Q1 Conference Call. May 3, Innovation & Technology Leaders. Knowledge First Culture. Value Creators

Transcription

1 Q1 Conference Call May 3, 2018 Knowledge First Culture Innovation & Technology Leaders Value Creators

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 following: expected well payouts under the budgeted 2018 drilling program under different pricing assumptions; expected production growth and exit guidance production for 2018; target total payout for 2018; expected Q2 average production; expected reduction in capital expenditures while maintaining production guidance; expected closing of non-core dispositions being finalized, including the impact of the proceeds of such sales on the Corporation s financial flexibility; expected U.S. production in 2018 and 2022; expected 2018 total outflows and inflows; the corporation s 2018 capital allocation plans; the anticipated impact of hedging on funds flow from operations volatility and dividend and capital spending stability; the expected production by total payout and capital expenditures and net debt/funds flow by total payout under the Corporation s five-year organic growth plan; expected go-forward full-cycle drilling IRRs over next five years; the Corporation s long-term outlook in development strategy to maximize ultimate recovery and reserves; our plans to drill four net wells in the East Shale Duvernay in the first half of 2018; the Corporation s planned down-spacing pilot in the Uinta Basin; our opportunity to significantly increase horizontal risked inventory by down-spacing; targeted capital cost reduction for the Uinta Basin and the expected timing to begin seeing such reductions; and the Corporation s future plans for its Board renewal process. 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, 2017, 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 Corporation s Annual Information Form for the year ended December 31, 2017 under "Risk Factors," in our Management s Discussion and Analysis for the year ended December 31, 2017, under the headings "Risk Factors" and "Forward-Looking Information" and for the year ended December 31, 2017 under Derivatives, Liquidity and Capital Resources, Changes in Accounting Policies and Outlook. The material assumptions are disclosed in the Management s Discussion and Analysis for the year ended December 31, 2017, under the headings "Capital Expenditures", "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 2018 guidance in respect of capital expenditures, average annual production, exit production, funds flow from operations netback, total payout, net debt to funds flow from operations and number of wells to be drilled; and expectations under its 5-Year Plan, including with respect to CAGR + Yield, production by total payout and capital expenditures and net debt/funds flow by total payout, 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 in February 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 Execution in 2018 Q Exceeded production targets; expect Q2 production of >182,000 boe/d Reduced capital expenditures while maintaining production guidance Finalizing $225 million disposition of non-core assets (updated guidance to follow) 2018 Return-focused with ~90% of net drills to pay out in <2 years at current strip pricing 7% growth with exit guidance of 195,000 boe/d Target <100% total payout including dividends 3

4 boe/d % of total corporate production Crescent Point Energy Corporate Presentation Expanding U.S. Presence 90,000 U.S. Production >30% 35% 75,000 30% 60,000 25% 45,000 20% 30,000 13% 15% 15,000 10% E 2022E 5% Source: Computershare (share information) 2018 Production estimates based on 2018 guidance 2022 Production estimates based on 100% payout scenario in 5-year plan 4

5 Balancing Cash Outflows with Inflows DIVIDENDS EXPECTED NET DISPOSITIONS 2018 Total Outflows vs. Inflows <100%* 1 CAPITAL EXPENDITURES FUNDS FROM OPERATIONS Average = 105%* *Figures do not include expected proceeds of ~$225MM from non-core disposition expected to close near the end of Q2/18 Outflows Inflows Total outflows vs. inflows = outflows (capital expenditures + land + dividends) divided by inflows (funds flow from operations + net dispositions) 2018 figures based on guidance 5

6 Financial Strategy Risk Management Financial Discipline Strong Capital Allocation 6

7 Focused Capital Allocation & High-Return Drilling Program 2018 Capital Allocation by Area Focused: ~95% of capital allocated to 3 core areas 5% High-Return Drilling Program: Breakeven of ~US$40/bbl WTI in 2018 and 5-year plan (NPV@10%) 20% 20% 20% 57% >75% of net wells at US$55/bbl WTI or ~90% at current strip pricing, pay out in <2 years (2018 program) 55% >75% of net wells pay out in <2 years at US$55/bbl WTI (5-year plan) 20% 2-year payout well (US$55/bbl WTI) equates to an IRR of ~40% Williston Basin SW Saskatchewan Uinta Basin Other Based on US$55/bbl WTI for Current strip prices as at April 24, 2018 All numbers shown above are approximations 7

8 Oil Hedge Volume (bbl/d) Crescent Point Energy Corporate Presentation Commodity Hedging Strategy Oil Hedges 90,000 55% Q % H % H $ ,000 70,000 28% Q $ ,000 50,000 40,000 $70.00 $ CAD 30,000 20,000 $ ,000 0 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Swaps 3-Way Collars Floor Hedge Price (3-way collars at market price) $50.00 Active hedging program reduces funds flow from operations volatility and provides greater stability for dividends and capital spending As at April 27, Floor hedge price is calculated using the forward strip for the 3-way collar hedges Floor hedge price of 3-way collar hedges are subject to change based on forward oil and f/x prices 2018 percentage hedged figures based on annual average liquids production guidance net of royalties 2019 percentage hedged figures based on 2018 exit liquids production net of royalties based on 2018 guidance 8

9 Million $ CAD Crescent Point Energy Corporate Presentation Balance Sheet Strength Debt Composition ($CAD) as of Mar 31, Net Debt to Funds Flow From Operations $1.9B Senior Guaranteed Notes* $1.4B Cash & Unutilized Credit Capacity 4.0x 3.0x 2.0x $2.2B Drawn on Bank Credit Facilities (61% utilized) 1.0x Senior Guaranteed Notes Maturity Schedule 1 0.0x E 250 $ $185 No material near-term debt maturities, cash and unutilized credit capacity of ~$1.4 billion $158 Bank credit facilities and senior guaranteed notes rank equal and are unsecured and covenant-based. Bank credit facilities have a June 2020 renewal date $20 $ US$ denominated senior guaranteed notes fully hedged with cross currency swaps On April 11, 2018 closed a private placement offering of senior guaranteed notes as part of normal course issuance. Proceeds directed toward repaying portion of the Company s outstanding bank debt Significant amount of liquidity and financial flexibility *Includes underlying currency swaps 1) Includes the private placement offering of senior guaranteed notes on April 11, 2018 applied against bank debt and the repayment of senior guaranteed notes on April 14,

10 320 Current Single Well Cost Development Phase Well Cost 330 Crescent Point Energy Corporate Presentation Uinta Basin: Stacked Horizontal Test Results Successfully completed first stacked Hz development targeting Castle Peak, Uteland Butte and Wasatch zones Recently completed second stacked Hz development subsequent to Q1/18 with positive initial results Opportunity to significantly increase horizontal risked inventory through down-spacing of up to 8 wells per drilling spacing unit Majority of current risked horizontal inventory assumes 4 wells per drilling spacing unit Targeting capital cost reductions of >10% as program shifts to development phase (expected in 2019) Stacked Horizontal Development 2-Mile Well Development Phase Cost Reductions Castle Peak US$8.5-$10MM ~1% ~8% Uteland Butte Drilling Savings Completion Savings ~1% Equip Savings US$7.5-$8.5MM Wasatch Drilled well Future undrilled well *Assumes 4 wells per drilling spacing unit *Castle Peak single well cost of US$8.5MM decreases to US$7.5MM in development phase 10

11 East Shale Duvernay Large OOIP with significant running room 355,000 net acres at a low entry cost of ~$315/acre Knob Hill High impact wells Participated in 2 (gross) non-operated wells. The first well flowed at an IP30 rate of ~570 boe/d and IP90 of ~515 boe/d (92% liquids) A second non-operated well, which was recently completed, flowed at an IP30 rate of ~535 boe/d (93% liquids) Gilby Joffre / Ferrybank Favourable geology High-graded areas based on thicker pay, higher pressure and depth Strategically targeted oil window (avoiding gas transition zone) Twining / Elnora High-working interest (~99%), strong land tenure and low royalties (~85% crown) Completion knowledge transfer from U.S. assets Source: Sherwin Geological Edges, Crescent Point and Public Data Planning to drill 4 net operated wells in the first half of

12 Boe/d Capital Expenditures ($MM) Net Debt/Funds Flow Crescent Point Energy Corporate Presentation 5-Year Organic Growth Plan 350,000 Production by Total Payout (%) Scenario $3,500 Capital Expenditures & Net Debt/Funds Flow by Total Payout (%) Scenario Net Debt to Funds Flow 2.5 $3, ,000 $2,500 Capital Expenditures 250,000 12% CAGR $2, $1, ,000 7% CAGR $1, % CAGR $ , $ % Payout 100% Payout 110% Payout 90% Total Payout 100% Total Payout 110% Total Payout 2018 net debt / funds flow based on current strip prices of ~US$65/bbl WTI based on US$55/bbl WTI 2018 capital expenditures in the 90% and 100% payout scenarios equate to the Company s 2018 guidance Total payout = (capital expenditures + dividends) / (funds flow from operations) 2018 dividend yield based on share price as of market close on December 29,

13 Investment Thesis Scaleable Economic Growth Value Creators Financial Discipline Scaleable organic growth: ~27 billion barrels OOIP, ~14,000 unrisked net locations and >4 million net acres of land Execution history: ~742 million boe of organic reserve additions and consistent long-term reserves growth per share Significant infrastructure ownership including pipeline, rail and facilities Knowledge-first culture and data driven company resulting in operational excellence Long-term outlook in development strategy to maximize ultimate recovery and reserves History of successful new play discoveries and organic growth of drilling inventory in high-productivity rate plays Non-core asset dispositions and a continued focus on financial strength ~$1.4 billion of current liquidity with no material near-term maturities Up to 3-½ year hedging program 13