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Crescent Point Energy Second Quarter 2022 Results

Share Print Bookmark    |    Wednesday,July 27,2022

Crescent Point Energy Corp. reported its operating and financial results for the quarter ended June 30, 2022.

Key Highlights:

• Generated approximately $380 million of excess cash flow in second quarter, allowing for increased returns to shareholders.
• Enhanced return of capital offering with an increased base dividend and an updated framework, as previously announced.
• Achieved strong IP30 rate of 900 boe/d per well, comprised primarily of liquids, on second fully operated pad in Kaybob Duvernay.
• Established new targets to reduce scope 1 and 2 emissions and freshwater use, as previously announced.

Craig Bryksa, President and CEO of Crescent Point, commented: "Our second quarter results highlight our excess cash flow generation, continued operational execution and commitment to returning capital. Upon attaining our near-term debt target, we announced our updated framework, which now targets to return the majority of our excess cash flow to shareholders. We remain focused on creating long-term value through a combination of returning capital while also enhancing the balance sheet strength and sustainability of the business."

Financial Highlights:

• Adjusted funds flow totaled $599.1 million during second quarter 2022, or $1.04 per share diluted, driven by a strong operating netback of $76.57 per boe.
• For the quarter ended June 30, 2022, development capital expenditures, which included drilling and development, facilities and seismic costs, totaled $196.9 million.
• Crescent Point's net debt as at June 30, 2022 was less than $1.5 billion, reflecting $307.3 million of net debt reduction in the quarter, including the repayment of approximately $225 million of senior note maturities. Subsequent to the quarter, the Company successfully closed the disposition of certain non-core assets allowing Crescent Point to attain its near-term net debt target of $1.3 billion, earlier than anticipated.
• Crescent Point reported net income of $331.5 million, or $0.58 per share diluted, for second quarter 2022.

Return of Capital Highlights:

• During second quarter, the Company returned $108.0 million or approximately 30 percent of its excess cash flow to shareholders through its base dividend and share repurchases. Subsequent to the quarter, Crescent Point released an updated framework which targets to return up to 50 percent of its discretionary excess cash flow, in addition to its base dividend, through a combination of share repurchases and special dividends.
• The Company repurchased approximately 7.2 million shares, for cancellation, for $70.9 million during second quarter and continues to remain active on its share repurchase program. Crescent Point has approval to repurchase, for cancellation, approximately 10 percent of its public float under its existing normal course issuer bid ("NCIB"), which expires on March 8, 2023.
• On July 6, 2022, the Company announced an increase to its third quarter 2022 base dividend by over 20 percent to $0.08/share or $0.32/share annually. Crescent Point's third quarter 2022 dividend will be paid on October 3, 2022 to shareholders of record on September 15, 2022.

Ops Highlights:

• Average production for the quarter ended June 30, 2022 was 129,176 boe/d, comprised of over 80 percent oil and liquids.
• The Company continues to demonstrate a strong track record of operational execution in its Kaybob Duvernay play. Crescent Point recently brought on stream its second fully operated multi-well pad with an average 30-day initial production ("IP30") rate of over 900 boe/d per well (71% condensate, 8% NGL and 21% shale gas), which is expected to payout in approximately six months from the initial on-stream date at current commodity prices. Crescent Point's ongoing execution also includes a further reduction in drilling days on its most recent pad, which averaged approximately 14 days per well.
• During second quarter, the Company's operations in North Dakota were temporarily impacted by a severe storm that affected electricity distribution. Operations were fully restored during the quarter, as previously announced.
• The Company continues to roll out its Operations Technology ("OT") platform, which Crescent Point has used to deliver operating cost efficiencies and environmental and safety benefits. Through the OT platform, the Company has optimized workflows and implemented remote well monitoring and technology in its field operations. Crescent Point is currently implementing the OT platform in its North Dakota and Kaybob Duvernay assets, which will complete the company-wide integration of this technology platform.
• Subsequent to the quarter, Crescent Point released its annual sustainability report providing insight into its Environmental, Social and Governance ("ESG") approach and execution. The 2022 Sustainability Report featured the introduction of a target to further reduce the Company's scope 1 and 2 emissions intensity by 38 percent by 2030, relative to Crescent Point's 2020 baseline. The Company also announced two new water targets to build upon its existing strong water management performance, including a 50 percent reduction in surface freshwater use in southeast Saskatchewan completions by 2025. Crescent Point's ESG practices continue to be integrated into all aspects of its business to enhance long-term sustainability.

Outlook

Second quarter 2022 results demonstrated continued capital discipline and operational execution, resulting in significant excess cash flow generation.

Crescent Point recently updated its 2022 annual average production guidance to 130,000 to 134,000 boe/d, reflecting the impact of certain non-core asset dispositions, with development capital expenditures unchanged at $875 to $900 million. The Company has controlled a significant portion of its capital costs to-date through its supply chain management while also mitigating potential cost increases through realized efficiencies. Crescent Point continues to monitor its cost assumptions in light of the current inflationary environment.

Excess cash flow generation is now expected to be approximately $1.4 billion in 2022, assuming US$100/bbl WTI for the remainder of 2022. The Company's excess cash flow generation continues to be bolstered by its high netback asset base and benefit from its significant tax pools.

Crescent Point remains disciplined in its capital allocation and continues to create value on a per share basis, including its recently announced framework that targets to return up to 50 percent of its discretionary excess cash flow to its shareholders.