Crescent Point Energy announces 2016 capital expenditures plan

Crescent Point Energy Corp. (“Crescent Point” or the “Company”) (TSX and NYSE: CPG) to announced its capital expenditures plans for 2016.
Crescent Point expects to spend between $950 million and $1.3 billion to target an annual average production range of 165,000 boe/d to 172,000 boe/d in 2016. This represents an average production increase of approximately one to five percent compared to 2015 guidance and a decrease in planned capital expenditures of approximately 16 to 39 percent versus 2015 estimates.

“With oil prices near multi-year lows, our 2016 plans are conservative and disciplined,”

said Scott Saxberg,president and CEO of Crescent Point.

“We are reducing our capital expenditures significantly from 2015 and expect to live within cash flow to protect our balance sheet. We are starting the year strong and are well positioned to achieve our 2016 targets. We have a healthy balance sheet, a solid December 2015 exit production rate in excess of 175,000 boe/d and approximately 34 percent of our 2016 crude oil production hedged at an average price of CDN$83 per bbl.”

Crescent Point is flexible in how it manages its business and will protect its balance sheet. First quarter spending is consistent in all capital scenarios with spending flexibility planned for after spring break-up. The Company is able to add or reduce capital toward the end of the second quarter, depending on the price environment at that time.
Crescent Point has a high rate-of-return, low-risk drilling inventory that provides additional flexibility when allocating capital. The Company’s 2016 plans currently include at least $150 million of long-term growth capital related to strategic projects such as waterflood initiatives, new completions technologies and step-out drilling.
Such long-term growth expenditures could be re-allocated to higher rate of return drilling in order to optimize shortterm
capital efficiencies, which could add approximately 3,000 boe/d to the Company’s annual average production guidance, depending on timing. Crescent Point could also shift an estimated $130 million of 2017 and 2018 hedging gains into 2016 in a US$40/bbl WTI oil price environment.
Crescent Point was successful in decreasing average drilling and development capital costs by more than 30 percent over the course of 2015. If low oil prices persist, the Company expects an additional five to 10 percent reduction in its capital costs beyond those reductions achieved during 2015.
Based on drilling and development capital, which represents approximately 84 percent of the capital budget, the Company estimates it will add production in 2016 at a capital efficiency of approximately $21,000 per flowing boe, or approximately $19,000 per flowing boe excluding long-term growth capital. The Company’s 2016 production guidance includes approximately 1,700 boe/d of shut-in production, on an annualized basis, which assumes normal spring break-up conditions. In addition, the Company also plans to shut-in approximately 1,600 boe/d of production by the end of the year as part of its strategic waterflood programs. Crescent Point’s waterflood program is expected to lower decline rates and improve the Company’s long-term sustainability. The Company’s 2016 base corporate decline rate is budgeted to be approximately 28 percent.
“Over the past several years, we have continually increased our focus on waterflood projects, implementation of new technology and cost saving initiatives,” said Saxberg.

“These long-term initiatives have improved our capital efficiencies and substantially lowered our corporate decline rate from 35 percent to 28 percent. We will potentially spend less than we did in 2011 when we were a much smaller company and averaged production of 74,000 boe/d.”

2016 CAPITAL SPENDING DETAILS
Source: Crescent Point Energy Corp.
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