Crescent Point Energy Corp. Announces Third Quarter 2012 Results

CALGARY, Nov. 8, 2012 /CNW/ - Crescent Point Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) is pleased to announce its operating and financial results for the quarter ended September 30, 2012. The Company also announces that its unaudited financial statements and management's discussion and analysis for the quarter ended September 30, 2012, will be available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and on Crescent Point's website at www.crescentpointenergy.com.

FINANCIAL AND OPERATING HIGHLIGHTS

THIRD QUARTER 2012 HIGHLIGHTS

In third quarter 2012, Crescent Point continued to execute its integrated business strategy of acquiring, exploiting and developing high-quality, long-life light and medium oil and natural gas properties.

• Crescent Point achieved a new production record in third quarter 2012 and averaged 99,631 boe/d, weighted 90 percent to light and medium crude oil and liquids. This represents a growth rate of three percent over second quarter 2012 and 38 percent over third quarter 2011.
• During third quarter, the Company spent $259.4 million on drilling and development activities, drilling 149 (84.7 net) wells with a 100 percent success rate. Crescent Point also spent $54.5 million on land, seismic and facilities, for total capital expenditures of $313.9 million.
• Crescent Point generated funds flow from operations of $384.2 million ($1.13 per share - diluted) in third quarter 2012, representing a 27 percent increase over third quarter 2011 funds flow from operations of $303.3 million ($1.09 per share - diluted).
• Crescent Point maintained consistent monthly dividends of $0.23 per share, totaling $0.69 per share for third quarter 2012. This is unchanged from $0.69 per share paid in third quarter 2011. On an annualized basis, the third quarter dividend equates to a yield of 6.5 percent, based on a volume weighted average quarterly share price of $42.54.
• During the quarter, the Company closed a bought deal financing and the associated over-allotment option granted to the underwriters. A total of 15,433,000 Crescent Point shares were issued at a price of $41.00 per share for aggregate gross proceeds of approximately $632.8 million.
• Subsequent to the quarter, on November 1, 2012, the Company announced the acquisition (the "Ute Acquisition") of Ute Energy Upstream Holdings LLC ("Ute"), a privately held oil and gas producer with assets in the Uinta Basin light oil resource play in northeast Utah. The assets expected to be acquired include production of approximately 7,800 boe/d and approximately 270 net sections of land in the centre of the resource play. Closing is expected to occur on or about November 30, 2012.
• Also on November 1, 2012, Crescent Point announced a bought deal financing with a syndicate of underwriters to raise gross proceeds of approximately $750 million. The bought deal financing includes an over-allotment option for underwriters. Closing is expected to occur on or about November 21, 2012.
• 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.
• The Company continued to increase oil deliveries through its Stoughton rail terminal, providing access to diversified refining markets and more stable price differentials to WTI. Third quarter average throughput was more than 15,500 bbl/d, with an additional 1,000 bbl/d also being delivered to third-party sites. Expansion of the Stoughton rail facility, which is expected to be completed in fourth quarter 2012, will increase shipping capacity to 40,000 bbl/d. In late third quarter, the Company completed preparation of its rail-loading facility in the Dollard area of southwest Saskatchewan and delivered its first loads in October. Current capacity is approximately 4,000 bbl/d.
• Crescent Point continued to implement its disciplined hedging strategy to provide increased certainty over cash flow and dividends. As at October 31, 2012, the Company had hedged 56 percent, 54 percent, 35 percent, 17 percent and 3 percent of its oil production, net of royalty interest, for the balance of 2012, 2013, 2014, 2015 and the first quarter of 2016, respectively. Average quarterly hedge prices range from Cdn$88 per bbl to Cdn$94 per bbl.
  
  

OPERATIONS REVIEW

Third Quarter Operations Summary

During third quarter 2012, Crescent Point continued to aggressively implement management's business strategy of creating sustainable, value-added growth in reserves, production and cash flow through acquiring, exploiting and developing high-quality, long-life light and medium oil and natural gas properties.

Crescent Point achieved a new production record in the third quarter and averaged 99,631 boe/d, which represents a 38 percent increase over third quarter 2011.

During third quarter, the Company spent $259.4 million on drilling and development activities, drilling 148 (84.3 net) oil wells, achieving a 100 percent success rate. Crescent Point also spent $54.5 million on land, seismic and facilities, for total capital expenditures of $313.9 million during the quarter.

Drilling Results

The following tables summarize our drilling results for the three and nine months ended September 30, 2012:

Southeast Saskatchewan and Manitoba

In third quarter 2012, Crescent Point participated in the drilling of 66 (43.8 net) wells in southeast Saskatchewan and Manitoba, achieving a 100 percent success rate. Of the wells drilled, 44 (35.6 net) were horizontal wells in the Bakken light oil resource play. The Company also participated in the drilling of 22 (8.2 net) horizontal oil wells in conventional zones.

During the quarter, the Company converted six additional Viewfield Bakken producing wells to water injection wells. By end of third quarter 2012, the Company had converted a total of 41 producing wells to water injection wells in the play. Production performance from water injection patterns in the Viewfield Bakken resource play continues to exceed Crescent Point's expectations and has demonstrated the field wide applicability of waterflood to the play. Discussions with potential unit partners and the Saskatchewan government to implement a unit-wide waterflood are advancing.

Across Crescent Point's asset base, the Company continues to pursue multiple applications of new technologies to maximize recoveries and improve efficiencies. In the Saskatchewan Bakken, this has included re-entering existing wells that were originally completed with 8-stage and 16-stage cemented liners and increasing them to 25-stage and 30-stage cemented liner completions. The Company has identified 90 wells in the play as candidates for this process. Crescent Point has also drilled three 2-mile horizontal wells to date in the Flat Lake Bakken play, achieving a 100 percent success rate. Based on this success, the Company plans to drill a fourth 2-mile horizontal well in fourth quarter 2012.

Crescent Point continues to increase deliveries of crude oil through its new Stoughton rail facility, allowing the Company to diversify its markets for Bakken crude oil, to more effectively manage pipeline disruptions and to increase netbacks. On average, more than 15,500 bbl/d of Bakken production was delivered through the facility during third quarter. Expansion of the Stoughton rail facility, which is expected to be completed in fourth quarter 2012, will increase shipping capacity to 40,000 bbl/d.

Southwest Saskatchewan

During third quarter, the Company participated in the drilling of 20 (14.5 net) oil wells in southwest Saskatchewan, achieving a 100 percent success rate. Of these wells, 11 (9.8 net) were drilled in the Shaunavon area.

The Company is currently injecting water into seven horizontal injection wells in five pressure maintenance programs in the Lower Shaunavon zone. Crescent Point continues to be encouraged by results to date in all programs. Through acquisitions completed in 2012, Crescent Point has acquired 17 injection wells that are injecting water into an additional five patterns in the Upper Shaunavon formation. Based on success to date, the Company plans to begin injecting water into an additional five wells in the Upper Shaunavon by year end. In total, Crescent Point expects to have up to 30 water injection wells into the play by year-end 2012.

To date, 30 wells have been drilled at eight wells per section spacing in both the Lower and Upper Shaunavon zones with no signs of interference. By the end of third quarter, the Company had drilled two wells in the Lower Shaunavon at 16 wells per section, with plans to drill another two by year end.

In late third quarter, the Company completed preparation of its rail-loading facility in the Dollard area and delivered its first loads in October. Current capacity is approximately 4,000 bbl/d, with plans for further expansion in 2013.

Crescent Point also completed construction and commissioned the second of three new batteries planned for 2012. Construction on the remaining battery is underway, with commissioning anticipated by the end of fourth quarter 2012.

South/Central Alberta and West Central Saskatchewan

During third quarter, 32 (20.6 net) oil wells were drilled, achieving a 100 percent success rate. The Company's plans for its first waterflood pilot in the Beaverhill Lake light oil resource play are well underway. Crescent Point expects the pilot to be operational in early 2013.

To date, the Company has drilled 17 (17.0 net) wells with a 100 percent success rate in the Viking area on lands acquired in the Cutpick Energy Inc. acquisition, which closed on June 20, 2012. The successful drilling results from this initial program have expanded the pool boundary by eight sections, beyond the 83 net sections expected at the time of the acquisition.

Late in third quarter, Crescent Point converted a producing well to a water injection well on the Cutpick lands, bringing the total number of water injection wells to three. The waterflood program began in the area in 1998 and, in August 2011, a second pilot was established. With encouraging production performance to date, the Company plans to convert an additional three producing wells to water injection wells on these lands in 2013.

Crescent Point has access to a significant land base in southern Alberta and has been pursuing several exploration projects in the area. In fourth quarter 2012, the Company plans to drill up to an additional seven wells to follow up on previously drilled unconventional exploration wells in the Alberta Bakken play.

United States

During third quarter, the Company participated in the drilling of 30 (5.4 net) oil wells, of which 14 (2.2 net) targeted the Three Forks formation, achieving a 100 percent success rate. Crescent Point also drilled 1 (0.4 net) service well.

In total in 2012, the Company expects to drill up to 16 net wells targeting the Bakken and Three Forks zones. Crescent Point is currently working with its service providers to reduce capital costs that have seen upward pressure due to high industry activity levels in North Dakota.

ACQUISITIONS

Subsequent to the quarter, on November 1, 2012, the Company announced the acquisition of Ute, a privately held oil and gas producer with assets in the Uinta Basin light oil resource play in northeast Utah. The assets expected to be acquired include production of approximately 7,800 boe/d and approximately 270 net sections of land in the centre of the resource play. Closing is expected to occur on or about November 30, 2012.

Also, as announced on November 1, a number of consolidation acquisitions in Crescent Point's core Beaverhill Lake and Shaunavon areas closed in third quarter 2012 or are expected to close in fourth quarter 2012. Total consideration paid or expected to be paid for the consolidation acquisitions is approximately $65 million, of which approximately $20 million closed in third quarter. The production expected to be acquired is approximately 450 boe/d.

OUTLOOK

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.

Crescent Point executed a strong third quarter, achieving a new production record and increasing crude oil shipments through its Stoughton rail facility. Subsequent to the quarter, the Company announced the acquisition of a new core area in northeast Utah through the Ute Acquisition. The Ute Acquisition is consistent with the Company's strategy of acquiring large oil-in-place assets with high-netback production that has long-term upside and the ability to increase recovery factors through horizontal drilling and multi-stage fracture stimulation.

In the near term, the Company expects to focus on the successful integration of Ute's assets. Crescent Point plans to implement a development strategy of moderate growth for the Uinta Basin, similar to other new areas the Company has developed in Canada.

"We are excited to expand our presence in the United States with the acquisition of such a significant resource play," said Scott Saxberg, president and CEO of Crescent Point. "We believe the potential upside in the Uinta Basin will create value for our shareholders over the long term."

The Company continues to focus on executing organic growth projects across Crescent Point's asset base and on the application of new techniques and concepts across many of its resource plays.

For the remainder of 2012, the Company expects to continue to develop its emerging plays in Beaverhill Lake, North Dakota Bakken/Three Forks and southern Alberta. The Company also plans to continue to expand the waterflood programs in the Viewfield Bakken, Shaunavon and Viking resource plays, which continue to show positive results.

Crescent Point expects to release its 2013 capital expenditure plans in early December.

Funds flow from operations for 2012 is expected to be approximately $1.59 billion ($4.81 per share - diluted), based on forecast pricing of US$94.25 per barrel WTI, Cdn$2.30 per mcf AECO gas and a US$/Cdn$1.00 exchange rate.

The Company's guidance for funds flow from operations continues to include wider corporate oil price differentials for the remainder of 2012. To provide a hedge against price differential volatility, Crescent Point plans to continue to increase crude oil deliveries through its new Stoughton and southwest Saskatchewan rail facilities, which are providing access to new markets. By year end, capacity at the facilities is expected to be 40,000 bbl/d and 4,000 bbl/d, respectively.

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 hedging strategy to provide increased certainty over cash flow and dividends. As at October 31, 2012, the Company had hedged 56 percent, 54 percent, 35 percent, 17 percent and 3 percent of its expected oil production, net of royalty interest, for the balance of 2012, 2013, 2014, 2015 and the first quarter of 2016, respectively. Average quarterly hedge prices range from Cdn$88 per bbl to Cdn$94 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 2012 and beyond.

2012 GUIDANCE

Crescent Point's 2012 guidance is as follows:

http://www.theglobeandmail.com/globe-investor/news-sources/?date=+20121108&archive=cnw&slug=C5907

Cheers; Scott