Crescent Point Announces Q1 2023 Results

Press Release

May 12, 2023

Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX and NYSE: CPG) is pleased to announce its operating and financial results for the quarter ended March 31, 2023.

KEY HIGHLIGHTS

• Closed the strategic acquisition of Alberta Montney assets, which includes 38,000 boe/d and over 20 years of premium inventory.
• Generated $153.4 million of excess cash flow in first quarter, driven by the Company’s high netback asset base.
• Returned over 60 percent of excess cash flow to shareholders during first quarter 2023.
• Repurchased 10.5 million shares year-to-date, including 5.1 million shares during first quarter 2023.
• Disciplined 2023 budget is expected to generate significant excess cash flow of $1.1 billion at US$75/bbl WTI.

“This has been a very exciting start to the year for Crescent Point, having announced and closed the strategic acquisition of Alberta Montney assets”, said Craig Bryksa, President and CEO of Crescent Point. “This acquisition enhances the depth of our premium inventory, excess cash flow per share and return of capital to shareholders. It also aligns with our long-term strategy to focus on high quality, scalable resource plays that meet our defined asset criteria. We are very excited to operate these assets and see the potential for significant upside through reserves growth, the opportunity to develop a second Montney bench given the significant resource in place and enhanced efficiencies given the similarity and proximity to our Kaybob Duvernay assets.”

FINANCIAL HIGHLIGHTS

• Adjusted funds flow totaled $524.9 million during first quarter 2023, or $0.95 per share diluted, driven by a strong operating netback of $44.77 per boe.
• For the quarter ended March 31, 2023, development capital expenditures, which included drilling and development, facilities and seismic costs, totaled $314.2 million.
• Crescent Point’s net debt as at March 31, 2023 totaled approximately $1.4 billion, or 0.6 times adjusted funds flow. Subsequent to the quarter, the Company closed its previously announced acquisition of Alberta Montney assets on May 10, 2023, which included a net cash payment of approximately $1.7 billion funded through its existing credit facilities. At closing of the acquisition, Crescent Point’s net debt totaled approximately $3.0 billion, or 1.3 times adjusted funds flow, with approximately $850 million of unutilized credit capacity.
• As part of its risk management program, Crescent Point has hedged approximately 30 percent of its oil and liquids production for second and third quarter 2023, net of royalty interest, and approximately 10 percent in fourth quarter. The Company has also hedged a portion of its natural gas production, with hedges extending into 2024. Crescent Point will continue to layer on additional protection in the context of market conditions.
• The Company reported net income of $216.7 million, or $0.39 per share diluted, for the quarter ended March 31, 2023.

RETURN OF CAPITAL HIGHLIGHTS

• Crescent Point’s total return of capital to shareholders in first quarter 2023, including the base dividend, was $103.2 million, or over 60 percent of its excess cash flow. This included the repurchase of 5.1 million shares for $48.5 million, which equated to 50 percent of Crescent Point’s discretionary excess cash flow.
• Since the end of first quarter, the Company has repurchased an additional 5.4 million shares for $55.1 million for a total of 10.5 million shares year-to-date. The Company has approval to repurchase, for cancellation, up to 54.6 million shares, or 10 percent of its public float, under its normal course issuer bid (“NCIB”) which expires on March 8, 2024.
• Subsequent to the quarter, Crescent Point’s Board of Directors declared a quarterly cash base dividend of $0.10 per share payable on July 4, 2023, to shareholders of record on June 15, 2023.

OPERATIONAL HIGHLIGHTS

• Average production during first quarter 2023 was 139,280 boe/d, comprised of approximately 80 percent oil and liquids.
• On May 10, 2023, the Company successfully closed the previously announced strategic acquisition of oil and liquids-rich Montney assets in Alberta from Spartan Delta Corp. (“Spartan”). This acquisition was immediately accretive to the Company’s adjusted funds flow and excess cash flow per share by 20 percent, further enhancing its overall return of capital profile. These Montney assets are strategically situated in the volatile oil fairway and provide over 20 years of premium drilling locations in the play with full-cycle returns that rank in the top quartile within Crescent Point’s portfolio.
• In late first quarter 2023, Spartan brought on stream a single well in the Gold Creek West area of the Alberta Montney play, which achieved an average 30-day initial production (“IP30”) rate of approximately 1,900 boe/d (87% light crude oil, 2% NGLs and 11% shale gas). This well is currently exceeding booked type well expectations in the area and is expected to payout in less than six months from the initial on-stream date at current commodity prices. Crescent Point plans to drill approximately 15 wells in the Alberta Montney through the remainder of 2023. The Company will seek to optimize efficiencies in the play by leveraging its expertise in multi-well pad development and knowledge transfer across its asset base.
• In the Kaybob Duvernay, Crescent Point continues its track record of operational execution, delivering strong full-cycle returns that also rank top quartile within its asset portfolio. The Company recently brought on-stream its seventh fully operated multi-well pad, which generated an average IP30 rate of over 1,000 boe/d per well (73% condensate, 8% NGLs and 19% shale gas). This pad is currently exceeding booked type well expectations in the area. Crescent Point plans to add a second rig in the Kaybob Duvernay in fourth quarter 2023 to further accelerate the development of its high-return inventory in the play.
• In late first quarter 2023, Crescent Point hosted a Kaybob Duvernay Analyst Teach-In where the Company highlighted the quality of the asset and the technical evolution of the play alongside Crescent Point’s disciplined strategy and operational execution to date. Further information, including a recording of the Analyst Teach-in presentation, can be found on Crescent Point’s website.
• As part of its commitment to strong environmental, social and governance (“ESG”) practices, the Company expects to release its fifth annual sustainability report in mid-2023 which will include progress updates on greenhouse gas emissions, water management, asset retirement, safety performance and Indigenous engagement. Crescent Point remains on track to meet or exceed its environmental targets, including reducing its Scope 1 and 2 emissions intensity, surface freshwater use and inactive well inventory.

OUTLOOK

Crescent Point’s strategic execution in 2023 has significantly enhanced the quality of its asset portfolio and the strength of its financial outlook. The Company now has 15 years of premium drilling inventory, underpinned by its Kaybob Duvernay, Alberta Montney and low-decline assets in Saskatchewan.

As previously announced on May 8, 2023, Crescent Point temporarily shut-in approximately 45,000 boe/d of production in the Kaybob Duvernay in response to the recent Alberta wildfires. The Company has now restored 85 percent of this production and continues to monitor the wildfires in Alberta, which have not yet fully stabilized. Crescent Point’s 2023 annual average production guidance of 160,000 to 166,000 boe/d, weighted 75 percent to oil and liquids, currently remains unchanged as a result of the Company’s strong start to the year. In terms of its budget, Crescent Point has entered into a number of agreements to secure a large portion of its drilling and completions services for the balance of 2023, providing further certainty to its annual program and development capital expenditures guidance, which remains unchanged at $1.15 to $1.25 billion.

Crescent Point expects to generate significant excess cash flow in 2023 of approximately $1.1 billion based on its guidance at US$75/bbl WTI. The Company’s strong excess cash flow generation is supported by its high-netback asset base and is further enhanced by its significant tax pools. The Company plans to continue to return approximately 60 percent of its excess cash flow to its shareholders, with the remaining portion allocated to its balance sheet. Crescent Point expects to exit the year with a leverage ratio of 1.0 times adjusted funds flow at US$75/bbl WTI and will continue to evaluate non-core dispositions to further strengthen its financial position.

The Company is committed to creating long-term value for shareholders by returning capital and continually enhancing the profitability of the business on a per-share basis.

CONFERENCE CALL DETAILS

Crescent Point management will hold a conference call on Friday, May 12, 2023 at 10:00 a.m. MT (12:00 p.m. ET) to discuss the Company’s results and outlook. A slide deck will accompany the conference call and can be found on Crescent Point’s website.

Participants can listen to this event online. To join the call without operator assistance, participants may register online by entering their phone number to receive an instant automated call back. Alternatively, the conference call can be accessed with operated assistance by dialing 1-888-390-0605.

The webcast will be archived for replay and can be accessed online at Crescent Point’s conference calls and webcasts page. The replay will be available approximately one hour following completion of the call.

Shareholders and investors can also find the Company’s most recent investor presentation on Crescent Point’s website.

2023 GUIDANCE

• Total annual average production (boe/d) is comprised of approximately 75% Oil, Condensate & NGLs and 25% Natural Gas
• Land expenditures and net property acquisitions and dispositions are not included. Development capital expenditures spend is allocated on an approximate basis as follows: 90% drilling & development and 10% facilities & seismic
• Reflects Crescent Point’s portion of its expected total budget

RETURN OF CAPITAL OUTLOOK

• Discretionary excess cash flow is calculated as excess cash flow less base dividends
• This % is part of a framework that targets to return up to 50% of discretionary excess cash flow to shareholders

The Company’s unaudited financial statements and management’s discussion and analysis for the quarter ended March 31, 2023, will be available on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com, on EDGAR at www.sec.gov/edgar and on Crescent Point’s website at www.crescentpointenergy.com

FINANCIAL AND OPERATING HIGHLIGHTS

• Specified financial measure that does not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other entities. Refer to the Specified Financial Measures section for further information.
• The per share amounts (with the exception of dividends per share) are the per share – diluted amounts.
• Net debt to adjusted funds flow from operations is calculated as the period end net debt divided by the sum of adjusted funds flow from operations for the trailing four quarters.
• The average selling prices reported are before realized derivatives and transportation.
• Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items.
• Capital acquisitions and dispositions represent total consideration for the transactions, including long-term debt and working capital assumed, and exclude transaction costs.

Specified Financial Measures

Throughout this press release, the Company uses the terms “adjusted funds flow” (equivalent to “adjusted funds flow from operations”), “adjusted funds flow from operations per share – diluted”, “adjusted net earnings from operations”, “adjusted net earnings from operations per share – diluted”, “total return of capital”, “excess cash flow”, “excess cash flow per share”, “discretionary excess cash flow”, “base dividends”, “net debt”, “net debt to adjusted funds flow” (equivalent to “net debt to adjusted funds flow from operations” and “leverage ratio”), “total operating netback”, “total netback”, “operating netback”, “netback”, “adjusted funds flow from operations netback” and “adjusted working capital (surplus) deficiency”. These terms do not have any standardized meaning as prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other issuers. For information on the composition of these measures and how the Company uses these measures, refer to the Specified Financial Measures section of the Company’s MD&A for the period ended March 31, 2023, which section is incorporated herein by reference, and available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

Adjusted funds flow from operations netback is a non-GAAP financial ratio and is calculated as adjusted funds flow from operations divided by total production. Adjusted funds flow from operations netback is a common metric used in the oil and gas industry and is used to measure operating results on a per boe basis.

The following table reconciles oil and gas sales to total operating netback, total netback and adjusted funds flow from operations netback:

• Other includes net purchased products, general and administrative expenses, interest on long-term debt, foreign exchange, cash-settled share-based compensation and certain cash items and excludes transaction costs, foreign exchange on US dollar long-term debt and certain non-cash items.

The following table reconciles dividends declared to base dividends:

• Includes the impact of shares repurchased for cancellation under the NCIB on dividends payable.
• Dividends declared where the declaration date and record date are in different periods.

The following table reconciles cash flow from operating activities to adjusted funds flow from operations, excess cash flow and discretionary excess cash flow:

• Excludes amounts received from government grant programs.

Adjusted funds flow from operations per share – diluted is a supplementary financial measure and is calculated as adjusted funds flow from operations divided by the number of weighted average diluted shares outstanding.

The following table reconciles adjusted working capital (surplus) deficiency:

• Includes current portion of long-term compensation liability and is net of equity derivative contract
• Includes deposit on acquisition.

The following table reconciles long-term debt to net debt:

• Includes current portion of long-term debt.

The following table reconciles net income to adjusted net earnings from operations:

Total return of capital is a supplementary financial measure and is comprised of base dividends, special dividends and share repurchases, adjusted for the timing of special dividend payments.

Excess cash flow per share is a non-GAAP ratio calculated as excess cash flow divided by the number of shares outstanding. Excess cash flow per share presents a measure of financial performance to assess the ability of the Company to finance dividends, potential share repurchases, debt repayments and returns-based growth. This measure is based on current shares outstanding.

Excess cash flow forecasted for 2023 is a forward-looking non-GAAP measure and is calculated consistently with the measures disclosed in the Company’s MD&A. Refer to the Specified Financial Measures section of the Company’s MD&A for the period ended March 31, 2023.

Management believes the presentation of the specified financial measures above provide useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis.

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