Crescent Point Energy announces third quarter 2009 results and upwardly
revised guidance
FINANCIAL AND OPERATING HIGHLIGHTS
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Three months ended Nine months ended
($000s except September 30 September 30
shares, per share -----------------------------------------------------
and per boe % %
amounts) 2009 2008 Change 2009 2008 Change
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Financial
Funds flow from
operations(1) 155,415 183,843 (15) 481,603 482,497 -
Per share(1)(2) 0.96 1.45 (34) 3.19 3.86 (17)
Net income (loss)(3) 45,357 497,815 (91) (27,051) 102,691 (126)
Per share (2)(3) 0.28 3.92 (93) (0.18) 0.83 (122)
Cash dividends (2) 113,158 86,247 31 315,162 238,507 32
Per share(2) 0.69 0.69 - 2.07 1.92 8
Payout ratio (%)(1) 73 47 26 65 49 16
Per
share (%)(1)(2) 72 48 24 65 50 15
Net debt(1)(4) 741,287 672,812 10 741,287 672,812 10
Capital
acquisitions
(net)(5) 523,566 8,908 5,777 987,946 141,556 598
Development capital
expenditures 110,362 120,296 (8) 226,799 361,678 (37)
Weighted average
shares
outstanding (mm)
Basic 160.3 125.0 28 148.7 123.6 20
Diluted 162.6 127.3 28 151.1 125.4 20
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Operating
Average daily
production
Crude oil and NGLs
(bbls/d) 40,854 32,611 25 37,635 31,805 18
Natural gas
(mcf/d) 32,806 30,116 9 29,004 29,199 (1)
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Total (boe/d) 46,322 37,630 23 42,469 36,672 16
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Average selling
prices(6)
Crude oil and NGLs
($/bbl) 67.97 114.53 (41) 60.70 107.02 (43)
Natural gas ($/mcf) 3.14 7.99 (61) 3.88 8.72 (56)
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Total ($/boe) 62.17 105.65 (41) 56.44 99.76 (43)
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Netback ($/boe)
Oil and gas sales 62.17 105.65 (41) 56.44 99.76 (43)
Royalties (11.17) (20.67) (46) (9.69) (18.47) (48)
Operating expenses (9.05) (9.58) (6) (8.69) (8.93) (3)
Transportation (1.51) (1.70) (11) (1.54) (1.97) (22)
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Netback prior to
realized
derivatives 40.44 73.70 (45) 36.52 70.39 (48)
Realized gain
(loss) on
derivatives(7) 1.27 (15.18) 108 4.64 (12.94) 136
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Operating netback(1) 41.71 58.52 (29) 41.16 57.45 (28)
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Crescent Point's financial and operating results do not reflect the
production or cash flows of Shelter Bay Energy Inc. ("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.
Crescent Point accounts for its investment in Shelter Bay using the
equity method of accounting. Accordingly, Crescent Point records its
share of Shelter Bay 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 operating
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. Comparative amounts are Trust
distributions and per trust unit - diluted.
(3) The net loss of $27.1 million for the nine months ended
September 30, 2009 includes unrealized derivative losses of
$147.4 million, a $72.5 million realized derivative gain on
crystallization of various oil contracts and a $11.4 million bad debt
provision for SemCanada. The net income of $102.7 million for the
nine months ended September 30, 2008 includes an unrealized loss on
derivatives of $122.4 million and a $34.5 million realized derivative
loss on crystallization of various oil contracts.
(4) Net debt includes bank indebtedness, working capital and long term
investments, but excludes risk management assets and liabilities.
(5) Capital acquisitions represent total consideration for the
transactions including bank debt and working capital assumed.
(6) The average selling prices reported are before realized derivatives
and transportation charges.
(7) The realized derivative gain for the nine month period ended
September 30, 2009 excludes realized derivative gains on
crystallization of $72.5 million. The 2008 realized derivative loss
for the nine month period ended September 30 excludes a $34.5 million
loss on derivative crystallization of various oil contracts.
HIGHLIGHTS
In third quarter 2009, 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 exceeded production guidance and produced an average
of 46,322 boe/d in third quarter 2009. This represents a 12 percent
increase over second quarter 2009 and a 23 percent increase over
third quarter 2008. With continuing better than expected production
results year to date, the Company is upwardly revising its 2009
annual daily production guidance by 1,000 boe/d to 44,500 boe/d.
- The Company spent $110.4 million on development capital activities in
third quarter, including $27.4 million on facilities, land and
seismic and $83.0 million on drilling and completions activities.
- During the quarter, Crescent Point drilled 71 (49.4 net) wells with a
100 percent success rate. This includes 46 (31.2 net) Bakken
horizontal wells and 7 (4.1 net) Lower Shaunavon horizontal wells.
The Company also fracture stimulated 53 (42.8 net) Bakken horizontal
wells.
- On July 2, 2009, Crescent Point Energy Trust ("the Trust") and Wild
River Resources Ltd. ("Wild River") completed a plan of arrangement
(the "Wild River Arrangement") whereby Trust unitholders exchanged
their trust units for common shares of Wild River on a one-to-one
basis thereby converting the Trust into a corporation. Unitholders
voted 99.9 percent in favour of the Wild River Arrangement at a
unitholder meeting on June 29, 2009. The Company continues to pay a
dividend of $0.23 per share, which equals the previous monthly
distribution paid by the Trust.
- On July 3, 2009, Crescent Point completed its previously announced
arrangement with Gibraltar Exploration Ltd. ("Gibraltar"). The
Company subsequently sold 25 percent of the Wild River and Gibraltar
assets to Shelter Bay Energy Inc. ("Shelter Bay") resulting in
Crescent Point retaining 2,900 boe/d of high quality, long life
production, 110 net sections of undeveloped land, and 12.3 million
boe of proved plus probable reserves.
- On August 24, 2009, the Company announced that it had entered into an
arrangement agreement to acquire Wave Energy Ltd. ("Wave"), a private
oil and gas company with a dominant position in the Lower Shaunavon
resource play in southwest Saskatchewan. Wave's assets included
3,000 boe/d of high quality, long life production, more than 695 net
sections of undeveloped land, including 195 net sections in
Saskatchewan, and 17.6 million boe of proved plus probable reserves.
The majority of Wave's producing properties were in the Lower
Shaunavon resource play, with additional properties located in the
emerging Viking light oil resource play in west central Saskatchewan.
The arrangement with Wave subsequently closed in early fourth quarter
2009.
- On August 24, 2009, the Company also announced that it had entered
into two agreements to acquire producing assets (the "Assets") in
southeast and southwest Saskatchewan for combined consideration of
approximately $258.5 million of cash before closing cost adjustments.
The Assets produce approximately 3,750 boe/d, comprised of
approximately 2,750 boe/d of high quality, southeast Saskatchewan
production and 1,000 boe/d of high quality, long life southwest
Saskatchewan production. The Assets include 178 net sections of
undeveloped land and approximately 11.1 million boe of proved plus
probable reserves. These acquisitions were both completed during the
quarter.
- Crescent Point's funds flow from operations in third quarter 2009
decreased by 15 percent to $155.4 million ($0.96 per share -
diluted), compared to $183.8 million ($1.45 per unit - diluted) in
third quarter 2008, reflecting strong operating results despite a
41 percent drop in realized oil prices and a 61 percent drop in
realized natural gas prices from the same period in 2008.
- Crescent Point maintained consistent monthly dividends of $0.23 per
share, totaling $0.69 per share for third quarter 2009. This is
unchanged from $0.69 per unit paid in third quarter 2008 and resulted
in a payout ratio of 72 percent on a per share - diluted basis, up
from 48 percent in third quarter 2008.
- On September 15, 2009, the Company closed a $230.1 million bought
deal equity financing, the net proceeds of which were used to fund a
portion of the asset acquisitions announced on August 24, 2009.
- On October 14, 2009, the Company announced a $500.3 million bought
deal equity financing which included an option granted to the
underwriters to purchase up to an additional $75.0 million of shares.
The option was subsequently exercised in full, and the financing
closed on November 3, 2009. Net proceeds of the financing were
initially used to reduce outstanding bank indebtedness, providing
borrowing capacity for general corporate purposes, which may include
funding future development capital programs and prospective
acquisitions.
- Crescent Point's balance sheet remains strong, with more than
$600 million of unutilized capacity projected in its bank lines and a
projected average net debt to 12 month cash flow of less than
0.5 times.
- Crescent Point continued its disciplined hedging strategy to provide
increased certainty over cash flow and dividends. As at October 26,
2009, the Company had hedged 48 percent, 46 percent, 32 percent and
16 percent of production, net of royalty interest, for the balance of
2009, 2010, 2011 and 2012, respectively. Average quarterly hedge
prices range from Cdn$78 per boe to Cdn$87 per boe. The Company also
initiated its first quarter 2013 hedge position, with four percent
hedged at approximately Cdn$89 per boe.
OPERATIONS REVIEW
Third Quarter Operations Summary
During third quarter 2009, 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 another record quarter for production, averaging 46,322 boe/d in third quarter 2009. The Company participated in the drilling of 69 (48.0 net) oil wells and 2 (1.4 net) service wells, achieving a 100 percent success rate. Crescent Point also fracture stimulated a total of 53 (42.8 net) Bakken horizontal wells and 7 (4.1 net) Lower Shaunavon horizontal wells. Drilling and completions expenditures in the quarter totaled
Drilling Results
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Three months ended
September 30, %
2009 Gas Oil D&A Service Standing Total Net Success
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Southeast
Saskatchewan - 61 - 2 - 63 45.3 100
Southwest
Saskatchewan - 7 - - - 7 4.1 100
South/Central
Alberta - 1 - - - 1 0.0 100
Northeast BC & W
Peace River Arch,
Alberta - - - - - - - -
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Total - 69 - 2 - 71 49.4 100
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Nine months ended
September 30, %
2009 Gas Oil D&A Service Standing Total Net Success
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Southeast
Saskatchewan - 94 - 3 - 97 73.1 100
Southwest
Saskatchewan - 7 - - - 7 4.1 100
South/Central
Alberta - 4 - - - 4 0.7 100
Northeast BC & W
Peace River Arch,
Alberta - - - - - - - -
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Total - 105 - 3 - 108 77.9 100
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Southeast Saskatchewan
In the third quarter, Crescent Point participated in the drilling of a total of 61 (43.9 net) oil wells and 2 (1.4 net) service wells in southeast Saskatchewan, achieving a 100 percent success rate. Of the wells drilled, 46 (31.2 net) were horizontal wells in the Bakken light oil resource play. The Company also fracture stimulated a total of 53 (42.8 net) Bakken horizontal wells.
During the quarter, Shelter Bay drilled four Bakken horizontal wells on lands farmed out by Crescent Point. These wells are not included in the above totals.
Crescent Point also successfully drilled and completed 5 (3.3 net) horizontal oil wells in the Mississippian Frobisher zone above the Bakken play. Year to date, Crescent Point has drilled 10 (7.8 net) wells in this zone, discovering two new light oil pools and continuing to delineate pools discovered in late 2008. Exploration efforts continue on several Frobisher prospects defined by three dimensional seismic and newly encountered oil shows.
The Company completed the construction of 92 kilometres of pipeline gathering systems in the Viewfield Bakken area in the quarter. The additional gathering systems provide for continued Bakken oil and gas development in the area and tie in 17 existing single well batteries and 19 wells recently drilled. The Company has commenced design work to modify existing compression at the Viewfield gas plant to increase inlet capacity to 21 mmcf/d by mid 2010. Plans to expand the plant to 30 mmcf/d by late 2010 continue.
At Tatagwa, Crescent Point drilled 2 (1.4 net) water injection wells to improve water flood sweep efficiency and improve overall recoveries. At
Southwest Saskatchewan
In the quarter, Crescent Point completed the Wild River and
Also in the Lower Shaunavon play, Crescent Point began construction of central facilities to accommodate Wild River and
South/Central Alberta
At Sounding Lake, the Company commissioned an amine unit to conserve associated gas and to reduce greenhouse gas emissions. The Company is waiting on regulatory approval for a water flood in the Sparky zone, with injection expected to be approved and implemented by late 2009 or early 2010. Initial expectations for incremental recoveries are greater than 10 percent within the flood area. At
Northeast British Columbia and Peace River Arch, Alberta
At Worsley, injection into the S pool commenced in mid July to improve overall recoveries in the pool. Expansion of the T Pool injection pattern is being reviewed for application and implementation in 2010.
Acquisitions and Arrangements
Wild River and
On
Crescent Point also completed an agreement to sell 25 percent of the combined Wild River and
On a net basis, the Wild River and
Wave Arrangement:
On
Southeast and Southwest Asset Acquisitions:
On
SHELTER BAY THIRD QUARTER UPDATE
During third quarter 2009, Shelter Bay continued to aggressively pursue its business strategy of growth in core Crescent Point areas. Shelter Bay drilled 24 Bakken horizontal wells, including four wells on lands farmed out by Crescent Point. Shelter Bay also drilled 10 Lower Shaunavon horizontal wells in southwest Saskatchewan and one Frobisher well above the Bakken zone in southeast Saskatchewan. Shelter Bay's production averaged more than 7,200 boe/d for the quarter.
In early July, Shelter Bay completed its acquisition from Crescent Point of 25 percent of the Wild River and
Shelter Bay is well positioned for growth in production, reserves and cash flow with a development drilling inventory of more than 450 locations in the Bakken and Lower Shaunavon oil resource plays. The total cost of Crescent Point's investment in Shelter Bay is approximately
Crescent Point's financial and operating results do not reflect the production or 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. Crescent Point accounts for its investment in Shelter Bay using the equity method of accounting. Accordingly, Crescent Point records its share of Shelter Bay net income or loss in the "equity and other income (losses)" caption on the consolidated statements of operations, comprehensive income and deficit.
SUBSEQUENT EVENTS
In early fourth quarter, Crescent Point completed an agreement to acquire certain assets in the core of the southeast Saskatchewan Bakken light oil resource play. Crescent Point also acquired additional Bakken and Lower Shaunavon lands at the October Crown land sale. Combined, the Company acquired 38.5 net sections of Bakken and Lower Shaunavon undeveloped land and approximately 300 boe/d of Bakken production for combined cash consideration of approximately
OUTLOOK AND UPWARDLY REVISED GUIDANCE
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 oil and natural gas properties in western
During the first three quarters of 2009, the Company has captured and consolidated the dominant position in the southwest Saskatchewan Lower Shaunavon resource play, which is estimated by Crescent Point to contain upwards of 4.3 billion barrels of Discovered Petroleum Initially-In-Place ("DPIIP") as defined in the Canadian Oil and Gas Evaluations Handbook. With the acquisitions of the Wild River and
Including Bakken and other properties, Crescent Point has more than 4,400 net low risk drilling locations in inventory, representing more than 320,000 boe/d of risked production additions. This depth of drilling inventory positions the Company well for long term sustainable growth in production, reserves and net asset value and provides support for long term dividends.
With continuing better than expected production results year to date, the Company is upwardly revising its 2009 average daily production guidance by 1,000 boe/d to 44,500 boe/d.
Funds flow from operations for 2009 is expected to increase to
Including the proceeds of the recently closed bought deal financing of
Crescent Point continues to implement its balanced 3 1/2 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
Crescent Point's management believes that with the Company's high quality reserve base and development inventory, excellent balance sheet and solid risk management program, the Company is well positioned to continue generating strong operating and financial results through 2010 and beyond.
2009 Upwardly Revised Guidance
Crescent Point's upwardly revised projections for 2009 are as follows:
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Production August Guidance Revised Guidance
Oil and NGL (bbls/d) 38,500 39,334
Natural gas (mcf/d) 30,000 31,000
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Total (boe/d) 43,500 44,500
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Funds flow from operations ($000) 645,000 659,000
Combined funds flow per share
(unit) - diluted ($) 4.06 4.04
Combined cash distributions per
unit and dividends per share ($) 2.76 2.76
Payout ratio - per share (unit) -
diluted (%) 68 68
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Capital expenditures ($000)(1) 325,000 325,000
Wells drilled, net 125 125
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Pricing
Crude oil - WTI (US$/bbl) 62.00 62.00
Crude oil - WTI (Cdn$/bbl) 71.26 70.45
Natural gas - Corporate (Cdn$/mcf) 4.00 4.00
Exchange rate (US$/Cdn$) 0.87 0.88
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(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
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" our Management's Discussion and Analysis for the year ended
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 oil and natural gas reserves in western
Shares of Crescent Point are traded on the
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: (403) 693-0020, Toll free (US & Canada): 1-888-693-0020, Fax: (403) 693-0070, website:www.crescentpointenergy.com
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