Adjusted net earnings
from operations
|
48.7
|
158.3
|
Net debt is calculated as long-term debt plus accounts payable
and accrued liabilities and long-term compensation liability, less
cash, accounts receivable, prepaids and deposits and 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.
The following table reconciles long-term debt to net
debt:
|
|
|
($
millions)
|
March 31,
2020
|
March 31,
2019
|
Long-term debt
(1)
|
2,539.2
|
4,142.6
|
Accounts payable and
accrued liabilities
|
418.2
|
600.5
|
Long-term
compensation liability (2)
|
2.4
|
4.9
|
Cash
|
(19.6)
|
(25.8)
|
Accounts
receivable
|
(196.7)
|
(421.6)
|
Prepaids and
deposits
|
(12.6)
|
(10.0)
|
Long-term
investments
|
(1.2)
|
(8.2)
|
Excludes:
|
|
|
Unrealized foreign
exchange on translation of hedged US dollar long-term
debt
|
(401.8)
|
(376.9)
|
Net debt
|
2,327.9
|
3,905.5
|
|
|
(1)
|
Includes current
portion of long-term debt.
|
(2)
|
Includes current
portion of long-term compensation liability.
|
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. The ratio of net
debt to adjusted funds flow from operations is used by management
to measure the Company's overall debt position and to measure the
strength of the Company's balance sheet. Crescent Point monitors
this ratio and uses this as a key measure in making decisions
regarding financing, capital spending and dividend levels.
Operating netback is calculated on a per boe basis as oil and
gas sales, less royalties, operating and transportation expenses.
Adjusted funds flow netback is equivalent to adjusted funds flow
from operations netback. Adjusted funds flow from operations
netback is calculated on a per boe basis as operating netback less
net purchased products, realized derivative gains and losses,
general and administrative expenses, interest on long-term debt,
foreign exchange, cash-settled share-based compensation and certain
cash items, excluding transaction costs, foreign exchange on US
dollar long-term debt and certain non-cash items. Cash flow netback
is equivalent to adjusted funds flow from operations netback.
Operating netback and adjusted funds flow from operations netback
are common metrics used in the oil and gas industry and are used by
management to measure operating results on a per boe basis to
better analyze performance against prior periods on a comparable
basis. Netback calculations are shown in the Financial and
Operating Highlights section in this press release.
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.
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: the
expectation that additional capital and operating efficiencies will
be achieved during 2020; the expected impact of recent actions on
long-term value; the expected lack of impact of the recently
announced $75 million reduction to
capital budget on production; the Company's priorities during this
period of increased volatility; the Company's plans to continue to
prioritize the safety of its employees and the communities in which
it operates; Crescent Point's expectation that it will incur its
remaining capital expenditures primarily during fourth quarter, the
discretionary nature of these expenditures and the Company's
ability to adjust spending based on commodity prices; management's
plan to remain disciplined in its approach to hedging; the
potential reversal of impairment charges in future periods; the
Company's 2020 annual capital expenditures guidance; the Company's
forecast for lower annual operating expenses, including sustainable
savings; Crescent Point's plans to remain flexible in its
operations and remaining capital program and its plans to continue
to focus on returns, its balance sheet and protecting the long-term
value of its assets; management's plans to continue to work to
realize additional savings and its intent to align cash outflows
with inflows; the Company's plans to restore production from its
shut-in wells; Crescent Point plans to continue to evaluate the
commodity price environment; Crescent Point's plans to release its
second annual sustainability report during second quarter 2020; the
Corporation's 2020 annual average production and development
capital expenditures guidance; and the timing of the Corporation's
AGM and its plan to hold a fully virtual meeting.
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 assumptions and 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 March 31, 2020 under
"Derivatives", "Liquidity and Capital Resources", "Changes in
Accounting Policies", "Risk Factors" and "Outlook". The material
assumptions are disclosed 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 March 31, 2020 under
the headings "Derivatives", "Liquidity and Capital Resources",
"Changes in Accounting Policies" and "Outlook". 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.