ENP Newswire -
Release date- 03092014 -
The Lightstream Assets include significant free cash flowing, conventional oil production of approximately 3,300 boe/d and 76 net sections of land that are contiguous with Crescent Point's existing land base in the area. Consideration for the producing Lightstream Assets is approximately
In addition, under the terms of the Lightstream Agreement, Crescent Point will also acquire 44 net sections of undeveloped freehold interests from Lightstream valued at approximately
Crescent Point is also pleased to announce successful step-out drilling results in its
With a combination of its recent
The Company expects to spend approximately
The incremental capital is expected to be directed primarily to the Company's exciting
Of the incremental facilities capital, approximately
With the increased capital expenditure budget and assuming the successful acquisition of the Lightstream Assets, Crescent Point's 2014 exit production rate is expected to increase to 155,000 from 149,000 boe/d and its average daily production in 2014 is expected to increase to 140,000 from 138,000 boe/d. Funds flow from operations is expected to increase by 3 percent to
'We have approximately
'Between the increased capital and the acquisitions we've completed, we expect to grow our production per share by greater than seven percent this year, for a total expected return of more than 13 percent per share for 2014 when you include our 6 percent yield,' said Saxberg. 'In addition, we expect to drive a 16 percent increase in cash flow this year, on a per share basis.'
Including the Lightstream Agreement and other consolidation acquisitions completed year to date in
'The Lightstream transaction and our equity deal will allow us to accelerate our capital program in 2014 and 2015, which will continue our trend of improving our long-term sustainability,' said Saxberg. 'This fits in well with our goal of doubling our cash flow per share within five years.'
Under the terms of the Lightstream Agreement, Crescent Point has agreed to acquire conventional oil assets in southeast
The acquisition is consistent with Crescent Point's strategy of consolidating large oil-in-place assets. With long-life and low-decline assets, the Lightstream Assets are expected to provide steady production and significant free cash flow. In addition, these assets provide long-term production, reserves and cash flow growth, with significant exploratory potential.
Key attributes of the Lightstream Assets to be acquired:
Production of approximately 3,300 boe/d, which is 95 percent light oil weighted;
Approximately 76 net sections of land, of which approximately 42 net sections are undeveloped land;
More than 72 net internally identified drilling locations;
An additional 44 net sections of undeveloped fee title land, much of which is located in an exciting new fairway that the Company believes holds significant exploratory potential;
Netback of approximately
Expected free cash flow of approximately
Tax pools of
Independent engineers have assigned reserves utilizing NI 51-101 reserve definitions, effective
Approximately 13.2 million boe of proved plus probable and 8.6 million boe of proved reserves and
Reserve life index of 11.0 years proved plus probable and 7.1 years proved.
Based on the above expectations for the purchase of conventional oil assets for
1. 2014 Cash Flow Multiple:
4.4 times 2014 annualized cash flow
Netback of approximately
The above metrics are based on a price forecast of
The Lightstream Assets are expected to be accretive to Crescent Point's per share reserves, production and cash flow on a debt adjusted basis.
The Lightstream Agreement consolidates Crescent Point's existing land position in the Company's core operating area of southeast
With forecast cash flow from the acquired assets of
FINANCIAL AND STRATEGIC ADVISORS
Scotiabank acted as financial advisor and
Crescent Point continues to delineate and expand its
Most recently, a step-out well on lands previously acquired in the
Since the beginning of 2014, Crescent Point has been actively consolidating land in the
In total in 2014, Crescent Point now plans to drill up to 57 net wells, 12 net of which are step-out horizontal wells, and to invest a total of
Access to the deep-cut facility is expected to lead to higher revenues for Crescent Point's Bakken and
UINTA BASIN UPDATE
Current production in the Uinta basin is 13,800 boe/d, which is an increase of 6,000 boe/d, or more than 75 percent, from the time of the Ute Acquisition in
The Company is excited to apply its substantial horizontal drilling and multi-stage fracture completions expertise in the
With strong results year-to-date in the
OUTLOOK AND UPWARDLY REVISED 2014 GUIDANCE
Crescent Point continues to implement its dual-track growth plan of advancing its cemented liner completions technology and expanding its waterflood programs to shallow corporate declines and increase ultimate reserve recoveries.
The increased capital program allows the Company to invest additional capital in its high-netback resource plays. The Company expects to spend approximately
'We are currently drilling our first operated horizontal wells in the
With the increased capital expenditure budget and assuming the successful acquisition of the Lightstream Assets, Crescent Point's 2014 exit production rate is expected to increase to 155,000 from 149,000 boe/d and its average daily production in 2014 is expected to increase to 140,000 from 138,000 boe/d. This is expected to drive a three percent increase in funds flow from operations to
In addition, Crescent Point is in the process of reviewing the sale of non-core assets in
Crescent Point's balance sheet remains strong, with projected average net debt to 12-month cash flow of approximately 1.1 times. The Company continues to execute its aggressive hedging program, using both WTI and WTI-differential oil hedges to provide a steady cash flow and reduce volatile
The Company's hedging program has provided financial strength and stability since Crescent Point's inception in 2001. Crescent Point believes it is well-positioned to continue generating strong operating and financial results through 2014 and beyond.
BOUGHT DEAL FINANCING
Including the Lightstream Agreement and other consolidation acquisitions completed year to date in
'We've been very active this year on the acquisitions front but we remain disciplined. We continue to balance our debt levels with our growth prospects,' said Saxberg. 'The opportunities we have pursued allow us to capitalize on our success in the
Consistent with its strategy of maintaining a disciplined balance sheet, Crescent Point has entered into an agreement, on a bought deal basis, with a syndicate of underwriters for an offering (the 'Offering') of 17,
Crescent Point has also granted the underwriters an over-allotment option to purchase, on the same terms, up to an additional 2,
The net proceeds of the debt assumed in association with the Offering will be used to fund the purchase of the Lightstream Assets, the expanded 2014 capital budget and to retire a portion of the aforementioned acquisitions. Closing of the bought deal financing is not, however, subject to the successful completion of the Lightstream Agreement.
There are numerous uncertainties inherent in estimating quantities of crude oil, natural gas and NGL reserves and the future cash flows attributed to such reserves. The reserve and associated cash flow information set forth above are estimates only.
In general, estimates of economically recoverable crude oil, natural gas and NGL reserves and the future net cash flows therefrom are based upon a number of variable factors and assumptions, such as historical production from the properties, production rates, ultimate reserve recovery, timing and amount of capital expenditures, marketability of oil and natural gas, royalty rates, the assumed effects of regulation by governmental agencies and future operating costs, all of which may vary materially.
For these reasons, estimates of the economically recoverable crude oil, NGL and natural gas reserves attributable to any particular group of properties, classification of such reserves based on risk of recovery and estimates of future net revenues associated with reserves prepared by different engineers, or by the same engineers at different times, may vary.
Crescent Point's and Lightstream's actual production, revenues, taxes and development and operating expenditures with respect to its reserves will vary from estimates thereof and such variations could be material.
Certain statements contained in this press release constitute 'forward-looking statements' within the meaning of applicable Canadian securities laws and section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934.
The Company has tried to identify such forward-looking statements by use of such words as 'could', 'should', 'can', 'anticipate', 'expect', 'believe', 'will', 'may', 'intend', 'projected', 'sustain', 'continues', 'strategy', 'potential', 'projects', 'grow', 'take advantage', 'estimate', 'well-positioned' and other similar expressions, but these words are not the exclusive means of identifying such statements.
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 and the Lightstream Assets; anticipated oil and natural gas production levels and expected 2014 production growth; anticipated funds flow from operations and growth thereof, funds flow per share and cash dividends per share in 2014; expected production per share growth and the impact of the Lightstream Agreement thereon; expected yield for 2014; expected cash flow and maintenance capital associated with the Lightstream Assets; capital expenditure programs, including drilling and completion expenditures and facilities, land and seismic expenditures and the impact of the Lightstream Agreement thereon; the expectation that the Lightstream Assets will provide steady production and free cash flow, as well as help reduce the Company's decline rate in the area and improve its sustainability; the ongoing development of planned and existing waterflood programs; the Company's plans to delineate the
Statements relating to 'reserves' are also deemed to be forward looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and that the reserves can be profitably produced in the future. Actual reserve values may be greater than or less than the estimates provided herein.
All forward-looking statements are based on Crescent Point's beliefs and assumptions based on information available at the time the assumption was made. 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.
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, expressed or implied by such statements, including those material risks discussed in our Annual Information Form under 'Risk Factors' and our Management's Discussion and Analysis for the year ended
The material assumptions are disclosed in the Management's Discussion and Analysis for the year ended
The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Crescent Point's future course of action depends on management's assessment of all information available at the relevant time. Barrels of oil equivalent ('boes') may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
This press release contains future-oriented financial information and financial outlook information (collectively, 'FOFI') about Crescent Point's prospective results of operations, cash flows, and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained herein is made as of the date of this press release and is provided for the purpose of describing the anticipated effects of the financing, the acquisitions and the Company's expanded budget on Crescent Point's business operations.
Crescent Point disclaims any intention or obligation to update or revise any FOFI contained in this document, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this document should not be used for purposes other than for which it is disclosed herein.
In this press release, the Company uses the terms 'funds flow from operations', 'funds flow from operations per share - diluted' and 'netback'. These terms do not have any standardized meaning as prescribed by International Financial Reporting Standards ('IFRS') and, therefore, they may not be comparable with the calculation of similar measures presented by other issuers.
Funds flow from operations is calculated based on cash flow from operating activities before changes in non-cash working capital, transaction costs and decommissioning expenditures. Funds flow from operations per share - diluted is calculated as funds flow from operations divided by the number of weighted average diluted shares outstanding. Management utilizes funds flow from operations as a key measure to assess the ability of the Company to finance dividends, operating activities, capital expenditures and debt repayments.
Funds flow from operations as presented is not intended to represent cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. Netback is calculated on a per boe basis as oil and gas sales, less royalties, operating and transportation expenses and realized derivative gains and losses.
Additional information on these and other factors that could affect Crescent Point's operations or financial results are included in
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.
Any references in this press release to initial, early and/or test or production/performance rates are useful in confirming the presence of hydrocarbons, however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter. The initial production rate may be estimated based on other third party estimates or limited data available at this time. In all cases in this news release initial production or test are not necessarily indicative of long-term performance of the relevant well or fields or of ultimate recovery of hydrocarbons.
Crescent Point is one of
Tel: (403) 693-0020
Fax: (403) 693-0070
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