Crescent Point Energy Corp. Announces Third Quarter 2010 Results

CALGARY, Alberta, November 4, 2010 /PRNewswire-FirstCall/ -- Crescent Point Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) is pleased to announce its operating and financial results for the third quarter ended September 30, 2010. The related unaudited financial statements and notes, as well as management's discussion and analysis, are available on Crescent Point's website at http://www.crescentpointenergy.com and on SEDAR at http://www.sedar.com.

    FINANCIAL AND OPERATING HIGHLIGHTS
    -------------------------------------------------------------------------
                            Three months ended         Nine months ended
    (CDN$000s except           September 30               September 30
     shares, per        -----------------------------------------------------
     share and per                             %                           %
     boe amounts)        2010       2009  Change      2010      2009  Change
    -------------------------------------------------------------------------
    Financial
    Funds flow from
     operations(1)(3) 230,424    155,415     48    619,641    481,603     29
      Per
       share(1)(2)(3)    0.91       0.96     (5)      2.70       3.19    (15)
    Net income
     (loss)(4)        (16,636)    45,357   (137)    74,372    (27,051)   375
      Per share(2)(4)   (0.07)      0.28   (125)      0.32      (0.18)   278
    Dividends paid or
     declared         175,753    113,158     55    472,832    315,162     50
      Per share(2)       0.69       0.69      -       2.07       2.07      -
    Payout
     ratio (%)(1)          76         73      3         76         65     11
      Per
       share
       (%)(1)(2)           76         72      4         77         65     12
    Net debt(1)(5)  1,340,196    741,287     81  1,340,196    741,287     81
    Capital
     acquisitions
     (net)(6)       1,446,164    523,566    176  1,996,277    987,946    102
    Development
     capital
     expenditures     348,513    110,362    216    712,058    226,799    214
    Weighted average
     shares
     outstanding (mm)
      Basic             250.0      160.3     56      225.2      148.7     51
      Diluted           254.0      162.6     56      229.1      151.1     52
    -------------------------------------------------------------------------
    Operating
    Average daily
     production
      Crude oil and
       NGLs (bbls/d)   58,390     40,854     43     52,519     37,635     40
      Natural gas
       (mcf/d)         42,947     32,806     31     38,134     29,004     31
    -------------------------------------------------------------------------
      Total (boe/d)    65,548     46,322     42     58,875     42,469     39
    -------------------------------------------------------------------------
    Average selling
     prices (7)
      Crude oil and
      NGLs ($/bbl)      70.54      67.97      4      72.44      60.70     19
      Natural gas
       ($/mcf)           3.69       3.14     18       4.21       3.88      9
    -------------------------------------------------------------------------
      Total ($/boe)     65.25      62.17      5      67.35      56.44     19
    -------------------------------------------------------------------------
    Netback ($/boe)
      Oil and gas
       sales            65.25      62.17      5      67.35      56.44     19
      Royalties        (10.49)    (11.17)    (6)    (11.58)     (9.69)    20
      Operating
       expenses        (11.27)     (9.05)    25     (10.89)     (8.69)    25
      Transportation    (1.49)     (1.51)    (1)     (1.64)     (1.54)     6
    -------------------------------------------------------------------------
      Netback prior to
       realized
       derivatives      42.00      40.44      4      43.24      36.52     18
      Realized gain on
       derivatives(8)    1.25       1.27     (2)      0.66       4.64    (86)
    -------------------------------------------------------------------------
     Operating
      netback(1)        43.25      41.71      4      43.90      41.16      7
    -------------------------------------------------------------------------

    Crescent Point's financial and operating results for the three months
    ending September 30, 2010 reflect the acquisition of Shelter Bay Energy
    Inc. ("Shelter Bay") which closed July 2, 2010. Comparative financial and
    operating results do not reflect the production and cash flows of Shelter
    Bay other than the production and cash flows associated with Crescent
    Point's interests in the wells farmed out to Shelter Bay by Crescent
    Point. Prior to July 2, 2010, Crescent Point accounted for its investment
    in Shelter Bay using the equity method of accounting. Accordingly,
    Crescent Point recorded its share of Shelter Bay net income or loss in
    the "equity and other income (loss)" caption on the consolidated
    statements of operations, comprehensive income and deficit.

    (1) Funds flow from operations, payout ratio, net debt and operating
        netback as presented do not have any standardized meaning prescribed
        by Canadian generally accepted accounting principles and, therefore,
        may not be comparable with the calculation of similar measures
        presented by other entities.
    (2) The per share amounts (with the exception of per share dividends) are
        the per share - diluted amounts.
    (3) Funds flow from operations for the nine month period ended
        September 30, 2009 includes a realized derivative gain on
        crystallization of various oil contracts of $72.5 million.
    (4) Net income of $74.4 million for the nine months ended September 30,
        2010 includes unrealized derivative gains of $8.2 million. The net
        loss of $27.1 million for the nine months ended September 30, 2009
        includes unrealized derivative losses of $147.4 million, a
        $72.5 million realized derivative gain on crystallization of various
        oil contracts and a $11.4 million bad debt provision for SemCanada.
    (5) Net debt includes long-term debt, working capital and long-term
        investments, but excludes risk management assets, risk management
        liabilities and unrealized foreign exchange loss on translation of
        US dollar senior guaranteed notes.
    (6) Capital acquisitions represent total consideration for the
        transactions including long-term debt and working capital assumed
        and, commencing January 1, 2010, excluding transaction costs.
    (7) The average selling prices reported are before realized derivatives
        and transportation charges.
    (8) The realized derivative gain for the nine month period ended
        September 30, 2009 excludes a realized derivative gain on
        crystallization of $72.5 million.

    HIGHLIGHTS

    In third quarter 2010, 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
        2010, averaging 65,548 boe/d, a 19 percent increase over second
        quarter 2010. Production was up 42 percent from 46,322 boe/d in third
        quarter 2009 and was weighted 89 percent to light and medium crude
        oil and liquids. Crescent Point is on track to achieve annual
        production growth of more than 10 percent, excluding acquisitions.

    -   The Company spent $348.5 million on development capital activities in
        third quarter 2010, including $144.7 million on facilities, land and
        seismic. Crescent Point spent a record $203.8 million on drilling and
        completions activities, including the drilling of 148 (113.5 net) oil
        wells with a 99 percent success rate.

    -   Crescent Point's funds flow from operations increased by 48 percent
        to $230.4 million ($0.91 per share - diluted) in third quarter 2010,
        compared to $155.4 million ($0.96 per share - diluted) in third
        quarter 2009.

    -   Crescent Point maintained consistent monthly dividends of $0.23 per
        share, totaling $0.69 per share for third quarter 2010 and resulting
        in a payout ratio of 76 percent on a per share - diluted basis. This
        is unchanged from $0.69 per share paid in third quarter 2009.

    -   On July 2, 2010, Crescent Point completed a plan of arrangement with
        Shelter Bay Energy Inc. ("Shelter Bay"), a private oil and gas
        producer in which Crescent Point owned a 21 percent equity interest.
        The Company acquired more than 7,400 boe/d of high-quality
        production, as well as more than 315 net sections of Bakken land and
        more than 40 net sections of Lower Shaunavon land.

    -   On August 20, 2010, Crescent Point completed a plan of arrangement
        with Ryland Oil Corporation ("Ryland"), an oil producer with assets
        primarily located in the Flat Lake areas of southeastern Saskatchewan
        and in North Dakota, United States. Crescent Point acquired more than
        475 net sections of land, the majority of which is in southeast
        Saskatchewan, further solidifying its position in the Flat Lake
        Bakken play and increasing its strategic undeveloped land position in
        North Dakota.

    -   On September 20, 2010, Crescent Point announced that it had acquired
        more than one million net acres of exploratory land in southern
        Alberta. The land was acquired through Crown land sales, freehold
        leasing programs and the acquisition of a private company (the
        "Private Co. Acquisition"). The assets acquired in the Private Co.
        Acquisition include approximately 900 boe/d of low-decline
        conventional production and more than 995,000 net acres of
        exploratory land in Alberta.

    -   On September 20, 2010, Crescent Point announced the acquisition of
        more than 100 net sections of undeveloped land in Saskatchewan,
        including 60 net sections in the Company's core Viewfield Bakken and
        Lower Shaunavon resource plays, through Crown land sales in the
        preceding several months.

    -   During third quarter, Crescent Point also entered into an agreement
        to acquire certain assets in southeast Saskatchewan (the "Southeast
        Saskatchewan Acquisition"). The assets are adjacent to and contiguous
        with existing Crescent Point properties, further consolidating the
        Company's core southeast Saskatchewan area, and include approximately
        950 boe/d of high-quality, low-decline conventional production. The
        agreement, which has not been previously announced, is expected to
        close in early November 2010. Total consideration expected to be paid
        at closing is approximately $90 million of cash.

    -   On September 20, 2010, Crescent Point announced a bought deal
        financing in which a total of 10,250,000 Crescent Point shares were
        issued for gross proceeds of approximately $375 million. The
        financing subsequently closed on October 13, 2010.

    -   The Company's balance sheet remains strong, with projected average
        net debt to 12-month cash flow of approximately 1.0 times and
        approximately $750 million currently unutilized on its bank lines.

    -   Crescent Point continued to implement its disciplined hedging
        strategy to provide increased certainty over cash flow and dividends.
        As at October 26, 2010, the Company had hedged 51 percent,
        51 percent, 39 percent and 28 percent of production, net of royalty
        interest, for the balance of 2010, 2011, 2012 and 2013, respectively.
        Average quarterly hedge prices range from Cdn$80 per boe to
        Cdn$93 per boe.


    OPERATIONS REVIEW
    Third Quarter Operations Summary

During third quarter 2010, 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 third quarter, averaging 65,548 boe/d, a 19 percent increase over second quarter 2010. The Company is on track to meet or exceed average daily production of 61,000 boe/d for 2010.

During the quarter, the Company participated in the drilling of 148 (113.5 net) oil wells and 4 (4.0 net) service wells, achieving a 99 percent success rate.

    Drilling Results

    The following tables summarize our drilling results for the three and
    nine months ended September 30, 2010:
    -------------------------------------------------------------------------
    Three months ended
     September 30,                                                        %
     2010              Gas    Oil   D&A  Service Standing Total  Net Success
    -------------------------------------------------------------------------
    Southeast
     Saskatchewan        -     95     2       4        -    101  82.9     99
    Southwest
     Saskatchewan        -     49     -       -        -     49  33.5    100
    South/Central
     Alberta             -      1     -       -        -      1   1.0    100
    Northeast BC and
     Peace River Arch,
     Alberta             -      -     -       -        -      -     -      -
    United States        -      1     -       -        -      1   0.1    100
    -------------------------------------------------------------------------
    Total                -    146     2       4        -    152 117.5     99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Nine months ended
     September 30,                                                        %
     2010              Gas    Oil   D&A  Service Standing Total  Net Success
    -------------------------------------------------------------------------
    Southeast
     Saskatchewan        -    204     3       5        -    212 165.8     99
    Southwest
     Saskatchewan        -     87     -       -        -     87  64.2    100
    South/Central
     Alberta             -      1     -       -        -      1   1.0    100
    Northeast BC and
     Peace River Arch,
     Alberta             -      -     -       -        -      -     -      -
    United States        -      1     -       -        -      1   0.1    100
    -------------------------------------------------------------------------
    Total                -    293     3       5        -    301 231.1     99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

Southeast Saskatchewan

In third quarter 2010, Crescent Point participated in the drilling of 97 (78.9 net) oil wells and 4 (4.0 net) service wells in southeast Saskatchewan, achieving a 99 percent success rate. Of the wells drilled, 72 (64.4 net) were horizontal wells in the Viewfield Bakken light oil resource play.

The Company completed the construction of 85 kilometres of pipeline gathering systems in the Viewfield area, which will provide for continued Bakken oil and gas development and reduce greenhouse gas emissions from the play. Crescent Point tied in 12 existing single-well batteries and 21 recently drilled wells. During the quarter, Crescent Point also upgraded and expanded fluid handling capacity at several existing facilities and built a new battery to accommodate near- and long-term development needs. During the quarter, Crescent Point began water injection in the third and fourth Viewfield Bakken water flood pilots. More than 500 boe/d of production was shut in to facilitate the conversion of seven producing wells to water injection wells. The Company expects to have its fifth water flood pilot on line during fourth quarter and its sixth in early 2011. Upwards of 13 additional producing wells are expected to be converted to water injection wells in first half 2011. The first and second water flood pilot projects continue to demonstrate positive production response in wells offsetting horizontal water injection wells. In the first pilot, the two producing wells directly offsetting the injection well have realized cumulative production of more than 250,000 bbls in less than four years. Crescent Point also participated in the drilling of 5 (2.3 net) Bakken horizontal wells in the Flat Lake area and 5 (4.5 net) Viewfield Frobisher horizontal wells, achieving a 100 percent success rate. An additional 15 (7.7 net) horizontal oil wells and 4 (4.0 net) service wells were drilled in other southeast Saskatchewan areas.

Early in the quarter, Shelter Bay's operations were integrated into Crescent Point's operations.

Southwest Saskatchewan

In third quarter 2010, the Company participated in the drilling of 23 (18.4 net) Lower Shaunavon horizontal oil wells and 3 (1.1 net) Upper Shaunavon horizontal oil wells, achieving a 100 percent success rate. Shelter Bay completed the drilling of one Lower Shaunavon horizontal well before completing its arrangement with Crescent Point on July 2, 2010. This well is not included in the totals above. Crescent Point continued its active investment in facilities in the Lower Shaunavon resource play to improve efficiencies and reduce operating costs. Facilities investments included the expansion and upgrade of two oil batteries, as well as the construction of six satellites and 110 kilometres of pipeline gathering systems. Gas conservation in the area commenced late in the second quarter with non-operated, interruptible capacity of up to 500 mcf/d available. With the continued successful expansion of the play, the Company continues to measure gas production rates and has commenced preliminary gas plant design work for potential long-term gas and natural gas liquids conservation. At Cantuar, the Company participated in the drilling of 6 (3.3 net) wells, achieving a 100 percent success rate. An additional 2 (1.2 net) wells are planned for fourth quarter. At Battrum, the Company participated in the drilling of 5 (2.2 net) wells, achieving a 100 percent success rate. An additional 2 (0.8 net) wells are planned for fourth quarter.

Crescent Point also drilled 12 (8.5 net) Viking formation wells in the Dodsland/Plato area. These wells are expected to be completed in fourth quarter 2010.

Alberta

On September 20, 2010, the Company announced that it had acquired more than one million net acres of exploratory land in southern Alberta that the Company believes is prospective for multi-zone light oil opportunities, including the unconventional Bakken and Three Forks zones. During third quarter, the first one of 3 (3.0 net) exploration wells planned for 2010 was drilled on these lands and a second has been spud in fourth quarter. The Company expects to drill more than 19 net development and exploration wells on these lands by the end of 2011.

In addition, the Company is preparing to drill 1 (1.0 net) horizontal well in the Worsley field in 2011, based on offset drilling success. Based on this initial test, at least three offset drilling locations could be drilled.

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 western Canada.

For the remainder of 2010, Crescent Point will continue to execute its capital development program of $925 million, focused on increased drilling in the Alberta and Saskatchewan Bakken and Lower Shaunavon resource plays. This capital development program is expected to provide an annual growth rate of more than 10 percent, excluding acquisitions. Crescent Point continues to budget 2010 average production of more than 61,000 boe/d, weighted 90 percent towards crude oil and natural gas liquids. Exploitation activities during fourth quarter 2010 are expected to include the implementation of one more water flood pilot project in the Bakken resource play, with another one slated for early 2011. Including the pilots that have already been initiated, Crescent Point will have six water flood pilots on line by early first quarter 2011, each testing different patterns and completion techniques to optimize economics and recoveries. The Company believes results from the water flood are positive and has plans to convert another 13 producing wells to water injection wells in the first half of 2011. Crescent Point continues to actively exploit the Lower Shaunavon resource play, with 10 net wells budgeted for fourth quarter 2010. The Company is monitoring and optimizing results from the area's initial water flood pilot project, which are positive. Crescent Point has begun injecting water into a second pilot project and has submitted applications for another two, which are expected to commence in early 2011.

The Company's balance sheet remains strong, with projected average net debt to 12-month cash flow of approximately 1.0 times and approximately $750 million currently unutilized on its bank lines.

Crescent Point continues to implement its balanced 3 1/2-year price risk management program, using a combination of swaps, collars and purchased put options with investment grade counterparties all within Crescent Point's banking syndicate. As at October 26, 2010, the Company had hedged 51 percent, 51 percent, 39 percent and 28 percent of production, net of royalty interest, for the balance of 2010, 2011, 2012 and 2013, respectively. Average quarterly hedge prices range from Cdn$80 per boe to Cdn$93 per boe.

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 into 2011 and beyond.

    ON BEHALF OF THE BOARD OF DIRECTORS

    (signed)



    Scott Saxberg
    President and Chief Executive Officer
    November 4, 2010

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking statements. All forward-looking statements are based on Crescent Point's beliefs and assumptions based on information available at the time the assumption was made. The use of any of the words "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "projected", "sustain", "continues", "strategy", "potential", "projects", "grow", "take advantage", "estimate", "well positioned" and similar expressions are intended to identify forward-looking statements. By their nature, such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Crescent Point believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. These statements speak only as of the date of this report or, if applicable, as of the date specified in those documents specifically referenced herein.

In particular, this press release contains forward-looking statements pertaining to the following: the performance characteristics of Crescent Point's oil and natural gas properties; oil and natural gas production levels; capital expenditure programs; drilling programs; well conversion and water injection programs and the timing thereof; the quantity of Crescent Point's oil and natural gas reserves and anticipated future cash flows from such reserves; the quantity of drilling locations in inventory; projections of commodity prices and costs; supply and demand for oil and natural gas; expectations regarding the ability to raise capital and to continually add to reserves through acquisitions and development; expected debt levels and credit facilities; expected pipeline capacity additions; facility construction and gas conservation plans and timing thereof; and treatment under governmental regulatory regimes. By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, including those material risks discussed in our annual information form under "Risk Factors", our Management's Discussion and Analysis for the year ended December 31, 2009 under the heading "Forward-Looking Information." The material assumptions are disclosed in the Results of Operations section for the year ended December 31, 2009 under the headings "Cash Dividends", "Capital Expenditures", "Asset Retirement Obligation", "Liquidity and Capital Resources", "Critical Accounting Estimates", "New Accounting Pronouncements" and "Outlook". The actual results could differ materially from those anticipated in these forward-looking statements as a result of the material risks set forth under the noted headings, which include, but are not limited to: financial risk of marketing reserves at an acceptable price given market conditions; volatility in market prices for oil and natural gas; delays in business operations, pipeline restrictions, blowouts; the risk of carrying out operations with minimal environmental impact; industry conditions including changes in laws and regulations including the adoption of new environmental laws and regulations and changes in how they are interpreted and enforced; uncertainties associated with estimating oil and natural gas reserves and Discovered Petroleum Initially in Place; economic risk of finding and producing reserves at a reasonable cost; uncertainties associated with partner plans and approvals; operational matters related to non-operated properties; increased competition for, among other things, capital, acquisitions of reserves and undeveloped lands; competition for and availability of qualified personnel or management; incorrect assessments of the value of acquisitions and exploration and development programs; unexpected geological, technical, drilling, construction and processing problems and availability of insurance; fluctuations in foreign exchange and interest rates; stock market volatility; failure to realize the anticipated benefits of acquisitions; general economic, market and business conditions; uncertainties associated with regulatory approvals; uncertainty of government policy changes; uncertainties associated with credit facilities and counterparty credit risk; changes in income tax laws or changes in tax laws, crown royalty rates and incentive programs relating to the oil and gas industry. Additional information on these and other factors that could affect Crescent Point's operations or financial results are included in Crescent Point's reports on file with Canadian securities regulatory authorities. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed herein or otherwise and Crescent Point undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless required to do so pursuant to applicable law.

Barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet (mcf) of natural gas to one barrel (bbl) of oil is based on an energy conversion method primarily applicable at the burner tip and is not intended to represent a value equivalency at the wellhead. All boe conversions in this press release are derived by converting natural gas to oil in the ratio of six thousand cubic feet of natural gas to one barrel of oil. Certain financial amounts are presented on a per boe basis; such measurements may not be consistent with those used by other companies. Crescent Point is a conventional oil and gas producer with assets strategically focused in properties comprised of high-quality, long-life, operated light and medium oil and natural gas reserves in western Canada. Crescent Point shares are traded on the Toronto Stock Exchange under the symbol CPG.

For further information: For further information: ON CRESCENT POINT ENERGY CORP. PLEASE CONTACT: Greg Tisdale, Chief Financial Officer, or Trent Stangl, Vice President Marketing and Investor Relations, Telephone: +1-403-693-0020, Toll free (US & Canada): 888-693-0020, Fax: +1-403-693-0070, website:http://www.crescentpointenergy.com

SOURCE Crescent Point Energy Corp.




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