News
(NYSE: CPG) Q1 2024 Earnings Call Transcript
Crescent Point Energy Corp.CPG) Q1 2024 Earnings Conference Call Transcript, May 10, 2024
Crescent Point Energy Corp. is not one of the 30 most popular stocks among hedge funds at the end of the third quarter (see details here).
Operator: Good morning ladies and gentlemen. My name is Annes and I will be your operator for Crescent Point Energy’s Q1 2024 conference call. This conference call is being recorded today and will be webcast along with a slideshow that can be found on the home page of the Crescent Point website. The webcast may not be recorded or rebroadcast without the express consent of Crescent Point Energy. All values discussed today are in Canadian dollars, with the exception of the West Texas Intermediate or WTI price, which is quoted in US dollars. The full financial statements and Management’s Discussion and Analysis for the period ended March 31, 2024 were released this morning and are available on the Crescent Point, SEDAR+ and EDGAR websites.
All lines have been muted to avoid any background noise. Following the speakers’ comments, there will be a question and answer session for members of the investment community. [Operator Instructions]. During the conference call, management may make projections or other forward-looking statements about future events or future financial performance. Actual performance, events or results may differ materially. Additional information or factors that may affect Crescent Point’s operation or financial results are included in Crescent Point’s most recent annual information form, which can be accessed through the Crescent Point, SEDAR+ or EDGAR websites, or by contacting Crescent Point Energy. Management also draws your attention to the forward-looking information and non-GAAP measures sections of the press release issued earlier today.
I would now like to turn the call over to Craig Bryksa, president and CEO of Crescent Point. Please go ahead, Mr. Bryksa.
Craig Bryksa: Thank you, Operator. Welcome to our Q1 2024 conference call. Joining me today are Ken Lamont, our Chief Financial Officer, and Ryan Gritzfeldt, our Chief Operating Officer. We are off to a great start in 2024. As recently stated, our strategic priorities are focused on operational execution, optimizing our balance sheet and increasing our return on capital. Our first quarter results showed how our operational execution and capital discipline led to solid results across our businesses. In the first quarter, we produced more than 198 thousand BOE per day. We generated $130 million in excess cash flow, returning 60% of that to our shareholders through our core dividends and share repurchases. And when it comes to the balance sheet, we reduced our net debt by more than 150 million dollars.
The story continues
Earlier this week, we entered into an agreement to divest non-core assets in Saskatchewan for $600 million. We plan to direct the net proceeds from this provision toward debt repayment, further strengthening our financial position. As a result, we anticipate that our net debt at the end of 2024 will be $2.8 billion or 1.1x debt to cash flow. This would mark a significant net debt reduction of $1 billion from year-end 2023. All of these highlights serve as examples of how we are executing our strategic plan and maintaining our commitment to increasing shareholder value. I would like to focus today on our operational excellence across our portfolio because that is what ultimately drives the effectiveness of our strategic priorities. At Alberta Montney, we continue to demonstrate the quality of our asset base and our technical strength.
A drilling rig in action in the western Canadian wilderness, showing the companies’ focus on exploration and production.
Our recent well results show that we are drilling some of the major wells, oil and liquids producing wells, not just in the area, but throughout the Western Canadian Cemetery Basin. We have also seamlessly integrated our recently acquired Alberta Montney assets and brought 18 wells into operation year-to-date with strong results. At Karr West, we have brought into operation three multi-well platforms since closing our acquisition in late 2023. These wells were drilled by the previous operator using its fracturing design, including tighter well space. Maximum 30-day well rates from these first two platforms ranged from 400 to 1,400 BOE per day at 85% liquids. The third block recently came into operation with strong initial results. We will bring into operation our first fully operated platform in this area early in the second half of the year, which will utilize our drilling and completion design, including expanded well space.
On our recent multi-well rig at Gold Creek West, we tested different completions designs. We have used a plug and perf technique in two of the four wells instead of sliding sleeves and have had promising results to date. This pad had a 30-day average peak rate of 1,800 BOE per day per well with 85% liquid weighting. As good as these results are, we believe we can do more to unlock future value by further optimizing our drilling and completion projects. Consistent with previous quarters, our Kaybob Duvernay results also show strong IP30 ratings with high liquid weight, the majority of which is condensate. This leads to generating prolific returns in the area. In the first quarter, I am proud to say that our operational team achieved a notable milestone by successfully drilling the longest onshore well in Canadian history.
Our record well had a total measured depth of over 9,000 meters, which included a lateral length of over 5,400 meters. It was drilled as part of a multi-well platform in the volatile oil window to access parts of the reservoir that would not otherwise have been recovered. We will put this block into operation in the second half of the year and we are excited to see the results. Our most recent block in this area, which came online in the first quarter, had a 30-day average peak rate of over 1,500 BOE per day per well, comprised of 75% liquids. I would like to congratulate our Kaybob Duvernay team on their tremendous achievement in achieving this record well. This is yet another example of our technical strength and overall operational experience.
In southeastern Saskatchewan, we continue to advance our multilateral open well development program and are seeing encouraging results from these wells. We plan to drill 10 8-leg, 2-mile wells during 2024. With the Saskatchewan government’s recently announced royalty incentive, our program’s net present value and payout increases by 10%. With our recently announced divestiture of non-core assets in Saskatchewan, we have revised our 2024 annual production guidance to 191,000 to 199,000 BOE per day. Our capital expenditure guidance of $1.4 billion to $1.5 billion remains unchanged due to the minimum expenditures we have allocated to divested assets for the remainder of the year. On a pro forma basis, we expect to generate $875 million of excess cash flow in 2024 at $80 per barrel of WTI.
The majority of this excess cash flow is weighted towards the second half of the year based on the cadence of our capital program. We will continue to allocate 60% of our excess cash flow to shareholders and the remaining 40% to the balance sheet. As I step back and look at where our company is headed, I have never been more excited. We will continue to focus on our strategic priorities of operational execution, optimizing our balance sheet and increasing our return of capital to our shareholders. Our priorities are supported by an asset portfolio with 20 years of premium drilling inventory to provide disciplined growth per share and significant excess cash flow. Our corporate transformation improvements we have made to get to this point are truly exceptional.
Our first quarter results clearly show how positive the start of the year was for us. Before closing, I would like to invite everyone listening to this conference call to our General Assembly this morning, which will be held virtually. Please visit our website for more details. I now open the call for questions from the investment community, followed by questions from the webcast. Operator, please open the line for questions.
See too
20 best long-lasting lipsticks It is
12 Best Large-Cap Growth ETFs.
To continue reading the Q&A session, please Click here.