Crescent Point planning special dividend
Crescent Point Energy Corp. announced a special dividend for shareholders Wednesday, as continued high oil prices helped the Calgary-based oil and gas company deliver a five-fold increase in profits in its third quarter.
Crescent Point, which has drilling operations in Alberta, Saskatchewan and North Dakota, reported third-quarter net income of $466.4 million, up from $77.5 million in the same quarter last year.
The company said it will pay a special dividend of 3.5 cents per share based on its latest quarterly results in addition to its regular quarterly dividend of eight cents per share.
However, the company also acknowledged it is beginning to feel the pinch of widespread inflation throughout the economy. On Wednesday, Crescent Point revised its capital expenditure guidance for 2022 to $950 million from its previously indicated range of between $875 million and $900 million.
“Our new 2022 guidance of $950 million is a seven per cent bump from our previous midpoint,” said Crescent Point chief executive Craig Bryksa on a conference call with analysts, adding the increase is in part due to increased drilling activity in the Duvernay and North Dakota regions, but also the result of rising costs for everything from trucking, well servicing, labour and equipment repair.
“We've seen a little bit of a bump in drilling rig day rates ... and obviously plays that are a little bit deeper, like Kaybob (Alta.) and North Dakota, require more casing, more fracking, and obviously fuel costs hit us.”
PAYING DOWN DEBT
Canadian oil and gas companies have been enjoying windfall profits in 2022, ever since Russia's invasion of Ukraine disrupted the global energy supply balance and drove up commodity prices.
In the third quarter alone, Crescent Point was able to pay down approximately $270 million worth of debt, bringing its total net debt as of Sept. 30 down to $1.2 billion.
The company's excess cash flow in the third quarter totalled $233.7 million, and Bryksa said for 2023 Crescent Point expects to generate approximately $1.1 to $1.5 billion of excess cash flow, at forecast West Texas Intermediate oil prices of between US$75 to US$85 per barrel.
Crescent Point's average production for the quarter ended September 30 was 133,019 boe/day, up from 132,186 a year earlier, and the company said it plans to generate an annual average production of 134,000 to 138,000 boe/day in 2023.
Oil and gas sales totalled nearly $1.1 billion, up from $826.7 million in the third quarter last year, boosted by higher realized oil and natural gas prices.
The company continues to be pleased with the performance of its Kaybob Duvernay assets in northern Alberta, which it acquired last year from Shell Canada for $900 million.
During the third quarter, Crescent Point acquired additional lands in the Kaybob Duvernay for approximately $87 million, and Bryksa said the company expects to increase the proportion of capital it allocates to the asset within its five-year plan.
He said production in the Kaybob is expected to grow “in a disciplined manner” from approximately 35,000 boe/d in 2022 to over 50,000 boe/d by 2027, subject to commodity prices.