Crescent Point Energy (CPG) Reports Q4 Loss Per Share of CDN$0.76, Cuts Dividend

Crescent Point Energy (NYSE: CPG) reported Q4 EPS of (CDN$0.76), versus CDN$0.24 reported last year.

OUTLOOK AND REVISED DIVIDEND

Since inception, Crescent Point's business strategy has been to own and develop high-quality, large oil-in-place assets and to maintain a strong balance sheet to weather commodity price cycles. This strategy has resulted in long-term per share growth and dividend income for shareholders without risking balance sheet strength.

Crescent Point continues to maintain a healthy balance sheet that offers significant liquidity. At year-end 2015, Crescent Point had net debt to funds flow of 2.2 times and more than $1.4 billion of unutilized credit capacity on its syndicated bank line.

Despite executing its business strategy and generating another year of strong production and reserves growth, Crescent Point is reducing its dividend to maintain its strong balance sheet in the event that low oil prices persist for longer than anticipated. The Company's reduced dividend also provides increased financial flexibility during a rising commodity price environment.

The Board of Directors has approved a monthly dividend of $0.03 per share, effective with the March 2016 dividend that is payable in cash on April 15, 2016. This move reduces Crescent Point's cash requirements by approximately $430 million annually. Crescent Point is committed to a long-term growth plus dividend income model. The Company will continue to fund its dividend through internally generated cash flow and without the use of a dividend reinvestment program.

With planned 2016 capital expenditures of $950 million weighted towards the second half of the year, and a revised monthly dividend of $0.03 per share, the Company expects to live within cash flow in 2016 at an annual average WTI price of US$35/bbl.

"With our revised dividend and capital, we are living within cash flow and protecting our balance sheet in 2016 at price levels below the current forward strip," said Saxberg. "As commodity prices improve, we will have greater flexibility to improve our balance sheet, increase our per share growth, internally fund future acquisition opportunities or raise our dividend."

Based on initial planning for 2017, which includes the revised dividend and assumed capital expenditures of $950 million, Crescent Point expects to maintain production in the 165,000 boe/d range and balance cash inflows and outflows at a WTI price of approximately US$45/bbl, which is in line with current strip prices. As commodity prices rebound, the Company expects a significant increase in free cash flow. If WTI oil prices average US$55/bbl in 2017, the Company estimates approximately $600 million or $1.18 per share of excess free cash flow over and above its capital spending plans and its revised dividend.

Crescent Point continues to optimize its three-and-a-half year hedge book and to layer in additional hedges when forward price levels warrant. In the first quarter of 2016, the Company monetized approximately $62 million of 2017 and 2018 oil hedges, taking a portion of the monetization in the form of cash and applying the remaining portion to incremental 2016 and 2017 oil hedges. In addition, during first quarter, the Company hedged an incremental 6,500 bbl/d for the remainder of 2016.

As at March 4, 2016, the Company has 39 percent of its oil production, net of royalty interest, hedged for the remainder of 2016 at a weighted average price of approximately CDN$80.00/bbl and nine percent for 2017 at a weighted average price of approximately CDN$76.00/bbl. Crescent Point also has 40 percent of its natural gas production hedged for the remainder of 2016 at a weighted average price of CDN$3.47 per GJ and 22 percent hedged for 2017 to early 2019 at a weighted average price of CDN$3.16 per GJ.

Crescent Point has also limited foreign exchange risk on its US dollar debt. At the time of issuance of its US dollar senior guaranteed notes and US dollar bank debt, Crescent Point entered into currency swaps in order to fix the principal and interest repayments at notional Canadian dollar amounts. As at December 31, 2015, the Company's total net debt, excluding unrealized foreign exchange on translation of hedged US dollar long-term debt, was $4.3 billion.

Crescent Point remains committed to maintaining a strong financial position while continuing to maximize shareholder return through its total return strategy of long-term growth plus dividend income. The Company is flexible and remains well positioned to execute on its total return strategy due to its conservative business approach, high-quality inventory base and its commitment to advancing its technology and waterflood programs.

For earnings history and earnings-related data on Crescent Point Energy (CPG) click here.

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