Crescent Point announces Q1 2020 results
CALGARY – 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.
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 $700 million. ANNUAL GENERAL MEETING Crescent Point’s 2020 Annual General Meeting (“AGM”) will be held on May 14, 2020. The Company is proceeding with the AGM solely by virtual means as previously announced. For more information, please review the press release dated April 21, 2020. CONFERENCE CALL DETAILS Crescent Point management will hold a conference call on Wednesday, May 6, 2020 at 10:00 a.m. MT (12:00 p.m. ET) to discuss the Company’s results and outlook. A slide deck will accompany the conference call and can be found on Crescent Point’s home page. Participants can listen to this event online. Alternatively, the conference call can be accessed by dialing 1‑888‑390‑0605. The webcast will be archived for replay and can be accessed on Crescent Point’s website. The replay will be available approximately one hour following completion of the call. Shareholders and investors can also find the Company’s most recent investor presentation on Crescent Point’s website. 2020 GUIDANCE The Company’s guidance for 2020 is as follows: Total annual average production (boe/d) % Oil and NGLs110,000 – 114,000 90%Development capital expenditures ($ 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)20202019FinancialCash flow from operating activities329.3416.8Adjusted funds flow from operations (1)309.5514.0Per share (1) (2)0.590.93Net income (loss)(2,324.1)1.9Per share (2)(4.40)–Adjusted net earnings from operations (1)48.7158.3Per share (1) (2)0.090.29Dividends declared5.35.6Per share (2)0.010.01Net debt (1)2,327.93,905.5Net debt to adjusted funds flow from operations (1) (3)1.42.1Weighted average shares outstandingBasic528.3550.3Diluted528.3550.3OperatingAverage daily productionCrude oil (bbls/d)111,928139,911NGLs (bbls/d)17,49320,097Natural gas (mcf/d)71,45195,679Total (boe/d)141,330175,955Average selling prices (4)Crude oil ($/bbl)49.2164.65NGLs ($/bbl)17.2825.58Natural gas ($/mcf)3.033.72Total ($/boe)42.6456.35Netback ($/boe)Oil and gas sales42.6456.35Royalties(5.68)(7.53)Operating expenses(12.31)(12.77)Transportation expenses(2.24)(2.10)Operating netback (1)22.4133.95Realized gain (loss) on derivatives4.380.73Other (5)(2.73)(2.22)Adjusted funds flow from operations netback (1)24.0632.46Capital ExpendituresCapital dispositions, net (6)(505.5)(2.8)Development capital expendituresDrilling and development293.6359.6Facilities and seismic26.520.6Total320.1380.2Land expenditures0.84.0 (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. 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