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 United States and Canada.
2012 was one of Crescent Point's most active and successful years to date. Not only did the Company achieve a new production record and deliver the eleventh consecutive year of growth in reserves, cash flow and production, but it continued to aggressively consolidate its key resource plays, such as the Bakken, Shaunavon and Beaverhill Lake. Through the Ute acquisition in northeast Utah, Crescent Point also established the Uinta Basin as a new core resource play.
Crescent Point's aggressive consolidation of resource plays where multi-stage fracture stimulation can be implemented has been a key factor in positioning the Company well for future growth. The Company was an early mover in this regard and has now assembled a solid portfolio of high-quality resource play assets in the United States and in western Canada. In 2013, the Company expects to focus on executing organic growth projects across its asset base. Advancing the development of new techniques and concepts is also a priority, as the Company believes that even slight improvements in technology can have big effects on recovery factors when leveraged across its large oil-in-place pools.
As well, Crescent Point expects to continue to develop its expanding waterflood programs in the Bakken, Shaunavon and Viking resource plays, which continue to show positive results. The Company also expects to initiate waterflood programs in Beaverhill Lake and the Uinta Basin.
Crescent Point plans to increase crude oil shipments through its Stoughton, Dollard and Alberta rail facilities, which are providing access to new markets and providing a hedge against price differential volatility. Current capacity at the facilities is approximately 45,000 bbl/d, 5,000 bbl/d and 3,000 bbl/d, respectively. In addition, Crescent Point has more than 15,000 bbl/d of its oil production contracted to rail markets on a firm basis through mid-2014, providing fixed price differentials from WTI. Combined with financial WTI derivatives, these selling prices are fixed at levels greater than CDN$90.00/bbl.
Funds flow from operations for 2013 is expected to be approximately $1.73 billion ($4.48 per share - diluted), based on forecast pricing of US$90.00 per barrel WTI, Cdn$3.50 per mcf AECO gas and a US$/Cdn$1.00 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 significant unutilized credit capacity.
Crescent Point continues to implement its disciplined WTI hedging strategy to provide increased certainty over cash flow and dividends. As at March 5, 2013, the Company had hedged 55 percent, 40 percent, 21 percent and 3 percent of its expected oil production, net of royalty interest, for the balance of 2013, 2014, 2015 and the first half of 2016, respectively. Average quarterly hedge prices range from Cdn$90 per bbl to Cdn$93 per bbl.
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 2013 and beyond.
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