CALGARY, AB – Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX: CPG) and (NYSE: CPG) has completed the disposition of its remaining non-core southeast Saskatchewan conventional assets (“Assets”), which were previously identified as disposition candidates, for cash proceeds of $93 million (“Transaction”). As a result of the Transaction, Crescent Point also reduced asset retirement obligations (“ARO”) by approximately $220 million, or nearly 25 percent of its ARO balance as at March 31, 2021. Proceeds from the disposition have been directed to the Company’s balance sheet.
Crescent Point considered the Assets to be non-core due to the significant associated ARO, operating expenses that were substantially higher than the corporate average and limited scalability. The Assets also generated minimal free cash flow, after incorporating development capital required to sustain production and reclamation activities, despite contributing annual net operating income of approximately $55 million based on current production of approximately 6,500 boe/d and US$60/bbl WTI.
Crescent Point’s 2021 budgeted development capital expenditures range remains unchanged, as minimal development capital was allocated to these Assets for the remainder of the year. Reclamation activities that were previously budgeted for these Assets for the balance of 2021 will be redirected to reclaiming other properties as part of the Company’s commitment to strong environmental, social and governance (“ESG”) practices.
Crescent Point’s acquisition and disposition strategy remains centered on its strategic priorities of enhancing the Company’s balance sheet strength and sustainability. Crescent Point’s revised 2021 guidance, which incorporates the Transaction, is expected to generate significant excess cash flowŦ of approximately $500 to $625 million at US$55/bbl to US$65/bbl WTI.
TD Securities Inc. acted as financial advisor to Crescent Point with respect to the Transaction. Peters & Co. Limited represented the Company as its strategic advisor.
2021 GUIDANCE
The Company’s revised guidance for 2021 is as follows:
Prior |
Revised |
|
Total Annual Average Production (boe/d) (1) |
132,000 – 136,000 |
128,000 – 132,000 |
Capital Expenditures |
||
Development capital expenditures ($ million)
|
$575 – $625
|
$575 – $625
|
Capitalized G&A ($ million)
|
$35
|
$35
|
Total ($ million) (2) |
$610 – $660 |
$610 – $660 |
Other Information for 2021 Guidance |
||
Reclamation activities ($ million) (3)
|
$15
|
$15
|
Capital lease payments ($ million)
|
$20
|
$20
|
Annual operating expenses
|
$625 – $645 million ($12.75 – $13.25/boe)
|
$595 – $615 million ($12.45 – $12.95/boe)
|
Royalties |
11.5% – 12.5% |
11.5% – 12.5% |
1) |
The revised total annual average production (boe/d) is comprised of ~86% Oil & NGLs and 14% Natural Gas |
2) |
Land expenditures and net property acquisitions and dispositions are not included. Revised development capital expenditures is allocated as follows: 86% drilling & development and 14% facilities & seismic |
3) |
Reflects Crescent Point’s portion of its expected total budget |