Conference Call Slide Deck

Transcription

1 March 7, 2019 Q4 and Year-End 2018 Conference Call Slide Deck CRESCENT POINT

2 Forward Looking Information This presentation contains forward-looking statements within the meaning of applicable securities legislation, such as section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934, including estimates of future production, cash flows and reserves, business plans for drilling and exploration, the estimated amounts and timing of capital expenditures, the assumptions upon which estimates are based and related sensitivity analyses, and other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance (often, but not always, using words or phrases such as expects or does not expect, is expected, anticipates or does not anticipate, plans, estimated or intends, or stating that certain actions, events or results may, could, would, might or will be taken, occur or be achieved). In particular, this presentation contains forward-looking statements pertaining to the Company s: 2019 disciplined, returns-focused budget of $1.20-$1.30 billion, approximately 30% lower than 2018; targeting additional improvements in overall efficiencies; the goal of becoming more focused and efficient with a stronger balance sheet; greater than $400 million of free cash flow at current strip prices and guidance, allowing for debt reduction and share repurchases; large OOIP resource base allows for continued reserves growth; the Company s commitment to decline rate mitigation, planned waterflood conversions in 2019 and anticipated costs associated therewith; strong long-term economics for waterflood reserves; the transition plan to create shareholder value and its components; 2019 capital allocation and production guidance, including estimates of 2019 capital expenditures, annual average production and capital allocation; 2019 returns-focused budget; key focus areas for 2019 and percentage of capital allocated thereto; 2019 reallocated capital; corporate flexibility; flexible 2019 capital allocation strategy with ability to revise budget; ongoing portfolio optimization; risk management; revised dividend strategy and its expected benefits; potential share repurchases; improvements to cost structure including targeting additional cost reduction and expected 2019 G&A saving of approximately 10%; targeted additional operating cost reductions; tools for balance sheet improvement including dispositions and enhanced FCF; optimal leverage scenarios; current FCF priorities; improving capital efficiencies and 2019 expectations thereof; expected 2019 full-cycle returns at $50-$60 WTI; expected Q1/19 oil differential; expected Q1/19 corporate realized oil pricing; expected 2019 ROACE and the drivers thereof; strong growth potential and the potential for enhanced returns in emerging and early-stage resource plays; expected base decline rate in Viewfield; 2019 expected NOI vs. Capex in Viewfield and Shaunavon; reserves upside at Shaunavon; Flat Lake s strong reserved upside and significant unbooked running room; near-term free cash flow and the opportunity to enhance efficiencies at Flat Lake; increasing 2- mile horizontal well development in 2019 at Flat Lake; opportunity to enhance returns in the Uinta Basin; continued pursuit of new opportunities for market access in Uinta; deep value at current share price; improving equity value; transitioning to become a more focused and efficient company with a stronger balance sheet; potential catalysts associated with asset packaged currently being marketed in Q1/19; 2019 guidance including capital expenditures, annual average production, adjusted funds flow netback and adjusted funds flow sensitivity; plans to continue to invest in infrastructure to reduce emissions; climate change initiatives; environmental risk mitigation; the board renewal process including timing and effectiveness of the full board renewal, appointments and retirements; expected ultimate recovery in key focus areas and emerging resource plays; near-term senior guaranteed notes maturity schedule; new management team focused on dispositions with proceeds directed to debt reduction and enhancing shareholder value vs. acquisitions; the discipline capital allocation process and its components including risk-adjusted returns, consistent capital and activity levels, long-term development goals and decline mitigation; and transition plan deliverables including focusing the asset base with fewer operating areas by disposing of select upstream assets, reducing net debt, targeting a net debt to adjusted funds flow ratio of less than or equal to 1.3x, increasing adjusted funds flow netback by more than 6% through improvements to cost and capital structure and increasing free cash flow generation through improved capital efficacies, cost reductions, decline mitigation and disciplined capital allocation. There are numerous uncertainties inherent in estimating crude oil, natural gas and NGL reserves and the future cash flow attributed to such reserves. The reserve and associated 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 expenses, all of which may vary materially. Actual reserve values may be greater than or less than the estimates provided herein. Also, estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates and future net revenue for all properties due to the effect of aggregation. Information relating to reserves is deemed to be forward-looking information, as it involves the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated, and that the reserves described can be profitably produced in the future. All required reserve information for the Corporation is contained in its Annual Information Form for the year ended December 31, 2018, which is accessible at With respect to disclosure contained herein regarding resources other than reserves, there is uncertainty that it will be commercially viable to produce any portion of the resources and there is significant uncertainty regarding the ultimate recoverability of such resources. 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 these 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 the Company s Annual Information Form for the year ended December 31, 2018 under Risk Factors, in our Management s Discussion and Analysis for the year ended December 31, 2018, under the headings Risk Factors, Derivatives, Liquidity and Capital Resources, Changes in Accounting Policy and Outlook. The material assumptions are disclosed in the Management s Discussion and Analysis for the year ended December 31, 2018, under the headings Capital Expenditures, Derivatives, Liquidity and Capital Resources, Critical Accounting Estimates, Risk Factors", Changes in Accounting Policies and Outlook. In addition, with respect to forward-looking information contained in this presentation, assumptions have been made regarding, among other things: future crude oil and natural gas prices; future interests rates and currency exchange rates; future cost escalation under different pricing scenarios; the Corporation's future production levels; the applicability of technologies for recovery and production of the Corporation's reserves and improvements therein; the recoverability of the Corporation's reserves; Crescent Point s ability to market its production at acceptable prices; future capital expenditures; future cash flows from production meeting the expectations stated in this presentation; future sources of funding for the Corporation's capital program; the Corporation's future debt levels; geological and engineering estimates in respect of the Corporation's reserves; the geography of the areas in which the Corporation is conducting exploration and development activities; the impact of competition on the Corporation; the Corporation's ability to obtain financing on acceptable terms. These assumptions, risks and uncertainties could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements. The impact of any one assumption, risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent. Except as required by law, Crescent Point assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Certain information contained herein has been prepared by third-party sources. Included in this presentation are Crescent Point s 2019 guidance in respect of capital expenditures, average annual production, adjusted funds flow netback and adjusted funds flow sensitivity, which are based on various assumptions as to production levels, commodity prices and other assumptions and are provided for illustration only and are based on budgets and forecasts that have not been finalized and are subject to a variety of contingencies including prior years' results. To the extent such estimates constitute a financial outlook or future oriented financial information in this presentation, as defined by applicable securities legislation, such information has been approved by management of Crescent Point. Such financial outlook or future oriented financial information is provided for the purpose of providing information about management s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. 2

3 Highlights 2018 Executed disciplined 2018 capital program $38 million under budget while exceeding production Disposed assets producing ~7,000 boe/d for ~$355 million Initiated transition plan with a new team and a goal of becoming more focused and efficient with a stronger balance sheet 2019 Disciplined, returns-focused budget of $ $1.30 billion ~30% lower than 2018 Benefiting from recent cost reductions and targeting additional improvements in overall efficiencies >$400 million of excess cash flow based on guidance at current strip prices, allowing for debt reduction and share repurchases 3

4 $/boe/d Full-Cycle IRR (%) Improving Capital Efficiencies and Returns $30,000 Capital Efficiencies 30% Full-Cycle IRR $50 - $60 WTI) 24% 20% 20% $25,000 14% 10% 10% 12% 5% $20, E 0% E Since mid-2018, new management has increased its focus on risk-adjusted returns and costs reductions Cost Reductions: Realized cost reductions of ~5% in H2/18 across asset base with reduced drilling days, completion optimization and improved logistics Rescheduled Capital Program: Implemented a more consistent spending/activity profile since mid 2018 to enhance efficiencies and overall returns Returns-based Growth: Increased focus on risk-adjusted returns and ROACE, including balance between near and long-term development goals 2019 estimates represent the mid-point of guidance Capital efficiencies is calculated as development capital expenditures (includes facilities and excludes land and capitalized G&A divided by production adds) Full-cycle IRR include drilling and development, facilities, land and seismic capital expenditures 4

5 Financial Highlights Capital Discipline: Q4/18 adjusted funds flow of $337 million ($0.61/share) vs total capital expenditures of $302 million 2018 capital expenditures $38 million below annual guidance while exceeding annual production target Net Earnings: 2018 adjusted net earnings of $235 million ($0.43/share), up from $100 million ($0.18/share) in 2017 After-tax impairment of $2.7B to better reflect an approximation of the fair value of asset base in the current commodity price and macro-economic environment Balance Sheet and Financial Flexibility: YE 2018 net debt to adjusted funds flow of 2.3x, expected to improve to 2.0x in 2019 based on current strip pricing and guidance (excluding proceeds from dispositions) Significant liquidity with $1.6B of cash and unrealized credit capacity with no material near-term maturities *Includes underlying currency swaps 5

6 CAD$/bbl Canadian Market Access and CPG Pricing Advantage CPG Corporate Realized Oil Pricing vs. AB Index Prices $90 $60 $30 $0 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 CPG Realized Oil Price CPG Expected Oil Price MSW WCS Mar-19 Shaunavon Viewfield & Flat Lake Cromer Superior Clearbrook Corporate Oil Production Breakdown by Pricing Stream St. Paul Chicago Sarnia WAX UHC 25% (US) Cushing Patoka Light Oil (80%) LSB 45% MSW 10% Medium Oil (20%) (premium to WCS) FOS 20% Major Pipeline CPG CDN Focus Areas 100% CPG expected oil price is calculated using the forecast corporate oil differential based on guidance at current strip prices CPG s SE Saskatchewan production is priced off LSB at Cromer vs. MSW at Edmonton WCS = Western Canadian Select, FOS = Fosterton, MSW = Mixed Sweet Blend, LSB = Light Sour Blend, UHC = Sweet at Clearbrook, WAX = Yellow Wax in Salt Lake City 6

7 2P Waterflood Reserves Additions by Year (MMboe) % of Total 2P Organic Reserves Additions by Year Reserves Added >92 MMboe of 2P reserves for total of ~988 MMboe Organically replaced ~142% of 2018 production (2P) PDP recycle ratio of 1.5x (incl. FDC) and 1.5x (excl. FDC) 2P recycle ratio of 1.4x (incl. FDC) and 1.9x (excl. FDC) YE 2018 Before-Tax Net Asset Value per US$55/bbl Reserves Category NAV per share Proved plus Probable (2P) $13.38 Developed Producing (P+PDP) $8.02 Proved Developed Producing (PDP) $5.37 (1) NAV per share based on 553.4MM shares (f.d.) and 10% discount rate (2) NAV includes land, seismic and derivatives less net debt of $4.0B as at Dec 31, Reserve life index of ~16 years (2P) Waterflood Reserves Additions Increased NAV / share by 4% (@ flat US$55 WTI pricing excl. value for land and seismic), or 8% adjusting for dividends % 20% Waterflood reserves in 2018 represent ~23% of 2P organic reserves additions across the Company % 10% Low 2P F&D cost of ~$9.00 in the Viewfield Bakken resource play primarily driven by waterflood 5 5% Large OOIP resource base allows for continued reserves growth % Reserves Additions % of Total 2P Organic Additions 7

8 Investment Summary Deep value at current share prices relative to underlying fundamental value Improving equity value through net debt reduction and NCIB for up to 7% of public float High netback asset base with significant positions in large OOIP resource pools Expect excess cash flow of >$400 million in 2019 based on guidance at current strip prices Transitioning to become a more focused and efficient company with a stronger balance sheet Realized G&A, operating expense and capital cost reductions with an increased focus on additional savings New management s capital allocation process centered on returns with flexibility at various commodity prices Reduced 2019 capital expenditures by ~30% with similar annual average production vs after dispositions Disciplined disposition program of larger upstream and infrastructure assets Potential catalysts associated with asset packages currently being marketed in Q1/19 8