Crescent Point Energy Corp. Announces Year-End 2010 Results
By Crescent Point Energy Corp., PRNETuesday, March 15, 2011
CALGARY, Alberta, March 16, 2011 - Crescent Point Energy Corp. ("Crescent Point" or the "Company") (TSX:
CPG) is pleased to announce its operating and financial results for the year
ended December 31, 2010. The Company also announces the filing of its audited
financial statements and management's discussion and analysis for the year
ended December 31, 2010, on the System for Electronic Document Analysis and
Retrieval ("SEDAR") at www.sedar.com and on Crescent Point's website
at www.crescentpointenergy.com.
FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended December 31
(Cdn$000s except shares, 2010 2009 % Change
per share and per boe amounts)
Financial
Funds flow from operations (1) (3) 263,221 191,292 38
Per share (1) (2) (3) 0.98 0.98 -
Net income (loss) (4) (54,351) (4,024) (1,251)
Per share (2) (4) (0.21) (0.02) (950)
Dividends paid or declared 184,688 138,156 34
Per share (2) 0.69 0.69 -
Payout ratio (%) (1) 70 72 (2)
Per share (%) (1) (2) 70 70 -
Net debt (1) (5) 1,116,463 370,937 201
Capital acquisitions (net) (6) 81,456 1,090,575 (93)
Development capital expenditures 246,548 113,117 118
Weighted average shares outstanding
(mm)
Basic 263.4 192.6 37
Diluted 267.4 194.9 37
Operating
Average daily production
Crude oil and NGLs (bbls/d) 62,640 46,022 36
Natural gas (mcf/d) 42,831 36,134 19
Total (boe/d) 69,779 52,044 34
Average selling prices (7)
Crude oil and NGLs ($/bbl) 76.01 73.69 3
Natural gas ($/mcf) 3.88 4.66 (17)
Total ($/boe) 70.61 68.40 3
Netback ($/boe)
Oil and gas sales 70.61 68.40 3
Royalties (10.74) (12.59) (15)
Operating expenses (11.37) (9.48) 20
Transportation (1.68) (1.35) 24
Netback prior to realized derivatives 46.82 44.98 4
Realized gain (loss) on derivatives (0.80) (0.25) 220
(8)
Operating netback (1) 46.02 44.73 3
Cont.
Year ended December 31
(Cdn$000s except shares, 2010 2009 % Change
per share and per boe amounts)
Financial
Funds flow from operations (1) 882,862 672,895 31
(3)
Per share (1) (2) (3) 3.70 4.15 (11)
Net income (loss) (4) 20,021 (31,075) 164
Per share (2) (4) 0.08 (0.19) 142
Dividends paid or declared 657,520 453,318 45
Per share (2) 2.76 2.76 -
Payout ratio (%) (1) 74 67 7
Per share (%) (1) (2) 75 67 8
Net debt (1) (5) 1,116,463 370,937 201
Capital acquisitions (net) (6) 2,077,733 2,078,521 -
Development capital 958,606 339,916 182
expenditures
Weighted average shares
outstanding (mm)
Basic 234.9 159.8 47
Diluted 238.7 162.1 47
Operating
Average daily production
Crude oil and NGLs (bbls/d) 55,070 39,749 39
Natural gas (mcf/d) 39,318 30,802 28
Total (boe/d) 61,623 44,883 37
Average selling prices (7)
Crude oil and NGLs ($/bbl) 73.46 64.49 14
Natural gas ($/mcf) 4.12 4.11 -
Total ($/boe) 68.28 59.93 14
Netback ($/boe)
Oil and gas sales 68.28 59.93 14
Royalties (11.34) (10.54) 8
Operating expenses (11.03) (8.92) 24
Transportation (1.65) (1.48) 11
Netback prior to realized 44.26 38.99 14
derivatives
Realized gain (loss) on 0.25 3.21 (92)
derivatives (8)
Operating netback (1) 44.51 42.20 5
Crescent Point's financial and operating results since July 2, 2010,
include the acquisition of Shelter Bay Energy Inc. ("Shelter Bay"); prior to
this, Crescent Point's financial and operating results did not include the
production and cash flows of Shelter Bay other than the production and cash
flows associated with Crescent Point's interests in the wells farmed out to
Shelter Bay by Crescent Point. Also prior to July 2, 2010, Crescent Point
accounted for its investment in Shelter Bay using the equity method of
accounting; accordingly, Crescent Point recorded its share of Shelter Bay's
net income or loss in the "equity and other income" caption on the
consolidated statements of operations, comprehensive income and deficit.
(1) Funds flow from operations, payout ratio, net debt and netback as
presented do not have any standardized meaning prescribed by Canadian
generally accepted accounting principles 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 per share dividends) are
the per share - diluted amounts.
(3) Funds flow from operations for the year ended December 31, 2009,
includes a realized derivative gain on crystallization of various oil
contracts of $72.5 million.
(4) Net income for the year ended December 31, 2010, includes unrealized
derivative losses of $96.3 million. The net loss for the year ended
December 31, 2009 includes unrealized derivative losses of $228.3
million, a $72.5 million realized derivative gain on crystallization
of various oil contracts and a $10.1 million bad debt provision for
SemCanada.
(5) Net debt includes long-term debt, working capital and long-term
investments excluding risk management assets, risk management
liabilities and unrealized foreign exchange on translation of US
dollar senior guaranteed notes.
(6) Capital acquisitions represent total consideration for the
transactions including long-term debt and working capital assumed and,
commencing January 1, 2010, excluding transaction costs.
(7) The average selling prices reported are before realized derivatives
and transportation charges.
(8) The realized derivative gain for the year ended December 31, 2009,
excludes a realized derivative gain on crystallization of $72.5
million.
2010 HIGHLIGHTS
In 2010, Crescent Point continued to execute its integrated business
strategy of acquiring, exploiting and developing high-quality, long-life
light and medium oil and natural gas properties.
- Crescent Point achieved a record average daily production rate in 2010
of 61,623 boe/d, a 37 percent increase over 2009, and achieved a year-end
exit production rate of more than 72,000 boe/d. Production was weighted 89
percent to light and medium crude oil.
- Excluding acquisitions, Crescent Point grew average production by more
than 10 percent compared to 2009, due to its successful drilling and
completions programs.
- In 2010, the Company spent $958.6 million on development capital
activities, including $603.0 million on drilling and completions activities.
Crescent Point drilled 406 (302.2 net) wells in 2010 with a 99 percent
success rate.
- Crescent Point acquired a record amount of undeveloped land through
acquisitions, Crown land sales and freehold leasing programs. The Company
doubled its undeveloped land base to more than three million net acres. In
total, the Company acquired 1.9 million net acres of land during the year for
total consideration of $791.4 million. The majority of the land expenditures
were focused on consolidating the Company's core resource plays, at Viewfield
Bakken and Lower Shaunavon, as well as establishing dominant positions in new
emerging plays in southern Alberta and the Flat Lake area of southeast
Saskatchewan.
- The Company increased proved plus probable reserves by 35 percent to
379.5 million boe ("mmboe") at year-end 2010, weighted more than 92 percent
to light and medium crude oil and liquids. This represents a proved plus
probable reserve life index of 14.3 years. Proved reserves also increased by
35 percent to 250.8 mmboe.
- Crescent Point replaced 247 percent of 2010 production on a proved plus
probable basis, excluding reserves added through acquisitions. This is the
ninth consecutive year of strong positive technical and development reserve
additions.
- This is also the ninth consecutive year of growth in Net Asset Value
("NAV") per share, production and cash flow. NAV per share increased to
$36.02 per share, discounted at 10 percent. Including dividends paid in 2010,
this represents a 10 percent growth in value per share.
- Crescent Point achieved 2010 finding and development ("F&D") costs of
$17.23 per proved plus probable boe and $21.07 per proved boe of reserves,
excluding changes in future development capital ("FDC"). This represents
recycle ratios of 2.6 and 2.1 for proved plus probable and proved,
respectively.
- Excluding the significant amount of undeveloped land acquired through
Crown land sales and freehold leasing programs, F&D costs were $13.44 per
proved plus probable boe and $16.43 per proved boe, excluding changes in FDC.
Total Proved
Including Excluding
Per boe, except Recycle Ratios Land Land(3)(4)
F&D
5-year weighted average cost, excluding $16.18
change in FDC(1)
2010 cost, excluding change in FDC $21.07 $16.43
2010 average recycle ratio(2) 2.1 2.7
2010 cost, including change in FDC $32.45 $27.81
Finding, Development & Acquisition
("FD&A")
5-year weighted average cost, $27.73
excluding change in FDC
2010 cost, excluding change in FDC $35.94 $26.90
2010 average recycle ratio(2) 1.2 1.6
2010 cost, including change in FDC $41.85 $32.81
Cont.
Total Proved plus Probable
Excluding
Per boe, except Recycle Ratios Including Land Land(3)(4)
F&D
5-year weighted average cost, $12.34
excluding change in FDC(1)
2010 cost, excluding change in FDC $17.23 $13.44
2010 average recycle ratio(2) 2.6 3.3
2010 cost, including change in FDC $28.89 $25.11
Finding, Development & Acquisition
("FD&A")
5-year weighted average cost, $19.88
excluding change in FDC
2010 cost, excluding change in FDC $26.15 $19.58
2010 average recycle ratio(2) 1.7 2.3
2010 cost, including change in FDC $31.54 $24.97
(1) Future Development Capital.
(2) Based on 2010 netback (prior to realized derivatives) of $44.26 per boe.
(3) Land expenditures were $210.8 million of the $958.6 million capital
development program. (4) Land expenditures were $580.6 million of the
$2,189.8 million acquisition expenditures.
- Crescent Point's average funds flow from operations increased by 31
percent to $882.9 million ($3.70 per share - diluted) in 2010, compared to
$672.9 million ($4.15 per share - diluted) in 2009. Excluding a $72.5 million
realized derivative gain on crystallization of various oil contracts recorded
in 2009, funds flow from operations for 2009 would have been $3.70 per share
- diluted.
- Crescent Point maintained consistent monthly dividends of $0.23 per
share, totaling $2.76 per share for the year and resulting in a payout ratio
of 75 percent on a per share - diluted basis. This is unchanged from $2.76
per share paid in 2009. Since inception in 2001, Crescent Point has paid
approximately $2.0 billion in dividends.
- On March 24, 2010, the Company closed a private placement of long-term
debt in the form of senior guaranteed notes to a group of institutional
investors. In total, US$260 million and Cdn$50 million was raised through
four separate series of notes under various terms and rates. Proceeds from
the offering were used to repay a portion of the Company's outstanding bank
debt.
- During 2010, Crescent Point successfully completed two bought deal
financings for total gross proceeds of approximately $750 million. The first
closed in June and the second, which raised gross proceeds of $375.2 million,
closed on October 13, 2010.
- The Company's balance sheet remains strong, with projected average net
debt to 12-month cash flow of approximately 1.0 times and approximately $685
million currently unutilized on its bank lines.
- Crescent Point continued to implement its disciplined hedging strategy
to provide increased certainty over cash flow and dividends. As at March 8,
2011, the Company had hedged 55 percent, 44 percent, 35 percent and 19
percent of production, net of royalty interest, for the balance of 2011,
2012, 2013 and the first half of 2014, respectively. Average quarterly hedge
prices range from Cdn$84 per boe to Cdn$100 per boe.
FOURTH QUARTER 2010 HIGHLIGHTS
- Crescent Point grew fourth quarter 2010 average daily production by six
percent over third quarter 2010, producing 69,779 boe/d for the quarter. This
is up from 65,548 boe/d in third quarter and up 34 percent from 52,044 boe/d
in fourth quarter 2009. The average December 2010 production rate exceeded
72,000 boe/d.
- In fourth quarter 2010, the Company spent $246.5 million on development
capital activities, including $178.5 million on drilling and completions
activities. Crescent Point drilled 105 (71.1 net) wells with a 99 percent
success rate.
- Crescent Point's funds flow from operations increased by 38 percent to
$263.2 million ($0.98 per share - diluted) in fourth quarter 2010, compared
to $191.3 million ($0.98 per share - diluted) in fourth quarter 2009.
- In fourth quarter 2010, the Company's operating netback increased to
$46.02 per boe from $44.73 in fourth quarter 2009.
- Crescent Point maintained consistent monthly dividends of $0.23 per
share, totaling $0.69 per share for fourth quarter 2010 and resulting in a
payout ratio of 70 percent on a per share - diluted basis. This is unchanged
from $0.69 per share paid in fourth quarter 2009.
- On October 13, 2010, the Company closed a bought deal equity financing,
in which a total of 10,250,000 Crescent Point shares were issued for gross
proceeds of $375.2 million. Proceeds were used to finance increased capital
expenditures, including land acquisitions, a portion of the Private Co.
acquisition announced on September 20, 2010, and general corporate purposes.
OPERATIONS REVIEW
Fourth Quarter Operations Summary
During fourth quarter 2010, Crescent Point continued to aggressively
implement management's business strategy of creating sustainable, value-added
growth in reserves, production and cash flow through acquiring, exploiting
and developing high-quality, long-life light and medium oil and natural gas
properties.
Crescent Point achieved a new production record in the fourth quarter,
averaging 69,779 boe/d, a six percent increase over third quarter. The
Company participated in drilling 105 (71.1 net) wells targeting oil,
achieving a 99 percent success rate.
Drilling Results
The following tables summarize our drilling results for the three and 12
months ended December 31, 2010:
Three months ended Gas Oil D&A Service Standing Total Net % Success
December 31, 2010
Southeast Saskatchewan - 76 - - - 76 51.5 100
Southwest Saskatchewan - 19 - - - 19 11.2 100
South/Central Alberta - 7 - - 1 8 8.0 88
Northeast BC and Peace - - - - - - - -
River Arch, Alberta
United States - 2 - - - 2 0.4 100
Total - 104 - - 1 105 71.1 99
Year ended December 31,Gas Oil D&A Service Standing Total Net % Success
2010
Southeast Saskatchewan - 280 3 5 - 288 217.3 99
Southwest Saskatchewan - 106 - - - 106 75.4 100
South/Central Alberta - 8 - - 1 9 9.0 89
Northeast BC and Peace - - - - - - - -
River Arch, Alberta
United States - 3 - - - 3 0.5 100
Total - 397 3 5 1 406 302.2 99
Southeast Saskatchewan
In fourth quarter 2010, Crescent Point participated in drilling 76 (51.5
net) oil wells in southeast Saskatchewan, achieving a 100 percent success
rate. Of the wells drilled, 59 (45.6 net) were horizontal wells in the Bakken
light oil resource play.
The Company completed the construction of 110 kilometres of
pipeline-gathering systems in the Viewfield area, tying in approximately 71
oil wells. Crescent Point began construction to expand compression and
processing at the Viewfield gas plant, to raise inlet capacity to 30 mmcf/d;
the expansion is expected to be complete by fourth quarter 2011. In addition,
the Company completed the design of an additional 100,000 barrels of field
storage capacity to increase operational flexibility. Construction began in
early 2011, with plans to be operational during second quarter 2011.
By year-end 2011, Crescent Point expects to have up to 36 water injection
wells operating in the Viewfield Bakken resource play. The first and second
water flood pilot projects continue to demonstrate positive production
response in wells offsetting horizontal water injection wells. Water
injection in Crescent Point's third and fourth water flood pilots began in
third quarter 2010; preliminary results are encouraging and will be monitored
throughout 2011.
Crescent Point also participated in the drilling of 17 (5.9 net)
conventional horizontal oil wells in southeast Saskatchewan, of which 2 (2.0
net) were operated. Of the wells drilled, 2 (1.1 net) were in the Viewfield
Frobisher zone.
The Company plans to spend 62 percent of its 2011 capital program, which
represents an investment of nearly $500 million, in the Viewfield Bakken
resource play, drilling approximately 200 net wells and expanding its
existing gas- and fluid-handling capabilities.
Southwest Saskatchewan
During the quarter, the Company participated in drilling 9 (8.1 net)
Lower Shaunavon horizontal oil wells, 4 (0.3 net) Upper Shaunavon horizontal
oil wells and 6 (2.8 net) Battrum/Cantuar oil wells, achieving a 100 percent
success rate.
During the quarter, Crescent Point began designing and ordering equipment
to build a 6 mmcf/d gas plant in the Shaunavon area. The plant, which is
designed to be expandable to 12 mmcf/d, is expected to be operational before
the end of this year.
Throughout 2010, wet weather conditions impeded the Company's pipeline
and effluent trucking operations in southern Saskatchewan. These wet
conditions contributed to higher transportation and operating costs,
particularly in the Shaunavon area, which contributed to an increase in the
Company's 2010 operating costs relative to 2009.
During 2011, Crescent Point's main focus will be to expand infrastructure
in the Shaunavon area, building batteries and gathering systems to increase
efficiencies and reduce operating costs. The Company expects to drill 44 net
wells in the Shaunavon area in 2011. In total, 16 percent of the Company's
2011 capital budget will be spent in the area. The Company expects to
significantly increase drilling in the Shaunavon in 2012, once this year's
infrastructure projects are complete.
Alberta
In southern Alberta, 8 (8.0 net) oil wells were drilled, including 3 (3.0
net) in unconventional zones and 5 (5.0 net) in conventional plays identified
on the southern Alberta lands. Crescent Point expects to spend $31 million in
southern Alberta in 2011, drilling 14 net wells. Up to 5 (5.0 net) of these
will be exploration wells; the balance will be development wells targeting
conventional horizons.
North Dakota, United States
Crescent Point participated in drilling 2 (0.4 net) successful
non-operated Bakken wells in North Dakota. The Company plans to drill five
net wells in 2011.
Acquisitions
On November 5, 2010, Crescent Point completed the acquisition of certain
assets in southeast Saskatchewan. The assets further consolidated the
Company's core area in southeast Saskatchewan and included approximately 950
boe/d of high-quality, low-decline production.
RESERVES
In 2010, Crescent Point replaced 247 percent of production on a proved
plus probable basis, excluding reserves added through acquisitions. Including
acquisitions, the Company replaced 535 percent of production and increased
its year-end proved plus probable reserves by 35 percent to 379.5 mmboe and
its proved reserves by 35 percent to 250.8 mmboe. Year-end 2009 reserves were
281.6 mmboe proved plus probable and 185.7 mmboe proved.
- Crescent Point achieved 2010 F&D costs of $17.23 per proved plus
probable boe and $21.07 per proved boe, excluding changes in FDC, generating
proved plus probable and proved recycle ratios of 2.6 times and 2.1 times,
respectively.
- Through Crown land sales and freehold leasing programs, Crescent Point
acquired approximately 290,000 acres of undeveloped land for total
consideration of $210.8 million. Excluding these land acquisitions, F&D costs
were $13.44 per proved plus probable boe and $16.43 per proved boe.
- Including changes in FDC, 2010 F&D costs were $28.89 per proved plus
probable boe and $32.45 per proved boe. Excluding the significant land
expenditures during the year, F&D costs, including FDC, were $25.11 per
proved plus probable boe and $27.81 per proved boe.
- Crescent Point's 5-year weighted average F&D cost, including
expenditures on facilities, land and seismic, is $12.34 per proved plus
probable boe and $16.18 per proved boe, representing recycle ratios of 3.6
and 2.7 times, respectively. This highlights the Company's technical ability
to efficiently add value to its large resource-in-place asset base and
accurately reflects the full cycle nature of investments in facilities, land
and seismic.
- The Company's cumulative proved plus probable technical and development
reserves additions since inception increased to 179.9 mmboe, which represents
47 percent of year-end 2010 proved plus probable reserves.
The Company's reserves were independently evaluated by GLJ Petroleum
Consultants Ltd. ("GLJ") and Sproule Associates Ltd. ("Sproule") as at
December 31, 2010.
Summary of Reserves
(Escalated Pricing)
As at December 31, 2010 (1)
RESERVES(2)
Oil (mbbl) Gas (mmscf) NGL (mbbl) Total (mboe)
Description Gross Net Gross Net Gross Net Gross Net
Proved 116,707 102,248 65,957 60,212 3,508 3,187 131,208 115,469
producing
Proved 105,077 96,481 55,681 51,343 5,244 4,912 119,601 109,949
non-producing
Total proved221,784 198,729 121,638 111,556 8,753 8,098 250,810 225,419
Probable 115,468 103,651 54,771 49,547 4,134 3,816 128,731 115,725
Total proved337,252 302,380 176,408 161,103 12,887 11,914 379,540 341,144
plus probable
(3)
(1) Based on GLJ's January 1, 2011, escalated price forecast.
(2) "Gross Reserves" are the total Company's interest share before the
deduction of any royalties and without including any royalty interest
of the Company. "Net Reserves" are the total Company's interest share
after deducting royalties and including any royalty interest.
(3) Numbers may not add due to rounding.
Summary of Before and After Tax Net Present Values
(Escalated Pricing)
As at December 31, 2010 (1)
BEFORE TAX NET PRESENT VALUE ($million)
Discount Rate
Description Undiscounted 5% 10% 15% 20%
Proved producing 6,501 4,639 3,712 3,145 2,756
Proved non-producing 462 366 305 262 231
Undeveloped 4,485 3,092 2,266 1,730 1,360
Total proved(2) 11,448 8,098 6,283 5,137 4,347
Probable 7,276 4,218 2,888 2,164 1,712
Total proved plus 18,724 12,315 9,171 7,301 6,060
probable(2)
AFTER TAX NET PRESENT VALUE ($million)
Discount Rate
Description Undiscounted 5% 10% 15% 20%
Proved producing 6,026 4,375 3,532 3,009 2,646
Proved non-producing 336 265 219 188 165
Undeveloped 3,274 2,199 1,559 1,145 860
Total proved(2) 9,636 6,839 5,311 4,342 3,671
Probable 5,315 3,060 2,077 1,540 1,206
Total proved plus 14,951 9,899 7,387 5,882 4,878
probable(2)
(1) Based on GLJ's January 1, 2011, escalated price forecast.
(2) Numbers may not add due to rounding.
Before Tax Net Asset Value Per Share, Fully Diluted, Utilizing
Independent Engineering Escalated Pricing
2010 2009 2008 2007 2006 2005 2004
PV 0% $71.38 $72.01 $80.66 $61.03 $34.08 $21.99 $16.19
PV 5% $47.65 $46.91 $49.30 $40.21 $21.61 $15.12 $11.22
PV 10% $36.02 $35.08 $34.97 $30.05 $15.70 $11.45 $8.56
PV 15% $29.10 $28.27 $26.85 $24.04 $12.27 $9.10 $6.85
Reserves Reconciliation
(Escalated Pricing)
Gross Reserves (1)
For the year ended December 31, 2010
CRUDE OIL AND NGL (mbbl) NATURAL GAS (mmscf)
Proved Probable Total Proved Probable Total
Opening Balance
January 1, 2010 169,374 89,030 258,404 97,888 41,520 139,408
Acquired 43,286 23,604 66,890 18,024 9,102 27,125
Disposed (3,539) (2,144) (5,683) (3,861) (1,987) (5,848)
Production (20,101) - (20,101) (14,351) - (14,351)
Development 24,861 19,581 44,442 19,369 10,597 29,966
Technical 16,656 (10,469) 6,187
revisions 4,569 (4,460) 108
Closing Balance
December 31, 2010
(2) 230,537 119,602 350,139 121,638 54,771 176,408
Cont.
BOE (mboe)
Proved Probable Total
Opening Balance
January 1, 2010 185,689 95,949 281,638
Acquired 46,290 25,121 71,411
Disposed (4,183) (2,475) (6,658)
Production (22,492) - (22,492)
Development 28,089 21,348 49,437
Technical revisions 17,417 (11,212) 6,205
Closing Balance
December 31, 2010 (2) 250,810 128,731 379,540
(1) Based on GLJ's January 1, 2011, escalated price forecast. "Gross
reserves" are the Company's working-interest share before deduction
of any royalties and without including any royalty interests of the
Company.
(2) Numbers may not add due to rounding.
Finding, Development and Acquisition Costs
(Excluding future development capital)
For the year ended December 31, 2010
CAPITAL
EXPENDITURES(1)(4) RESERVES (3)
Proved
Total Plus
Proved Probable
$000 % mboe % mboe %
Exploration development and 958,606 30 45,506 52 55,642 46
revisions
Acquisitions, net of 2,189,818 70 42,107 48 64,753 54
dispositions
Total 3,148,424 100 87,613 100 120,395 100
Cont.
FINDING, DEVELOPMENT
AND ACQUISITION
COSTS(1)(2)
Proved Plus
Proved Probable
$/boe $/boe
Exploration 21.07 17.23
development and
revisions
Acquisitions, net of 52.01 33.82
dispositions
Total 35.94 26.15
(1) Exploration, Development and Revisions exclude the change during the
most recent financial year in estimated FDC relating to proved and
proved plus probable reserves, respectively. These costs would add
$517.9 million and $649.1 million, respectively, to the proved and
proved plus probable reserves categories. Including these changes,
the proved and proved plus probable F&D costs are $32.45 and $28.89
per boe, respectively.
(2) Including change in FDC, FD&A costs are $41.85 per proved boe and
$31.54 per proved plus probable boe.
(3) Gross Company interest reserves are used in this calculation
(interest reserves, before deduction of any royalties and without
including any royalty interests of the Company).
(4) 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.
OUTLOOK
Crescent Point continues to execute its business plan of creating
sustainable value-added growth in reserves, production and cash flow through
management's integrated strategy of acquiring, exploiting and developing
high-quality, long-life light and medium oil and natural gas properties in
western Canada.
2010 was another successful year in which Crescent Point achieved record
production, reserves and cash flow. The Company also completed a record
amount of land acquisitions, which further consolidated its key Viewfield
Bakken and Lower Shaunavon resource plays and captured emerging plays in
southern Alberta and at Flat Lake, Saskatchewan.
Through Crown land sales, freehold leasing programs and the Private Co.
acquisition, Crescent Point acquired more than one million net acres of
exploratory land in southern Alberta in 2010. The Company believes the lands
are prospective for multiple zones, including the Bakken and Three Forks, and
has planned 14 net development and exploration wells for the area in 2011.
Crescent Point now has more than 6,500 net low-risk drilling locations in
inventory, representing more than 450,000 boe/d of risked potential
production additions. This depth of drilling inventory positions the Company
well for long-term sustainable growth in production, reserves and NAV and
also provides support for long-term dividends.
Crescent Point has developed a detailed five-year growth planning model,
which assists the Company in managing its extensive drilling inventory under
various commodity price scenarios. This planning model was built using
internally developed detailed engineering, geological mapping and tax
analysis. The Company uses the model as a tool to manage overall growth, with
an emphasis on the sustainability of Crescent Point's existing dividend,
while maintaining a strong balance sheet and per share production growth.
Under the base case scenario assumptions, which include a $80/bbl WTI oil
price, Crescent Point delivers its $0.23 per share monthly dividend,
maintains a strong balance sheet with debt to cash flow of approximately 1.1
times and grows production per share by three to five percent annually.
The planning model is conservative in that it assumes no change to
current completion technology and no potential positive impacts from water
flood performance in either the Viewfield Bakken or Lower Shaunavon resource
plays. Nor does it factor in successful development or exploration success in
the Company's unconventional plays or properties from future acquisitions.
Crescent Point's 2011 capital expenditures budget has been set at $800
million. Execution of the 2011 budget is expected to increase the Company's
average daily production to more than 72,500 boe/d and to provide for exit
2011 production of greater than 75,000 boe/d. Year-to-date results have been
strong and the Company is currently ahead of production targets.
Crescent Point expects to spend approximately 62 percent of its 2011
budget in the Viewfield Bakken resource play, 16 percent in the Lower
Shaunavon resource play, and a combined 10 percent in the Flat Lake Bakken
resource play and the emerging plays in southern Alberta. The remainder of
the budget will be allocated to the Company's other core conventional
properties. In total, Crescent Point expects to drill approximately 311 net
wells in 2011 and to spend $101 million on facilities infrastructure,
primarily in the Bakken and Lower Shaunavon resource plays.
The Company will continue to expand and develop its Viewfield Bakken
water flood program. By year-end 2011, the Company expects to have up to 36
injection wells in the Bakken play. Based on promising results from two and a
half years of production in the Company's first Bakken water flood pilot,
Crescent Point believes that water flood implementation could increase
ultimate recovery factors to greater than 30 percent. Also, in the Lower
Shaunavon play, Crescent Point will implement its fourth water flood pilot
later this year.
Funds flow from operations for 2011 is expected to increase to $1.1
billion ($4.08 per share - diluted), based on forecast pricing of US$92.00
per barrel WTI, Cdn$3.50 per mcf AECO gas and US$/Cdn$1.01 exchange rate.
The Company's balance sheet remains strong, with projected average net
debt to 12-month cash flow of approximately 1.0 times and approximately $685
million currently unutilized on its bank lines.
Crescent Point continues to implement its balanced 31/2-year price risk
management program, using a combination of swaps, collars and purchased put
options with investment grade counterparties all within Crescent Point's
banking syndicate. As at March 8, 2011, the Company had hedged 55 percent, 44
percent, 35 percent and 19 percent of production, net of royalty interest,
for the balance of 2011, 2012, 2013 and the first half of 2014, respectively.
Average quarterly hedge prices range from Cdn$84 per boe to Cdn$100 per boe.
Crescent Point's management believes that with the Company's high-quality
reserve base and development drilling inventory, excellent balance sheet and
solid risk management program, the Company is well-positioned to continue
generating strong operating and financial results through 2011 and beyond.
2011 Guidance
Crescent Point's 2011 guidance is as follows:
Production
Oil and NGL (bbls/d) 65,375
Natural gas (mcf/d) 42,750
Total (boe/d) 72,500
Funds flow from operations ($000) 1,130,000
Funds flow per share - diluted ($) 4.08
Cash dividends per share ($) 2.76
Payout ratio - per share - diluted (%) 68
Capital expenditures ($000) (1) 800,000
Wells drilled, net 311
Pricing
Crude oil - WTI (US$/bbl) 92.00
Crude oil - WTI (Cdn$/bbl) 91.09
Natural gas - Corporate (Cdn$/mcf) 3.50
Exchange rate (US$/Cdn$) 1.01
(1) The projection of capital expenditures excludes acquisitions, which
are separately considered and evaluated.
ON BEHALF OF THE BOARD OF DIRECTORS
(signed)
Scott Saxberg
President and Chief Executive Officer
March 16, 2011
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking statements. All forward-looking statements are based on
Crescent Point's beliefs and assumptions based on information available at
the time the assumption was made. The use of any of the words "could",
"should", "can", "anticipate", "expect", "believe", "will", "may",
"projected", "sustain", "continues", "strategy", "potential", "projects",
"grow", "take advantage", "estimate", "well-positioned" and similar
expressions are intended to identify forward-looking statements. By their
nature, such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events to
differ materially from those anticipated in such forward-looking statements.
Crescent Point believes that the expectations reflected in those
forward-looking statements are reasonable but no assurance can be given that
these expectations will prove to be correct and such forward-looking
statements included in this report should not be unduly relied upon. These
statements speak only as of the date of this report or, if applicable, as of
the date specified in those documents specifically referenced herein.
In particular, this press release contains forward-looking statements
pertaining to the following: the performance characteristics of Crescent
Point's oil and natural gas properties; oil and natural gas production
levels; capital expenditure programs; drilling programs; well conversion and
water injection programs; the quantity of Crescent Point's oil and natural
gas reserves and anticipated future cash flows from such reserves; the
quantity of drilling locations in inventory; projections of commodity prices
and costs; supply and demand for oil and natural gas; expectations regarding
the ability to raise capital and to continually add to reserves through
acquisitions and development; expected debt levels and credit facilities;
expected pipeline capacity additions; facility construction plans; and
treatment under governmental regulatory regimes.
By their nature, such forward-looking statements are subject to a number
of risks, uncertainties and assumptions, which could cause actual results or
other expectations to differ materially from those anticipated, including
those material risks discussed in our annual information form under "Risk
Factors" and our Management's Discussion and Analysis for the year ended
December 31, 2010 under the headings "Risk Factors" and "Forward-Looking
Information." The material assumptions are disclosed in the Management's
Discussion and Analysis for the year ended December 31, 2010 under the
headings "Cash Dividends", "Capital Expenditures", "Asset Retirement
Obligation", "Liquidity and Capital Resources", "Critical Accounting
Estimates", "New Accounting Pronouncements" and "Outlook". The actual results
could differ materially from those anticipated in these forward-looking
statements as a result of the material risks set forth under the noted
headings, which include, but are not limited to: financial risk of marketing
reserves at an acceptable price given market conditions; volatility in market
prices for oil and natural gas; delays in business operations, pipeline
restrictions, blowouts; the risk of carrying out operations with minimal
environmental impact; industry conditions including changes in laws and
regulations including the adoption of new environmental laws and regulations
and changes in how they are interpreted and enforced; uncertainties
associated with estimating oil and natural gas reserves and Discovered
Petroleum Initially in Place; economic risk of finding and producing reserves
at a reasonable cost; uncertainties associated with partner plans and
approvals; operational matters related to non-operated properties; increased
competition for, among other things, capital, acquisitions of reserves and
undeveloped lands; competition for and availability of qualified personnel or
management; incorrect assessments of the value of acquisitions and
exploration and development programs; unexpected geological, technical,
drilling, construction and processing problems; availability of insurance;
fluctuations in foreign exchange and interest rates; stock market volatility;
failure to realize the anticipated benefits of acquisitions; general
economic, market and business conditions; uncertainties associated with
regulatory approvals; uncertainty of government policy changes; uncertainties
associated with credit facilities and counterparty credit risk; and changes
in income tax laws, tax laws, crown royalty rates and incentive programs
relating to the oil and gas industry.
Additional information on these and other factors that could affect
Crescent Point's operations or financial results are included in Crescent
Point's reports on file with Canadian securities regulatory authorities.
Readers are cautioned not to place undue reliance on this forward-looking
information, which is given as of the date it is expressed herein or
otherwise and Crescent Point undertakes no obligation to update publicly or
revise any forward-looking information, whether as a result of new
information, future events or otherwise, unless required to do so pursuant to
applicable law.
Crescent Point is a conventional oil and gas producer with assets
strategically focused in properties comprised of high-quality, long-life,
operated light and medium oil and natural gas reserves in western Canada.
Crescent Point shares are traded on the Toronto Stock Exchange under the
symbol CPG.
Crescent Point Energy Corp.
Suite 2800, 111-5th Avenue S.W.
Calgary, Alberta T2P 3Y6
For further information:
FOR FURTHER INFORMATION ON CRESCENT POINT ENERGY CORP. PLEASE CONTACT:
Greg Tisdale, Chief Financial Officer, or Trent Stangl, Vice President
Marketing and Investor Relations.
Telephone: +1(403)693-0020
Toll-free (US & Canada): +1-888-693-0020
Fax: +1(403)693-0070
Website: www.crescentpointenergy.com
FOR FURTHER INFORMATION ON CRESCENT POINT ENERGY CORP. PLEASE CONTACT: Greg Tisdale, Chief Financial Officer, or Trent Stangl, Vice President, Marketing and Investor Relations. Telephone: +1(403)693-0020, Toll-free (US & Canada): +1-888-693-0020, Fax: +1(403)693-0070
Tags: Alberta, Calgary, Crescent Point Energy Corp, March 16
