CALGARY, ALBERTA–(Marketwired – Sept. 8, 2016) – Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX:CPG)(NYSE:CPG) announced today that it has entered into an agreement, on a bought deal basis, to sell 33.7 million common shares at $19.30 per share to raise gross proceeds of approximately CDN$650 million (the “Offering”). The net proceeds will be used to fund incremental growth capital expenditures during 2016 and 2017 and to reduce bank indebtedness. The Offering is subject to normal regulatory approvals and is expected to close on or about September 20, 2016.
Crescent Point has also granted the underwriters an over-allotment option to purchase, on the same terms, up to an additional 5,055,000 common shares. This option is exercisable, in whole or in part, by the underwriters at any time until 30 days after closing of the Offering. The maximum gross proceeds raised under the Offering, and the full exercise of the option, will be approximately CDN$748 million.
“This financing allows us to accelerate our drilling program across our portfolio, including our emerging Uinta and Flat Lake resource plays, which are continuing to demonstrate strong results,” said Scott Saxberg, president and CEO of Crescent Point. “We have been very successful at reducing our cost structure during this commodity price downturn and have a large drilling inventory that is highly economic at US $45 WTI. This is the first phase of a strong organic growth plan.”
For 2016, Crescent Point is increasing its fourth quarter capital budget by $150 million, resulting in budgeted annual capital expenditures of $1.1 billion and upward revised annual average production guidance of 167,000 boe/d. This additional fourth quarter capital is expected to add incremental production volumes in early 2017 and further improve the Company’s growth plans. This updated guidance compares to the Company’s previously announced capital budget of $950 million and annual average production guidance of 165,000 boe/d.
The Company’s preliminary 2017 budget of $1.4 billion includes $450 million of incremental growth capital above its sustaining capital budget of $950 million. This is expected to result in 2017 exit production of approximately 175,000 boe/d to 177,000 boe/d, or an annual growth rate of approximately five to eight percent. Crescent Point plans to finalize its 2017 budget in late fourth quarter 2016 or early January 2017.
“We have continued to advance each of our resource plays throughout 2016,” said Saxberg. “We successfully added new drilling locations and generated strong production results from previously untested geologic zones. Our most recent Castle Peak horizontal well in the Uinta Basin, for example, is expected to generate a payout of less than two years with a 30-day initial production rate of approximately 600 bopd at a cost of approximately US $5 million.”
Crescent Point’s increased 2016 and 2017 capital budget will allow the Company to maintain its current 20 rig drilling program over the next 12 to 18 months, excluding spring break-up. Crescent Point’s revised drilling budget also includes an additional rig in Flat Lake as well as one rig that is expected to be continually active throughout the Uinta Basin.
“This preliminary 2017 budget of $1.4 billion compares to our development capital expenditures of $2.1 billion during 2014,” said Saxberg. “This is the first phase of a strong organic growth plan that further positions us to increase capital as long-term WTI prices improve above US $45.”
This Offering will help Crescent Point preserve its strong financial position as it pursues its capital expenditures programs under the present low commodity price environment.
The Company’s upwardly revised guidance for 2016 is as follows:
|Oil and NGL (bbls/d)||148,000||149,500|
|Natural gas (mcf/d)||102,000||105,000|
|Capital expenditures (1)|
|Drilling and completions ($ millions)||812||940|
|Facilities and seismic ($ millions)||138||160|
|Total ($ millions)||950||1,100|
|(1)||The projection of capital expenditures excludes property and land acquisitions, which are separately considered and evaluated.|
The Offering is being made through a syndicate of underwriters led by BMO Capital Markets, and includes CIBC Capital Markets, RBC Capital Markets, Scotia Capital Inc., TD Securities Inc., FirstEnergy Capital Corp., National Bank Financial Inc., Peters & Co. Limited., Macquarie Capital Markets Canada Ltd., AltaCorp Capital Inc., GMP Securities L.P., Canaccord Genuity Corp., Citigroup Global Markets Canada Inc., Desjardins Securities Inc., Mitsubishi UFJ Securities Canada and Wells Fargo Securities Canada, Ltd.
The common shares offered under the Offering will be offered in all provinces of Canada by way of a prospectus supplement to the base shelf prospectus of Crescent Point dated July 20, 2015. The Offering will also be offered for sale only to Qualified Institutional Buyers in the United States, pursuant to an exemption from the registration requirement provided by Section 4(a)(2) of the United States Securities Act of 1933, as amended (the U.S. Securities Act”) and Rule 506(b) thereunder and corresponding exemptions from registration under state securities laws. A copy of the base shelf prospectus dated July 20, 2015 is available, and a copy of the prospectus supplement will be available, on SEDAR (www.sedar.com). The base shelf prospectus and the prospectus supplement contain important information about the securities being offered and investors should read such documents before making an investment decision.
No securities regulatory authority has either approved or disapproved of the contents of this news release. This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States or to, or for the account of benefit of, any U.S. persons (as defined in Regulation S under the U.S. Securities Act) absent registration or an exemption from registration. The Corporation has not registered and will not register the Common Shares under the US Securities Act of 1933, as amended. The Corporation does not intend to engage in a public offering of Common Shares in the United States.