- Achieved 2017 exit rate of 183,000 boe/d and expects 2018 year-over-year exit growth of approximately seven percent.
- 2018 capital budget focused on returns, with over 75 percent of net wells drilled expected to payout in two years or less.
- Increased total corporate productive capacity by approximately 70 percent, driven by new horizontal locations in Uinta.
- Transacted over $320 million of non-core dispositions in 2017 with a continued focus on debt reduction.
The Company’s 2018 budget is expected to generate annual average production of 183,500 boe/d and exit production of 195,000 boe/d. This represents annual growth of approximately five percent and year-over-year exit growth of approximately seven percent. These growth rates are in addition to the Company’s monthly dividend income provided to shareholders.
Crescent Point is also pleased to announce it achieved a 2017 exit rate of 183,000 boe/d, which represented year-over-year production growth of approximately 10 percent, both on an absolute and per share basis. This growth was realized despite executing several non-core asset dispositions throughout 2017.
The Company also successfully identified new drilling locations during 2017, including additional horizontal locations in the Uinta Basin. At year-end 2017, Crescent Point’s risked Uinta Basin horizontal inventory increased to approximately 850 net locations, up from 120 at the end of 2016. These new higher rate locations have the potential to generate significant production and increase the productive capacity of the Company’s drilling inventory by approximately 70 percent compared to the prior year. Crescent Point also updated its estimated original oil-in-place for the Uinta Basin, which grew by over 60 percent to approximately 8.5 billion barrels.
“Our operational execution was highly successful in 2017,” said Scott Saxberg, president and CEO of Crescent Point. “We added new drilling locations in each of our core areas and advanced new plays for future development. In Uinta, our risked horizontal drilling inventory increased to approximately 850 net locations and can potentially increase to over 1,700 based on the continued success of our newly acquired lands on the western portion of the basin, new zone development and additional down-spacing.”
Crescent Point’s budget remains focused on allocating capital based on returns and balancing longer-term development goals for its core areas. Over 75 percent of net wells drilled in 2018 are expected to payout in two years or less at US$55.00/bbl WTI.
2018 BUDGET AND GUIDANCE SUMMARY
|Exit production (boe/d)||195,000|
|Total average annual production (boe/d)
% Oil and NGLs
|Capital expenditures ($ millions)
Drilling and development
Facilities and seismic
|Total capital expenditures, before net land and property acquisitions ($ millions)||$1,800|
|Net wells drilled||~630|
|Funds flow from operations netback based on current strip prices ($/boe) (1) (2)||~$30.00|
|Cash dividends per share in 2018 (based on current monthly dividend of $0.03 per share)||$0.36|
|Total payout based on current strip prices (%) (1) (2) (3)||99%|
|Net debt to funds flow from operations based on current strip prices (1) (2) (4)||1.9x|
|Funds flow from operations sensitivity for every US$1.00/bbl WTI ($ millions)||~$40|
|(1) Funds flow from operations netback, total payout, net debt and net debt to funds flow from operations as presented do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and, therefore, may not be comparable with the calculation of similar measures presented by other entities.|
|(2) Current strip prices equate to US$60.14/bbl WTI and $0.80 US/CAD for 2018.|
|(3) Total payout is calculated on a percentage basis as capital expenditures and dividends declared divided by funds flow from operations.|
|(4) Net debt to funds flow from operations is calculated as the period end net debt divided by the sum of funds flow from operations for the trailing four quarters.|
All financial figures are approximate and in Canadian dollars unless otherwise noted. This press release contains forward-looking information and references to non-GAAP financial measures. Significant related assumptions and risk factors, and reconciliations are described under the Non-GAAP Financial Measures and the Forward-Looking Statements and Other Matters sections of this press release, respectively.
2018 CORE AREA SUMMARY
The following table summarizes Crescent Point’s planned core area capital allocation and expected production in 2018:
|Core Area||Capital Expenditures
(% of Total)
(# of Locations)
|Figures shown above are approximations.|
“Each of our core areas are expected to generate growth in 2018,” said Saxberg. “Our Williston Basin and southwest Saskatchewan areas continue to generate free cash flow and support our growth strategy in the Uinta Basin. Our 2018 focus in Uinta will include two-mile horizontal wells, multi-well pad drilling for improved efficiencies, new zone development and further delineation on the western portion of the basin.”
Throughout 2017, Crescent Point advanced its Injection Control Device (ICD) waterflood systems, which resulted in improved water injectivity and production rates. Within the Company’s Bakken waterflood in the Williston Basin, ICDs doubled water injectivity and increased oil production by approximately 25 percent. In 2018, Crescent Point is targeting total waterflood capital expenditures of approximately $35 million, an amount similar to the prior year. The Company’s 2018 budget also includes investments in climate change initiatives as well as additional remote field monitoring and automation pilots to further improve efficiencies.
During fourth quarter 2017, Crescent Point executed additional non-core asset dispositions for a total value of approximately $40 million, of which approximately $20 million are expected to close in first quarter 2018. These transactions are in addition to the $280 million of previously announced 2017 dispositions. The Company continues to market non-core asset packages, with proceeds providing increased balance sheet strength and financial flexibility.
“In 2017, we captured over 400,000 net acres in our core areas that provide three times the potential upside relative to the non-core assets we disposed throughout the year,” said Saxberg. “These transactions provide us with significant future production, reserves and inventory growth potential. We are currently marketing non-core asset packages and may also look to sell larger non-core assets to further strengthen our balance sheet, should market conditions allow.”
Crescent Point continues to remain active on its hedging program, which provides increased stability to the Company’s funds flow from operations and planned growth objectives. As at January 4, 2018, Crescent Point had 49 percent of its liquids production, net of royalty interest, hedged for first half of 2018 at a weighted average market value price of approximately CDN$73.00/bbl. For the second half of 2018, 32 percent of its liquids production is hedged at a weighted average market value price of approximately CDN$71.00/bbl. The Company’s commodity hedges extend through 2019, including a significant amount of natural gas production hedged at a weighted average price of CDN$2.79/GJ.
“Our light oil-weighted asset base continues to generate top-quartile netbacks,” said Saxberg. “The recent widening of oil differentials is expected to have a moderate impact on our cash flows of approximately CDN$1.50/bbl in 2018, which has already been offset by the recent increase in WTI prices.”
Crescent Point retains significant financial flexibility and liquidity with no material near-term debt maturities and approximately $1.5 billion of cash and unutilized credit capacity on its covenant-based, unsecured credit facility, as at September 30, 2017.