Crescent Point Energy Corp. has entered into definitive agreements with select parties to sell its Uinta Basin asset in its entirety and certain southeast Saskatchewan conventional assets for total cash consideration of approximately $912 million.

KEY HIGHLIGHTS

• Agreements to sell 27,000 boe/d of upstream assets for approximately 4.7 times cash flow.
• Net debt expected to improve to approximately $2.75 billion at year-end 2019, down from $4.40 billion prior to the changes in senior management in 2018. Transactions strengthen balance sheet and lower pro-forma net debt to adjusted
• funds flow ratio by approximately 0.4 times.
• Accretive to debt-adjusted funds flow per share by approximately 11 percent, while also improving the corporate operating netback by approximately five percent, lowering the capital required to sustain annual production and enhancing the Company’s financial flexibility.
• Increases Crescent Point’s ability to continue executing its share repurchase program, with approximately $100 million of incremental share repurchases budgeted for the remainder of 2019, based on guidance at current strip prices.
• Continue to advance disciplined disposition program, including the monetization of certain infrastructure assets.

“Since we established our transition plan in September 2018, we have meaningfully improved the sustainability of our business model by revising our capital allocation process, lowering our cost structure and strengthening our balance sheet,” said Craig Bryksa, President and CEO of Crescent Point. “The sale of the Uinta Basin and certain conventional assets is accretive for our shareholders and aligned with the key criteria we established for our asset portfolio. These transactions are a considerable step forward in our ongoing plan to focus our asset base.”

UINTA BASIN ASSET DISPOSITION

During first quarter 2019, Crescent Point initiated a sales process for its Uinta Basin asset. This process has resulted in the successful execution of a purchase and sale agreement to sell the entirety of the Company’s Uinta Basin position to a private operator for total cash consideration of approximately $700 million (US$525 million), before closing adjustments.

Crescent Point’s Uinta Basin asset includes approximately 350 net sections of undeveloped land, 123.1 million boe (“MMboe”) of Proved Plus Probable (“2P”) reserves and 29.5 MMboe of Proved Developed Producing (“PDP”) reserves. These reserves are based on the Company’s independent engineers’ evaluation and price forecast as at December 31, 2018.

Crescent Point expects to generate improved corporate returns and a stronger operating netback from lower royalties and reduced expenses as a result of this disposition. The capital expenditures required to sustain the Company’s annual production are also expected to improve due to a shallowing of the corporate decline rate.

SOUTHEAST SASKATCHEWAN CONVENTIONAL ASSET DISPOSITION

The conventional assets being sold include approximately 7,000 boe/d of current production (70% crude oil and 85% total liquids) and 49.2 MMboe of 2P reserves. These reserves are based on the Company’s independent engineers’ evaluation and price forecast as at December 31, 2018.

These conventional assets operate with a higher operating cost structure and generate an operating netback that is approximately 30 percent below Crescent Point’s corporate average. Additionally, the future decommissioning liabilities associated with these non-core assets are higher than those associated with the Company’s key focus areas.

UPDATED 2019 GUIDANCE

Crescent Point’s revised guidance for 2019 incorporates the announced asset dispositions and includes annual average production of 160,000 to 164,000 boe/d. The Company’s capital expenditures of $1.2 to $1.3 billion remains unchanged based on the planned spending profile for the disposed assets during the remainder of the year, as previously budgeted.

Crescent Point expects to conclude its 2019 capital expenditures budget for its Uinta Basin asset during September 2019. This program includes the fracture stimulation and completion of a number of previously drilled two-mile horizontal wells as part of the Company’s multi-well pad development program. Crescent Point expects these eight (seven net) two-mile horizontal wells to be brought on-stream prior to the transaction closing in late third quarter, resulting in forecast production of over 22,000 boe/d from the asset at closing.

The Company’s original 2019 budget allocated approximately $150 million in total to its Uinta Basin asset in comparison to approximately $200 million of estimated capital required to sustain annual production of approximately 20,000 boe/d in 2020. The southeast Saskatchewan conventional assets being sold would require estimated capital of approximately $25 million to sustain annual production of approximately 7,000 boe/d in 2020. As a result of these dispositions, the required capital expenditures to sustain annual production, as a percentage of Crescent Point’s cash flow, is expected to improve.

The Company’s revised 2019 guidance also incorporates the impact of converting additional producing wells to waterflood injectors as part of its commitment to decline mitigation. Crescent Point is now targeting approximately 175 to 200 injection well conversions in 2019 compared to its original budget of approximately 145 conversions.

The Company does not expect to incur any cash taxes resulting from the announced asset dispositions.

Link to Crescent Point Energy Canada Onshore country profile