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 year ended December 31, 2019.
KEY HIGHLIGHTS
“Our 2019 results highlight the Company’s focus on operating a high-return and sustainable portfolio of assets with a strong balance sheet,” said Craig Bryksa, President and CEO of Crescent Point. “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.”
FINANCIAL HIGHLIGHTS
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 Forward-Looking Statements sections of this press release, respectively. |
OPERATIONAL HIGHLIGHTS
RESERVES AND NET ASSET VALUE HIGHLIGHTS
“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,” said Bryksa. “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.”
Certain reserves metrics, including Finding and Development (“F&D”) costs and recycle ratios, may not be meaningful or comparable year-over-year given significant changes executed in 2019, including non-core asset dispositions. Additional information on Crescent Point’s 2019 reserves is provided in its Annual Information Form (“AIF”) for the year-ended December 31, 2019.
Before Tax Net Asset Value Per Share, Fully Diluted, as at December 31, 2019 at Flat Pricing of US$55/bbl WTI
Reserves Category |
NAV |
Total Proved plus Probable (2P) |
$10.57 |
Proved and Probable Developed Producing (P+PDP) |
$6.15 |
Total Proved (1P) |
$5.25 |
Proved Developed Producing (PDP) |
$3.75 |
Land and Seismic |
$1.33 |
(1) |
NAV per share based on 533.4 million shares fully diluted and a 10% discount rate. |
(2) |
NAV does not include land and seismic and is less net debt of $2.77 billion as at December 31, 2019. |
(3) |
NAV per share includes approximately $0.45 per share of additional future ARO as recommended in COGEH’s 2019 industry guidelines. |
OUTLOOK
Crescent Point’s successful execution in 2019 significantly enhanced its financial position and sustainability. The Company plans to build on this success in 2020 and will continue to focus on its key value drivers of disciplined capital allocation, cost efficiencies and balance sheet strength.
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.
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.
Summary of Reserves
The Company’s reserves were independently evaluated by GLJ Petroleum Consultants Ltd. (“GLJ”) and Sproule Associates Limited (“Sproule”) as at December 31, 2019 and were aggregated by GLJ. The reserves evaluation and reporting was conducted in accordance with the definitions, standards and procedures contained in the COGEH and National Instrument 51-101 Standards for Disclosure of Oil and Gas Activities (“NI 51-101”).
As at December 31, 2019 (1) (2) (3) (4)
Tight Oil |
Light and Medium Oil |
Heavy Oil |
Natural Gas Liquids |
|||||
Reserves Category |
Gross |
Net |
Gross |
Net |
Gross |
Net |
Gross |
Net |
Proved Developed Producing |
137,803 |
126,638 |
71,484 |
63,986 |
24,175 |
20,066 |
42,785 |
38,906 |
Proved Developed Non-Producing |
1,318 |
1,213 |
1,341 |
1,246 |
1,979 |
1,731 |
618 |
570 |
Proved Undeveloped |
95,922 |
85,679 |
28,122 |
26,013 |
1,645 |
1,419 |
19,659 |
17,566 |
Total Proved |
235,043 |
213,531 |
100,947 |
91,245 |
27,799 |
23,216 |
63,062 |
57,042 |
Total Probable |
150,052 |
135,767 |
58,348 |
52,860 |
6,894 |
5,508 |
33,315 |
30,195 |
Total Proved plus Probable |
385,094 |
349,298 |
159,295 |
144,104 |
34,693 |
28,724 |
96,377 |
87,237 |
Shale Gas (MMcf) |
Natural Gas (MMcf) |
Total (Mboe) |
||||
Reserves Category |
Gross |
Net |
Gross |
Net |
Gross |
Net |
Proved Developed Producing |
111,492 |
101,501 |
60,040 |
55,970 |
304,836 |
275,841 |
Proved Developed Non-Producing |
1,219 |
1,062 |
1,297 |
1,073 |
5,675 |
5,116 |
Proved Undeveloped |
66,614 |
59,038 |
10,750 |
9,743 |
158,242 |
142,141 |
Total Proved |
179,325 |
161,601 |
72,086 |
66,787 |
468,753 |
423,098 |
Total Probable |
103,163 |
93,005 |
33,640 |
31,003 |
271,409 |
244,998 |
Total Proved plus Probable |
282,488 |
254,606 |
105,726 |
97,790 |
740,161 |
668,096 |
(1) |
Based on Sproule’s December 31, 2019, escalated price forecast. |
(2) |
“Gross Reserves” are the total Company’s working-interest share before the deduction of any royalties and without including any royalty interest of the Company. |
(3) |
“Net Reserves” are the total Company’s interest share after deducting royalties and including any royalty interest. |
(4) |
Numbers may not add due to rounding. |
Summary of Before Tax Net Present Values
As at December 31, 2019 (1) (2)
Before Tax Net Present Value ($ millions) |
||||||
Discount Rate |
||||||
Price Deck |
Reserves Category |
Gross Reserves |
0% |
5% |
10% |
15% |
Sproule Forecast |
Proved Developed Producing |
304,836 |
9,383 |
7,432 |
6,090 |
5,179 |
Proved and Probable Developed Producing |
413,219 |
14,353 |
10,078 |
7,782 |
6,395 |
|
Total Proved |
468,753 |
13,036 |
9,785 |
7,657 |
6,242 |
|
Total Proved plus Probable |
740,161 |
24,273 |
16,082 |
11,787 |
9,223 |
|
US$55.00/bbl WTI Flat |
Proved Developed Producing |
297,180 |
6,862 |
5,603 |
4,710 |
4,079 |
Proved and Probable Developed Producing |
403,451 |
10,061 |
7,484 |
5,989 |
5,034 |
|
Total Proved |
428,126 |
8,765 |
6,838 |
5,512 |
4,591 |
|
Total Proved plus Probable |
723,299 |
15,946 |
11,095 |
8,347 |
6,628 |
(1) |
Sproule Forecast based on Sproule’s December 31, 2019, escalated price forecast |
(2) |
Numbers may not add due to rounding |
RESERVES RECONCILIATION
Gross Reserves (1) (2) (3) (4)
Tight Oil (Mbbls) |
Light and Medium Oil (Mbbls) |
Heavy Oil (Mbbls) |
|||||||
Factors |
Proved |
Probable |
Proved |
Proved |
Probable |
Proved |
Proved |
Probable |
Proved |
December 31, 2018 |
325,347 |
209,486 |
534,833 |
127,424 |
71,959 |
199,383 |
29,015 |
7,903 |
36,918 |
Extensions and Improved Recovery |
23,679 |
15,023 |
38,702 |
3,743 |
2,045 |
5,788 |
133 |
10 |
143 |
Technical Revisions |
(18,852) |
(21,977) |
(40,828) |
(648) |
(5,637) |
(6,285) |
670 |
(951) |
(281) |
Acquisitions |
379 |
266 |
644 |
2,403 |
590 |
2,993 |
– |
– |
– |
Dispositions |
(60,061) |
(51,101) |
(111,162) |
(18,884) |
(9,986) |
(28,871) |
– |
– |
– |
Economic Factors |
(2,098) |
(1,646) |
(3,743) |
(2,107) |
(622) |
(2,729) |
(285) |
(69) |
(354) |
Production |
(33,352) |
– |
(33,352) |
(10,984) |
– |
(10,984) |
(1,733) |
– |
(1,733) |
December 31, 2019 |
235,043 |
150,052 |
385,094 |
100,947 |
58,348 |
159,295 |
27,799 |
6,894 |
34,693 |
Natural Gas Liquids (Mbbls) |
Shale Gas (MMcf) |
Natural Gas (MMcf) |
|||||||
Factors |
Proved |
Probable |
Proved |
Proved |
Probable |
Proved |
Proved |
Probable |
Proved |
December 31, 2018 |
75,800 |
42,302 |
118,102 |
286,515 |
178,677 |
465,193 |
85,264 |
39,955 |
125,219 |
Extensions and Improved Recovery |
3,398 |
1,968 |
5,366 |
14,707 |
9,734 |
24,440 |
572 |
442 |
1,014 |
Technical Revisions |
(217) |
(4,733) |
(4,950) |
(686) |
(12,250) |
(12,936) |
(2,104) |
(4,344) |
(6,448) |
Acquisitions |
74 |
60 |
134 |
216 |
168 |
384 |
1 |
1 |
1 |
Dispositions |
(7,656) |
(5,699) |
(13,355) |
(94,570) |
(71,813) |
(166,383) |
(546) |
(1,032) |
(1,578) |
Economic Factors |
(765) |
(583) |
(1,348) |
(668) |
(1,354) |
(2,021) |
(3,858) |
(1,382) |
(5,240) |
Production |
(7,573) |
– |
(7,573) |
(26,188) |
– |
(26,188) |
(7,243) |
– |
(7,243) |
December 31, 2019 |
63,062 |
33,315 |
96,377 |
179,325 |
103,163 |
282,488 |
72,086 |
33,640 |
105,726 |
Total Oil Equivalent (Mboe) |
|||
Factors |
Proved |
Probable |
Proved plus Probable |
December 31, 2018 |
619,549 |
368,089 |
987,638 |
Extensions and Improved Recovery |
33,500 |
20,742 |
54,242 |
Technical Revisions |
(19,512) |
(36,063) |
(55,574) |
Acquisitions |
2,892 |
944 |
3,836 |
Dispositions |
(102,454) |
(78,927) |
(181,381) |
Economic Factors |
(6,009) |
(3,376) |
(9,385) |
Production |
(59,214) |
– |
(59,214) |
December 31, 2019 |
468,753 |
271,409 |
740,161 |
(1) |
Based on Sproule’s December 31, 2019, escalated price forecast. |
(2) |
“Gross Reserves” are the total Company’s working-interest share before the deduction of any royalties and without including any royalty interest of the Company |
(3) |
Extensions and Improved Recovery includes Discoveries. |
(4) |
Numbers may not add due to rounding. |
Finding and Development Costs
The Company’s F&D costs and recycle ratios may not be meaningful or comparable year-over-year given significant changes executed in 2019.
2019 Totals |
Change in |
Total |
|
Capital ($ millions) (1) |
|||
Total Proved plus Probable |
1,268 |
(195) |
1,073 |
Total Proved |
1,268 |
(58) |
1,209 |
Proved Developed Producing |
1,268 |
(8) |
1,260 |
Reserves Additions (Mboe) (2) |
|||
Total Proved plus Probable |
(10,718) |
– |
(10,718) |
Total Proved |
7,980 |
– |
7,980 |
Proved Developed Producing |
26,789 |
– |
26,789 |
(1) |
The capital expenditures include the announced purchase price of corporate acquisitions rather than the amounts allocated to property, plant and equipment for accounting purposes. The capital expenditures also exclude capitalized administration costs and transaction costs. |
(2) |
Gross Company interest reserves are used in this calculation (working interest reserves, before deduction of any royalties and without including any royalty interests of the Company). |
Excluding changes in FDC |
Including changes in FDC |
|||||
($/boe, except recycle ratios) |
($/boe, except recycle ratios) |
|||||
2019 |
2018 |
3 Years Ended |
2019 |
2018 |
3 Years Ended |
|
F&D Cost (1) |
||||||
Total Proved plus Probable |
($118.27) |
$19.20 |
$27.08 |
($100.09) |
$24.64 |
$30.47 |
Total Proved |
$158.85 |
$22.61 |
$27.95 |
$151.57 |
$26.18 |
$30.63 |
Proved Developed Producing |
$47.32 |
$23.64 |
$25.10 |
$47.03 |
$22.94 |
$24.87 |
F&D Recycle Ratio (2) |
||||||
Total Proved plus Probable |
(0.3) |
1.9 |
1.2 |
(0.3) |
1.4 |
1.1 |
Total Proved |
0.2 |
1.6 |
1.2 |
0.2 |
1.4 |
1.1 |
Proved Developed Producing |
0.7 |
1.5 |
1.3 |
0.7 |
1.5 |
1.3 |
(1) |
F&D is calculated by dividing the identified capital expenditures by the applicable reserves additions. F&D can include or exclude changes to future development capital costs. |
(2) |
Recycle Ratio is calculated as operating netback before hedging divided by F&D costs. Based on a 2019 netback of $33.81 per boe, a 2018 netback of $35.52 per boe and a three-year weighted average netback of $32.90 per boe. |
Future Development Capital
At year-end 2019, FDC for 2P reserves totaled $5.1 billion, compared to $7.0 billion at year-end 2018. The Company’s FDC decreased by $1.9 billion, primarily driven by dispositions of its non-core assets which accounted for $1.7 billion of the reduction.
Company Annual Capital Expenditures ($ millions) |
||||||
Canada |
U.S. |
Total |
||||
Year |
Total |
Total |
Total |
Total |
Total |
Total |
2020 |
614 |
698 |
184 |
237 |
798 |
935 |
2021 |
621 |
841 |
287 |
339 |
907 |
1,180 |
2022 |
613 |
871 |
217 |
268 |
831 |
1,139 |
2023 |
398 |
781 |
157 |
185 |
555 |
966 |
2024 |
116 |
366 |
203 |
203 |
319 |
569 |
2025 |
5 |
70 |
– |
– |
5 |
70 |
2026 |
3 |
49 |
– |
– |
3 |
49 |
2027 |
2 |
60 |
– |
– |
2 |
60 |
2028 |
7 |
47 |
– |
– |
7 |
47 |
2029 |
3 |
59 |
– |
– |
3 |
59 |
2030 |
1 |
2 |
– |
– |
1 |
2 |
2031 |
1 |
2 |
– |
– |
1 |
2 |
Subtotal (1) |
2,383 |
3,845 |
1,048 |
1,232 |
3,431 |
5,077 |
Remainder |
10 |
17 |
– |
– |
10 |
17 |
Total (1) |
2,393 |
3,862 |
1,048 |
1,232 |
3,441 |
5,094 |
10% Discounted |
1,986 |
3,031 |
839 |
995 |
2,825 |
4,025 |
(1) |
Numbers may not add due to rounding |
CONFERENCE CALL DETAILS
Crescent Point management will host a conference call on Thursday, March 5, 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 via webcast. 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 conference calls and webcasts webpage under the invest tab. 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) |
140,000 – 144,000 |
% Oil and NGLs |
91% |
Development capital expenditures ($ millions) (1) |
$1,100 to $1,200 |
Drilling and development (%) |
90% |
Facilities and seismic (%) |
10% |
(1) |
Development capital expenditures excludes any potential net property and land acquisitions and approximately $32 million of capitalized G&A |
The Company’s audited financial statements and management’s discussion and analysis for the year ended December 31, 2019, will be available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com, on EDGAR at www.sec.gov/edgar.shtml and on Crescent Point’s website at www.crescentpointenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended December 31 |
Year ended December 31 |
|||||||||||||
(Cdn$ millions except per share and per boe amounts) |
2019 |
2018 |
2019 |
2018 |
||||||||||
Financial |
||||||||||||||
Cash flow from operating activities |
396.5 |
359.1 |
1,742.9 |
1,748.0 |
||||||||||
Adjusted funds flow from operations (1) |
418.4 |
337.3 |
1,825.4 |
1,741.2 |
||||||||||
Per share (1) (2) |
0.78 |
0.61 |
3.34 |
3.16 |
||||||||||
Net income (loss) |
(932.1) |
(2,390.5) |
(1,033.3) |
(2,616.9) |
||||||||||
Per share (2) |
(1.73) |
(4.35) |
(1.89) |
(4.77) |
||||||||||
Adjusted net earnings (loss) from operations (1) |
49.9 |
(16.3) |
386.8 |
234.6 |
||||||||||
Per share (1) (2) |
0.09 |
(0.03) |
0.71 |
0.43 |
||||||||||
Dividends declared |
5.4 |
49.4 |
22.0 |
198.5 |
||||||||||
Per share (2) |
0.01 |
0.09 |
0.04 |
0.36 |
||||||||||
Net debt (1) |
2,765.3 |
4,011.3 |
2,765.3 |
4,011.3 |
||||||||||
Net debt to adjusted funds flow from operations (1) (3) |
1.5 |
2.3 |
1.5 |
2.3 |
||||||||||
Weighted average shares outstanding |
||||||||||||||
Basic |
537.4 |
550.2 |
545.7 |
549.1 |
||||||||||
Diluted |
538.7 |
550.2 |
546.0 |
550.2 |
||||||||||
Operating |
||||||||||||||
Average daily production |
||||||||||||||
Crude oil (bbls/d) |
111,394 |
140,281 |
126,219 |
140,298 |
||||||||||
NGLs (bbls/d) |
21,406 |
20,210 |
20,746 |
19,805 |
||||||||||
Natural gas (mcf/d) |
74,347 |
106,236 |
91,592 |
108,376 |
||||||||||
Total (boe/d) |
145,191 |
178,198 |
162,230 |
178,166 |
||||||||||
Average selling prices (4) |
||||||||||||||
Crude oil ($/bbl) |
65.27 |
54.38 |
67.14 |
69.43 |
||||||||||
NGLs ($/bbl) |
19.02 |
32.76 |
19.94 |
33.66 |
||||||||||
Natural gas ($/mcf) |
3.35 |
2.95 |
2.75 |
2.25 |
||||||||||
Total ($/boe) |
54.60 |
48.28 |
56.34 |
59.78 |
||||||||||
Netback ($/boe) |
||||||||||||||
Oil and gas sales |
54.60 |
48.28 |
56.34 |
59.78 |
||||||||||
Royalties |
(7.79) |
(7.61) |
(8.15) |
(9.11) |
||||||||||
Operating expenses |
(11.24) |
(12.86) |
(12.29) |
(13.13) |
||||||||||
Transportation expenses |
(2.12) |
(2.06) |
(2.09) |
(2.02) |
||||||||||
Operating netback (1) |
33.45 |
25.75 |
33.81 |
35.52 |
||||||||||
Realized gain (loss) on derivatives |
1.71 |
(1.34) |
0.73 |
(4.00) |
||||||||||
Other (5) |
(3.84) |
(3.84) |
(3.72) |
(4.75) |
||||||||||
Adjusted funds flow from operations netback (1) |
31.32 |
20.57 |
30.82 |
26.77 |
||||||||||
Capital Expenditures |
||||||||||||||
Capital dispositions, net (6) |
(663.8) |
(42.5) |
(924.1) |
(340.5) |
||||||||||
Development capital expenditures |
||||||||||||||
Drilling and development |
312.7 |
278.4 |
1,155.9 |
1,536.2 |
||||||||||
Facilities and seismic |
30.7 |
23.9 |
96.2 |
200.4 |
||||||||||
Total |
343.4 |
302.3 |
1,252.1 |
1,736.6 |
||||||||||
Land expenditures |
5.2 |
4.9 |
15.5 |
33.2 |
(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”, “adjusted funds flow from operations per share – diluted”, “adjusted net earnings from operations”, “adjusted net earnings from operations per share – diluted”, “free cash flow”, “excess cash flow”, “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 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 December 31 |
Year ended December 31 |
|||||||||||||||||
($ millions) |
2019 |
2018 (1) |
2019 |
2018 (1) |
||||||||||||||
Cash flow from operating activities |
396.5 |
359.1 |
1,742.9 |
1,748.0 |
||||||||||||||
Changes in non-cash working capital |
6.6 |
(27.9) |
47.5 |
(37.2) |
||||||||||||||
Transaction costs |
2.1 |
0.8 |
6.3 |
5.1 |
||||||||||||||
Decommissioning expenditures |
13.2 |
5.3 |
28.7 |
25.3 |
||||||||||||||
Adjusted funds flow from operations |
418.4 |
337.3 |
1,825.4 |
1,741.2 |
||||||||||||||
(1) On initial adoption of IFRS 16, the Company elected to use the modified retrospective approach; therefore, comparative information has not been restated. Refer to the Changes in Accounting Policies section in the Company’s MD&A for the year ended December 31, 2019. |
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 December 31 |
Year ended December 31 |
|||||||||||||||||
($ millions) |
2019 |
2018 (1) |
2019 |
2018 (1) |
||||||||||||||
Net income (loss) |
(932.1) |
(2,390.5) |
(1,033.3) |
(2,616.9) |
||||||||||||||
Amortization of E&E undeveloped land |
21.3 |
39.0 |
129.1 |
157.2 |
||||||||||||||
Impairment |
1,216.5 |
3,690.7 |
1,466.4 |
3,705.9 |
||||||||||||||
Unrealized derivative (gains) losses |
153.9 |
(737.9) |
269.6 |
(439.4) |
||||||||||||||
Unrealized foreign exchange (gain) loss on translation of |
||||||||||||||||||
hedged US dollar long-term debt |
(52.5) |
184.4 |
(207.7) |
254.2 |
||||||||||||||
Unrealized loss on long-term investments |
0.5 |
3.8 |
2.0 |
16.2 |
||||||||||||||
(Gain) loss on sale of long-term investments |
— |
1.0 |
— |
(0.7) |
||||||||||||||
Net (gain) loss on capital dispositions |
(0.1) |
28.3 |
199.2 |
129.1 |
||||||||||||||
Deferred tax relating to adjustments |
(357.6) |
(835.1) |
(438.5) |
(971.0) |
||||||||||||||
Adjusted net earnings (loss) from operations |
49.9 |
(16.3) |
386.8 |
234.6 |
||||||||||||||
(1) |
On initial adoption of IFRS 16, the Company elected to use the modified retrospective approach; therefore, comparative information has not been restated. Refer to the Changes in Accounting Policies section in the Company’s MD&A for the year ended December 31, 2019. |
Free cash flow is calculated as adjusted funds flow from operations less capital expenditures, payments on lease liability, asset retirement obligations and other cash items (excluding net acquisitions and dispositions). Excess cash flow is calculated as free cash flow less dividends. Management utilizes free cash flow and excess cash flow as key measures to assess the ability of the Company to finance dividends, potential share repurchases, debt repayments and returns-based growth.
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) |
2019 |
2018 |
||||
Long-term debt (1) |
2,905.1 |
4,276.7 |
||||
Accounts payable and accrued liabilities |
479.4 |
549.4 |
||||
Long-term compensation liability (2) |
13.1 |
10.0 |
||||
Cash |
(56.9) |
(15.3) |
||||
Accounts receivable |
(295.9) |
(322.6) |
||||
Prepaids and deposits |
(6.9) |
(4.6) |
||||
Long-term investments |
(6.7) |
(8.7) |
||||
Excludes: |
||||||
Unrealized foreign exchange on translation of hedged US dollar long-term debt |
(265.9) |
(473.6) |
||||
Net debt |
2,765.3 |
4,011.3 |
||||
(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.
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