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Actionable news in CPG: CRESCENT POINT ENERGY Corp,

Crescent Point Announces Q3 2015 Results


Three months ended September 30

Nine months ended September 30

(Cdn$000s except shares, per share and per boe amounts)

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Funds flow from operations, adjusted net earnings from operations, adjusted dividends, payout ratio, net debt, net debt to funds flow from operations and netback as presented do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and, therefore, may not be comparable with the calculation of similar measures presented by other entities.

The per share amounts (with the exception of adjusted dividends per share) are the per share – diluted amounts.

Payout ratio is calculated as adjusted dividends divided by funds flow from operations.

Net debt to funds flow from operations is calculated as the period end net debt divided by the sum of funds flow from operations for the trailing four quarters.

Capital acquisitions represent total consideration for the transactions, including long-term debt and working capital assumed, and exclude transaction costs.

Decommissioning and environmental expenditures includes environmental emission reduction expenditures, which are also included in development capital expenditures in the table above.

The average selling prices reported are before realized derivatives and transportation.

This news 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 news release, respectively.


In third quarter 2015, Crescent Point continued to execute its integrated business strategy of maximizing shareholder return with long-term per share growth plus dividend income through development and acquisition of high-quality, long-life, light and medium oil and natural gas properties.

Crescent Point achieved record daily average production of 172,579 boe/d in the quarter, weighted 90 percent to light and medium crude oil and liquids. This is an increase of approximately four percent per share over third quarter 2014.

Crescent Point reported funds flow from operations of $483.6 million ($0.96 per share – diluted) in third quarter 2015, due to strong netbacks of $34.50 per boe relative to average selling prices of $46.00 per boe. Crescent Point continues to generate top-quartile netbacks.

Crescent Point paid total dividends of $0.43 per share for the quarter, of which $0.23 was paid for July and $0.10 for each of August and September. The Company achieved a payout ratio of 45 percent for the three months ended September 30, 2015, or 31 percent adjusted for a full quarter of the Company’s recently revised monthly dividend.

The Company has successfully lowered its overall cost structure, reducing capital costs in several of its plays by approximately 30 percent since 2014. These cost savings were achieved through a combination of service cost reductions and long-term operational efficiencies. The Company remains focused on achieving even greater cost reductions.

Crescent Point achieved significant success in reducing its environmental footprint in the province of Saskatchewan. During third quarter, approximately 50 percent of wells drilled in the Shaunavon play were completed without the use of fresh water. The Company is working on a similar environmental initiative in the Viewfield Bakken play and is targeting to eliminate fresh water usage in both resource plays.

Crescent Point continued to advance its emerging-growth resource plays. The Company drilled two horizontal wells in the Uinta Basin, targeting the Castle Peak and Black Shale zones. Results from the Company’s recent 3-D seismic program in Utah are being processed and are expected to benefit the Company’s future drilling program. In southeast Saskatchewan, the core of the multi-zone Flat Lake play continues to expand through the drilling of three step-out wells. Recent well results from the Company’s unconventional Midale play have exceeded expectations.

The Company’s waterflood programs are generating positive results, with improvements in decline rates and ultimate recoveries. In the Company’s Viewfield Bakken play, direct offset wells are performing at half the decline rate with recoveries of approximately three times previous estimates. Though the Shaunavon waterflood program is in earlier stages, it is showing similarly encouraging results. The Company intends to expand its waterflood program to all of its core oil plays, with several pilots planned for 2016.

Approximately 53 percent and 33 percent of Crescent Point’s oil production is hedged for the remainder of 2015 and in 2016, respectively, providing additional cash flow and balance sheet protection. The Company has additional flexibility to bring forward its 2017 and 2018 hedges, if necessary, which have an estimated value of more than $140 million, assuming US$40.00/bbl WTI in 2016.

Crescent Point retains a significant amount of liquidity and financial flexibility with no material near-term debt maturities. Crescent Point’s covenant-based unsecured credit facility has unutilized capacity of approximately

$1.4 billion as at September 30, 2015, and matures on June 8, 2018.

Crescent Point reported a net loss of $201.4 million for the quarter, which included a $373.7 million after-tax

($555.7 million pre-tax) impairment charge resulting from lower than forecasted commodity prices at September 30, 2015. This impairment represents approximately three percent of the Company’s total assets as at September 30, 2015, reflecting the high-quality nature of the Company’s asset base. This non-cash charge does not impact the Company’s funds flow from operations or the amount of credit capacity available under its bank credit facilities. Under IFRS, these impairment charges can be reversed in future periods if commodity prices recover.


Third Quarter Operations Summary

Crescent Point achieved record daily average production of 172,579 boe/d in the quarter, representing an increase of approximately four percent per share over third quarter 2014. The Company continued to focus on organic growth by investing $287.7 million in high-quality drilling and development activities, drilling 174 (153.2 net) wells with a 100 percent success rate. Crescent Point also spent $33.2 million on land, seismic and facilities, for total development capital expenditures of $320.9 million.

The Company’s successful operating performance during the quarter was driven by its development program, its ongoing waterflood, strong results from its cemented liner completion techniques and continued advancements in new technology.

“We remain well-positioned to continue executing our strategy in the current environment,” said Scott Saxberg, president and CEO of Crescent Point. “Reducing our costs by approximately 30 percent since 2014 has allowed us to maintain solid economics on our drilling program, with the majority of our wells paying out in two years or less. We look forward to building upon the momentum we’ve generated in the fourth quarter and during 2016.”

As at September 30, 2015, Crescent Point was the top operator in Canada for the year as ranked by development and exploratory metres drilled. The Company’s financial strength and high-return asset base supported a drilling program of

1.19 million metres during the first nine months of 2015, which was approximately 670,000 metres more than the next-ranked operator.


The following table summarizes Crescent Point’s drilling results for the three and nine months ended September 30, 2015:

Three months ended September 30, 2015



% Success

Southeast Saskatchewan and Manitoba

Southwest Saskatchewan

Alberta and West Central SK

United States

Nine months ended September 30, 2015

(1) The net well count is subject to final working interest determination.

During the quarter, the Company continued developing its Viewfield Bakken resource play, drilling 41 (40.9 net) oil wells. The Viewfield Bakken play continues to generate significant free cash flow and provides the Company with low-risk, high-return drilling inventory of more than eight years.

In its Torquay play at Flat Lake, Crescent Point drilled 8 (8.0 net) oil wells during the quarter and completed its step-out drilling program for 2015. For the year, 7 (7.0 net) step-out wells were drilled in the Torquay play, which successfully extended the play’s core boundary and increased its overall production and reserves potential. The Torquay play at Flat Lake is a growing area for the Company that provides inventory with multi-zone potential.

During the quarter, the Company drilled an additional 60 (49.3 net) oil wells across its conventional and unconventional asset base throughout southeast Saskatchewan and Manitoba. The Company’s conventional assets continue to generate free cash flow, provide a source of low-risk, high-return drilling inventory and provide additional operational flexibility during the current commodity environment.

Since second quarter 2015, the Company has drilled 15 (12.9 net) oil wells in the Midale unconventional light oil resource play. The drilling results have exceeded Company expectations and were some of the most prolific wells drilled during the quarter. The Midale play is located just east of the Company’s Torquay play at Flat Lake and provides the Company with another high-return, multi-zone growth area. Crescent Point plans to drill another 15 (14.0 net) unconventional wells in the Midale play during the remainder of 2015.

The Company’s integration of Legacy is complete, with various opportunities identified for additional cost and efficiency improvements. Crescent Point’s third quarter operating expenses reflect Legacy’s higher cost structure, which is expected to improve over the coming quarters.

Subsequent to the quarter, Crescent Point discovered issues regarding the odourization level of some propane sold primarily to wholesale customers from processing plants in southeastern Saskatchewan. Upon learning of the issue, Crescent Point immediately revised its operations and implemented additional processes to ensure propane shipped from its facilities meets the required specifications for odourant levels. The Company takes all health and safety matters very seriously and is currently working to resolve the issue for impacted customers.

The Shaunavon play continues to provide the Company with low-risk, high-return drilling inventory. During third quarter, the Company drilled 8 (8.0 net) oil wells in the Lower Shaunavon zone and 6 (6.0 net) oil wells in the Upper Shaunavon zone. Crescent Point is very pleased with the performance in this play, including its Upper Shaunavon wells, which continue to exceed expectations.

Alberta and West Central Saskatchewan

Crescent Point remains active in the Viking resource play, located in the Dodsland area of Saskatchewan. During third quarter,

37 (35.2 net) oil wells were drilled in this low-cost, high-return play.

With the acquisition of Coral Hill Energy Ltd. (“Coral Hill”) during the quarter, Crescent Point assumed full operatorship and control of its assets in the Swan Hills Beaverhill Lake resource play and gained an increased position in the play’s core. Given the attractive economics in the core of the play, the Company has initiated a three-well drilling program in fourth quarter 2015, with one drilling rig currently active in the area.

In the Uinta Basin, the Company participated in the drilling of 9 (3.8 net) oil wells in third quarter, achieving a 100 percent success rate. Oil price differentials in the basin continue to improve and are enhancing overall economics.

During the quarter, Crescent Point drilled two horizontal wells in the Uinta Basin, targeting the Castle Peak and Black Shale zones. These two wells bring the Company’s operated horizontal well count to six since late 2014, with five zones tested overall. Similar to its initial horizontal wells in the Viewfield Bakken and Shaunavon resource plays, the Company is testing and optimizing the number of stages, amount of tonnage and additives used during the completion process.

Vertical wells in the Uinta Basin are producing at, or above, expected rates. The Company’s targeted vertical drilling program provides access to low-risk production with attractive capital efficiencies of approximately $19,000 per flowing boe. Similar to its horizontal wells, the Company is continually optimizing its vertical completion methods. Crescent Point plans to drill

10 (8.8 net) vertical wells during fourth quarter.

During third quarter, the Company also participated in the drilling of 2 (0.1 net) oil wells in North Dakota, targeting both the Bakken and Three Forks formations. The Company’s activity and knowledge in North Dakota provide long-term benefits and complement its...