Q4 2023 Crescent Point Energy Corp Earnings Call
Good morning, Ladies and gentlemen, my name is lesser and I will be your operator for Crescent point Energy's fourth quarter 2023 conference call.
Operator: Good morning, ladies and gentlemen, my name is Lester, and I will be your operator for Crescent Point Energy's fourth quarter 2023 conference call. This conference call is being recorded today and will be webcast along with a slide deck, which can be found on Crescent Point's homepage. The webcast may not be recorded or rebroadcast without the express consent of Crescent Point Energy. All amounts discussed today are in Canadian dollars, with the exception of West Texas Intermediate, or WTI, pricing, which is quoted in US dollars. Unknown Speaker The complete financial statements and Management's discussion and analysis for the period ending December 31, 2023 were announced this morning and are available on Crescent Point, CDER Plus, and EDGAR websites. All lines have been placed on mute to prevent any background noise.
This conference call is being recorded today and will be webcast, along with a slide deck.
Which can be found on Crescent Point's website homepage.
The webcast may not be recorded or rebroadcast without the expressed consent.
At some point energy.
All amounts discussed today are in Canadian dollars with the exception of West, Texas intermediate or W. Ti.
Pricing, which is quoted in U S dollars.
The complete financial statements and men.
Management's discussion and analysis for the period ending December 31 2023.
Were announced this morning and are available on Crescent point, SEDAR, plus and then <unk> websites.
All lines have been placed on mute to prevent any background noise.
After the speaker's remark there will be a question and answer session for members of the investment community.
Operator: After the speaker's remarks, there will be a question and answer session for members of the investment community. If you would like to ask a question over the phone line, during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press start. During the call, management may make projections or other forward-looking statements regarding future events or future financial performance. Actual performance, events, or results may differ materially. Additional information or factors that could affect Crescent Point's operation or financial results are included in its most recent annual information form, which may be accessed through Crescent Point's website, CDER Plus, or EDGAR websites, or by contacting Crescent Point Energy. Management also calls your attention to the forward-looking information and non-GAAP measures sections of the press release issued early today. I will now turn the call over to Craig Bryksa, President and Chief Executive Officer of Crescent Point. Please go ahead, Mr. Bryksa.
If you would like to ask a question over the phone line. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question Chris start suite.
During the call management may make projections or other forward looking statements regarding future events or future financial performance.
Actual performance events or results may differ materially.
Additional information or factors that could affect crescent point's operations or financial results are included in Crescent Point's most recent annual information form.
Which may be accessed through Crescent Point's sito.
Plus or Edgar websites or.
Or by contacting Crescent point energy.
Management also calls your attention to the forward looking information and non-GAAP measures sections of the press release issued early today.
I will now turn the call over to Craig <unk>, President and Chief Executive Officer of Crescent point.
Please go ahead Mr <unk>.
Thank you operator, I'd like to welcome everyone to our fourth quarter 2023 conference call.
Craig Bryksa: Thank you, operator. I'd like to welcome everyone to our fourth quarter 2023 conference call. With me today are Ken Lamont, our Chief Financial Officer, and Justin Foraie, our Vice President of Operations and Marketing. On today's call, I will first touch on a few of our key accomplishments in 2023, and we'll then provide some insight into our reserves and our five-year old business. Looking back at our Q4 results and our success through 2023, our most remarkable achievement has been how significantly we have transformed our portfolio and how it has materially strengthened Crescent Point's future. These strategic steps were taken with purpose to secure premium drilling inventory depth in world-class. In doing so, we focused on acquiring oil and liquids weighted assets that provide synergies to our existing business and also enhance our long-term excess cash flow generation and return a Through our efforts, we have built a portfolio that now has over 20 years of premium drilling. We also control the largest land position in both the condensate-rich K-Bob Gouvernet Plate and the volatile oil window in the Alberta Montan.
With me today are Ken Lamont, our Chief Financial Officer, and Justin <unk>, Our vice President of operations and marketing.
Today's call I will first touch on a few of our key accomplishments in 2023 and will then provide some insight into our reserves and our five year outlook.
Looking back at our Q4 results and our success through 2023, our most remarkable achievement has been how significantly we have transformed our portfolio and how it has materially strengthened crescent point's future outlook.
These strategic steps, we're taking with purpose to secure premium drilling inventory depth in world class basis.
In doing so we focused on acquiring oil and liquids weighted assets that provide synergies to our existing business and also enhance our long term excess cash flow generation and return of capital profile for our shareholders.
Through our efforts we have built a portfolio that now has over 20 years of premium drilling inventory.
Also control the largest land position in both the quantity rich Kebob Duvernay play and the volatile oil window in the Alberta market.
The portfolio, we have built provides us with significant running room and growth potential in these plays coupled with our high netback low decline assets in Saskatchewan.
Craig Bryksa: The portfolio we have built provides us with significant running room and growth potential in these plays, coupled with our high net back, low decline assets in Saskatchewan. In KBOB, we continue to be impressed by the strong oil production and the consistent, repeatable success we've achieved since entering the play in 2021. Similar to K-BOB, our well productivity in the Alberta Monty has been remarkable. We have achieved IP30 results that continually rank in the top 10 oil and liquid wells in the Western Canadian Sedimentary Basin. In fact, 25 of the top 30 oil wells in the Alberta Monty over the past year are now owned by Crescent Point.
Hey, Bob we continue to be impressed by the strong oil production and the consistent repeatable success, we've achieved since entering the play in 2021.
Similar to K, Bob our well productivity in the Alberta Montney has been remarkable.
We have achieved IP 30 results that continually rank in the top 10 oil and liquids wells in the Western Canadian sedimentary basin.
<unk> 25 of the top 30 oil wells in the Alberta Montney over the past year are now owned by Crescent point.
We're incredibly excited about the addition of this new asset to our portfolio and eager to report back as we further develop this world class resource.
Craig Bryksa: We're incredibly excited about the addition of this new asset to our portfolio and eager to report back as we further develop this world-class resource. With our successful portfolio transformation, our focus now turns to operational execution, enhancing our balance sheet strength, and increasing our return of capital to our shareholders. In 2023, we generated $980 million of excess cash.
With our successful portfolio transformation, our focus now turns to operational execution, enhancing our balance sheet strength and increasing our return of capital to our shareholders.
2023, we generated $980 million of excess cash of 600 million of which was returned directly to our shareholders through dividends and share repurchases.
Craig Bryksa: 600 million of which was returned directly to our shareholders through dividends and share purchases. We remain committed to returning 60% of our excess cash flow to our shareholders and are pleased to raise our base dividend once again to 11.5 cents per quarter or 46 cents per share on an annualized basis. Even with this dividend increase, we maintain a very conservative budget that is fully funded at a low commodity price, $55 per barrel WTI, assuming our current cost structure and capital expenditures guidance. The strength of our portfolio and our operational execution continue to generate significant value for our shareholders, as demonstrated in our 2023 reserve met. Last year we replaced over 900% of our 2023 production, including strategic A&D, on a 2P reserve base. We replaced 150% of our 2023 production organically, driven largely by increased reserve additions in our K-Bob DuVernay asset.
We remain committed to returning 60% of our excess cash flow to our shareholders and are pleased to raise our base dividend once again to 11, and a half cents per quarter or <unk> 46 per share on an annualized basis.
Even with this dividend increase we maintain a very conservative budget that is fully funded at low commodity price of $55 per barrel <unk>.
Assuming our current cost structure and capital expenditures guidance.
The strength of our portfolio and our operational execution continued to generate significant.
Significant value for our shareholders as demonstrated in our 2023 reserve metrics.
Last year, we replaced over 900% of our 2023 production, including strategic A&P on a two P reserve basis.
We replaced 150% of our 2023 production organically driven largely by increased reserves additions in our K, Bob Duvernay asset.
By entering into the Alberta, Montney, we added significant reserves in 2023, increasing our total corporate reserve life index to approximately 16 years.
Craig Bryksa: By entering into the Alberta Montany, we added significant reserves in 2023, increasing our total corporate reserve life index to approximately 16 years. When factoring in our organic additions and strategic A&D, I'm pleased to report that our 2P finding, development, and acquisition costs in 2023 generated a very strong recycle ratio of 2.5 times, including changes in future development capital. It's also worth highlighting that approximately 60% of our premium locations in the Cave of Duvernay and over 70% of our inventory in the Alberta Montaney will remain unbooked at year-end 2023, allowing for future reserve additions. Looking ahead, we're forecasting production of 198 to 206,000 BUE per day with development capital expenditures of $1.4 to $1.5 billion in 2024.
When factoring in our organic additions and strategic A&D I am pleased to report that our <unk> finding development and acquisition costs in 2023 generated a very strong recycle ratio of two five times, including change in future development capital.
It's also worth highlighting that approximately 60% of our premium locations in the <unk> Duvernay and over 70% of our inventory in the Alberta Montney.
Remain on booked at year end 2023, allowing for future reserve additions.
Looking ahead, we're forecasting production of 198 to 206000 BOE per day with development capital expenditures of one four to $1 5 billion in 2024.
Craig Bryksa: Operationally, we will continue to focus on enhancing efficiencies and returns, including drilling longer laterals in the Kaibab Duvernay and optimizing well design and inner well spacing in the Alberta Mont. We've begun drilling on our recently acquired lands, utilizing our new well design, and look forward to sharing our results in the second half of 2024. In Saskatchewan, we will continue to advance our defined mitigation programs and our open hole multilateral development.
Operationally, we will continue to focus on enhancing efficiencies and returns including drilling longer laterals in the <unk>, Duvernay and optimizing well design and inter well spacing in the Alberta market.
We have begun drilling on our recently acquired lands utilizing our new well design and look forward to sharing our results in the second half of 2024.
In Saskatchewan, we will continue to advance our decline mitigation programs and our open hole multilateral development.
Craig Bryksa: We expect to generate significant excess cash flow of approximately $830 million under our 2024 budget, assuming a full year average WTI price of approximately $75 per barrel and ACO of $2.30 per MCF. We continue to earmark 60% of our excess cash flow for shareholders, with approximately $500 million expected to be delivered this year through a combination of dividends and share purchases. Our significant excess cash flow generation and return of capital in 2024 is further complemented by our five-year plan, which is set to deliver excess cash flow per share growth of approximately 10% at $70 per barrel WTI. In aggregate, we expect to generate cumulative excess cash flow of $4.7 billion under our five-year plan.
We expect to generate significant excess cash flow of approximately $830 million under our 2020 for budget, assuming a full year average wpa pricing of approximately $75 per barrel in April of $2 30 per Mcf.
We continue to earmark, 60% of our excess cash flow for shareholders.
Approximately $500 million expected to be delivered this year through a combination of dividends and share repurchases.
Our significant excess cash flow generation and return of capital in 'twenty 'twenty. Four is further complemented by our five year plan, which is set to deliver excess cash flow per share growth.
<unk> on a compounded annual basis up approximately 10% at $70 per barrel <unk>.
In aggregate, we expect to generate cumulative excess cash flow of $4 7 billion under our five year plan.
We believe our plan provides shareholders with a compelling combination of high netback production strong excess cash flow generation a significant return of capital in addition to organic per share growth.
Craig Bryksa: We believe our plan provides shareholders with a compelling combination of high net back production, strong excess cash flow generation, and a significant return of capital, in addition to organic per share growth. In closing, I'd like to reiterate just how excited we are about our transformed portfolio. We have significantly enhanced our five-year outlook, and we're excited to further bolster our returns for each of our assets. I'd like to thank our shareholders for all their support and continued engagement as we transform our business. We look forward to providing more details on our operational results and long-term development plan at our upcoming investor day on March 20. I'd also like to thank our staff who continue to demonstrate our commitment to operational excellence with yet another safest year on record. We'll now open the call to questions from the investment community, followed by questions from the webcast. Operator, please open the line.
In closing I'd like to reiterate just how excited we are about our transformed portfolio with significant we have significantly enhanced our five year outlook and we're excited.
To further bolster our returns for each of our assets.
Like to thank our shareholders for all their support and continued engagement as we've transformed our business.
Look forward to providing more details on our operational results and long term development plan at our upcoming Investor Day on March 20.
I'd also like to thank our staff, who continue to demonstrate our commitment to operational excellence with yet another safest year on record.
We will now open the call to questions from the investment community followed by questions from the webcast operator, please open the line.
Thank you, ladies and gentlemen, we will now conduct the question and answer session.
Operator: Thank you, ladies and gentlemen. We will now conduct the question and answer session. Just a reminder, if you have a question, please press star 1 on your touchpad. And if you wish to cancel your request, please press star 2.
Just a reminder, if you have a question. Please press star one on your telephone.
And if you wish to cancel your request please press star two.
Your first question comes from Erin <unk>.
Aaron Bilkoski: Your first question comes from Aaron Bilkoski. Your line is now open. Thanks. Good morning, Craig.
Koskey.
Koskey youre lending from TD Youre in items now open.
Thanks, Good morning, Craig I have a couple of reserve related questions. The first is related to the technical revisions I was hoping you could provide some deals on electric.
Aaron Bilkoski: I have a couple of reserve-related questions. The first is related to the technical revisions. I was hoping to provide some details on what drove the oil and NGL technical revisions in the probable category. Yeah, good morning.
Oil and NGL technical revisions in the probable category.
Yes, good morning, and thanks for the question, Eric So as far as reserves really good numbers. When you look at it this year like I had mentioned on the call.
Craig Bryksa: And thanks for the question, Aaron. So as far as reserves go, really good numbers. When you look at it this year, like I mentioned on the call, 2P FDNA recycle ratio of 2.5 times. So really strong on those numbers.
Two P <unk> recycle ratio of two five times.
So really strong on those numbers when you look at the technical revisions were somewhere in the neighborhood or anything around that 13 ish million.
Craig Bryksa: When you look at the technical revisions, we were somewhere in the neighborhood of around that 13-ish million total on performance and then technicals on the negative side. About half of that, Aaron, is driven through operating costs in more of our legacy assets. So when our Saskatchewan plays, and by definition, those are called technicals when you truncate the back end of the curves.
Total on performance and then technicals on the negative side.
Half of that Erinn is driven to op costs in.
And more of our legacy assets. So in our Saskatchewan plays and by definition those are called technicals when you truncate the backend.
The curves and then the other half of that actually has a couple of the assets that we ended up.
Craig Bryksa: And then the other half of that actually is in a couple of the assets that we ended up moving off here over the last quarter. So when you look at Swan Hills and Turner Valley, so, you know, as far as the base business going forward, reserves look really good, really tight. KBOB came in very strong for us this year.
Moving off year over over the last quarter. So when you look at Swan Hills, and Turner Valley, So as far as the base business going forward reserves look really good really tight.
K Bob came in very strong for us this year and then of course when you look at the Montney with us doing that those series of deals this year those <unk>.
Craig Bryksa: And then, of course, when you look at the Montney with us doing that, those series of deals this year, those reserves came in under acquisition. So, you know, you'll see a cleaner version of that as we roll into 2024. Thanks, Craig. That's helpful.
<unk> came in under acquisition, so Youll see cleaner version of that as we roll into 2024.
Thanks, Craig that's helpful.
Aaron Bilkoski: I could follow it up with another question on the FDC. When I look at the FDC in the reserve report, it looks like capital expenditures are growing to a little over $1.7 billion by 2027. How should I reconcile that against your corporate five-year plan, which has corporate capex hovering around that 1.45 range over that period?
Could follow it up with another question on the FTC, but I look at the FTC in the reserve report it looks like capital expenditure and Youre going to little over $1 $7 billion by 2027, how should I reconcile that against your corporate five year plan that has.
Capex hovering around that one four to five range over that period.
Yes, so when you look at our development plan within our reserves one thing that we really like about it is.
Craig Bryksa: Yeah, so when you look at our development plan within our reserves, one thing that we really like about it is that our FDC fairly tightly follows our five-year plan here in the near term. And then, more importantly, we only have roughly, call it six and a half years of our inventory booked, and that ties into what you're seeing on that FDC. So, for us, you know, it's tough, Aaron, to get them exact between independence and how we see our budget, but, you know, fairly tight when you look at it here in the near term.
Our FTC.
Fairly tightly follows R. R.
Our five year plan here in the near term and then more importantly, we only have roughly call. It six five years.
Of our inventory booked and that ties into what youre seeing on that FTC. So for us it's tops Aaron to get them exact.
Between the independents and how we see our budget, but fairly tight when you look at it here in the near term in the five years and then again roughly only about a six five year FTC outlook or profile going forward is how we bought it so what that really speaks to is what I mentioned on the call. So you've only got.
Craig Bryksa: And then again, roughly only about a six and a half year FDC outlook or profile going forward is how we've got it. So, what that really speaks to is what I mentioned on the call. So, you've only got, you know, call it thirty percent, or sorry, twenty-five to thirty percent of the Montney locations booked, and then only about forty percent of the DuVernay locations booked.
I'll call it.
30% or sorry, 25% to 30% of the Montney locations booked in mineral only about 40% of the duvernay locations booked to that really speaks to.
Craig Bryksa: So, that really speaks to how we're going to be able to add reserves organically as we move the business forward here throughout the year. So, you know, I guess it's my way of saying, Aaron, it's really tough to get those exact numbers between the two firms. But we feel really good about how they line up in the five years. And then, more importantly, if you double back, Aaron, and get a look at the production profile the independents have, both on a one P and two P basis, it's pretty tight to what we're showing in the five-year plan. Perfect. Thanks for that, Craig.
How we're going to be able to add reserves organically as we move the business forward here throughout the year. So.
That's my long way of saying, there and it's really tough to get those exact between the two firms now, but we feel really good about how they line up in the five years and then more importantly, if you double back Aaron and get a look at the production profile of the independent shop, both on a <unk> basis, it's pretty tight to what we're showing in the five year plan.
Perfect. Thanks.
Thanks for that Greg I appreciate that.
Travis Wood: I appreciate that. Yeah, thanks for your question, Aaron. Your next question comes from Travis Wood from National Bank Financial. Your line is now open.
Yes, thanks for your questions Aaron.
Your next question comes from Travis Wood from National Bank Financial Your line is now open.
Yes, good morning, guys wanted to touch on M&A.
Travis Wood: Yeah, good morning, guys. Wanted to touch on M&A. You have some ongoing divestiture processes in the works. And at the same time, there are some opportunities to continue to consolidate your core area, specifically across the Duvernay, with some asset packages for sale from others. So how are you thinking about M&A now? And why not use this kind of opportunity to continue to buy some inventory while it's on sale?
Some.
Ongoing divestiture.
Processes in the works and at the same time, there is some opportunities to continue to consolidate.
Core areas, specifically across the duvernay with some asset packages for sale from others. So how are you thinking about M&A now and why not use this kind of opportunity to continue to.
By some inventory well it's on sale.
Hey, Travis Thanks for the question.
Craig Bryksa: Hey, Travis, thanks for the question. You know, we've been very active on that front over the last year. I think we're extremely happy with how our portfolio has come together and really the transformation of our portfolio. More importantly, for us, when you look at not only our five but our ten-year plan, how that looks moving forward. And then again, now on the back end of the latest transaction, we've got twenty years of premium drilling inventory in front of us, Travis, and it looks, it looks really good for us in the future. As far as acquisitions are concerned, we're not going to be doing anything on that front.
So very active on that front over the last year I think we are extremely happy with how our portfolio has come together and really the transformation of the portfolio.
More importantly for us when you look at not only our five but our 10 year plan.
That looks moving forward and then again now on the back end of.
Latest transaction, we've got 20 years of premium drilling inventory in front of us Travis and it looks it looks really good for us into the future as far as acquisitions.
We're not going to be doing anything on that front. So on the acquisitions I would say no.
Craig Bryksa: So, you know, on the acquisitions, I would say no. As far as the dispositions, we've got a couple of smaller things that we're working through as we continue to focus our asset base on what we're really looking for on that front. So there are a couple of things out there that we're working through.
As far as the dispositions, we've got a couple of smaller things that we're.
We're working through as we continue to.
Focus in our asset base into.
What we're really looking for on that front. So theres a couple of things out there that we're working through.
Travis Wood: I would tell you we're in the middle of the process on that, and as we get some clarity on how that's going to play out, we'll give the market an update on that. But, you know, that'll be it for us here this year, the focus on some of these disposals and nothing on the acquisitions. The other thing I'd highlight for you too, Travis, is not only a couple of the asset packages we're looking at, but we are, we're starting to think through the potential for infrastructure and what that means for us going forward as well. Okay, great. And good color on that. Thanks, Craig. Painful question, but I need to ask it.
I would tell you we're in the middle of that process on that.
And as we get some clarity on how that's going to play out we will give the market an update around that.
That'll be it for US here. This year is a focus on some of these dispose.
And nothing on the acquisition front.
The other thing I would highlight for you to Travis it's not only a couple of the asset packages. We're looking at but we are we're starting to think too.
Potential on infrastructure, and what does that mean for us going forward as well.
Okay, great good color on that thanks, Greg.
Painful question, but I need to ask it.
Craig Bryksa: Any dialogue with Riverstone and kind of how they're potentially thinking about their equity stake? I know since the deal, they're a bit underwater on it by 10% or so. But have you had any dialogue with them in terms of how we should think about that block that's out there potentially? Yeah, and I so it is a painful question, Travis, and you do have to ask it. So we absolutely get it. No one else does.
Doug.
Riverstone and.
How how theyre potentially thinking about their equity stake I know since the deal there.
They're a bit underwater on it by 10% or so.
But have you had any dialogue with them in terms of how we should think about that block that's out there potentially.
Yes. So it is a painful question Travis and you do <unk> ask it so we absolutely get it.
Craig Bryksa: And like you mentioned, you know, on the back end of that deal part of the deal, which was, again, a very strategic deal for us and made a lot of sense when you think of the long-term business of Crescent Point. So, on the back end of the deal, part of the consideration was moving equity into Riverstone as they were the major shareholders, like you mentioned, of Hammerhead to the tune of around 40-ish million shares, Travis, of which you have lockups for split 50% for a three and six month period. So, the first lockup is after the first three months, and then the remainder is after the second. That being said, both Ken and I have had conversations with Riverstone.
And like you mentioned.
The back end of that deal part of the deal, which was again very strategic deal for us and made a lot of sense. When you think of the long term business.
Crescent point.
So on the back into the deal part of the consideration was moving equity in to Riverstone as they were the major shareholder.
You mentioned a Panama.
To the tune of around 40 ish million shares Travis of which you have lockups for split 50% for three and six months periods. So the first <unk>.
Cup is after the first three months and then the remainder is after the second.
That being said, we've I've had conversations with Riverstone, both Ken and I right.
Craig Bryksa: Right now, they are extremely happy shareholders, and things are going well. We'll see how this ends up playing out for them and how long they're looking at holding on. But, you know, with us right now, good conversation, good dialogue, very happy shareholders, and then we'll see how this ends up playing out. You know, I don't expect anything material here to work through that over the next little bit, Travis, but we're again in dialogue and working through it. Okay, thanks for humoring me there. I'll turn it back.
Right now they are extremely happy shareholders and things are going well.
We'll see how this ends up playing out for them.
And how long, they're looking at holding but.
With US right now good conversation good dialogue very happy shareholders.
And then we'll see how this ends up playing out.
I don't expect.
Anything material here to work through that over the next little bit Travis, but we're we're again in dialogue and working through with them.
Okay. Thanks, Thanks for.
Humor me, there and now I'll turn it back yes, yes, yes, thanks Travis.
Travis Wood: Yeah, yeah. Yeah. Thanks, Travis.
Thank you turning now overdue Champ Mandan four quick questions.
Craig Bryksa: Thank you. Turning now over to Shant Madian for web questions. Okay, Sean.
Okay. Chuck. Thanks, operator, there was a couple of questions are in A&D, which I think you've answered <unk> question.
Shant Madian: Yeah, thanks, operator. There were a couple of questions on A&E, which I think you've answered through Travis's question. A question here on KBOF.
A question here on <unk>.
Craig Bryksa: Any follow-up wall results that you can speak to that continue to give you a little bit more comfort as you step out across the line? Yeah, so, one of the things we love about KBOB is just how consistent and repeatable it's been for us here since we entered the game in March 2021? We most recently brought on another pad that is pushing to the east and to the south of the play. It is in the volatile oil window, and it's in an area where the previous operator had some what I would describe as more challenging results. So, this really offsets, if you remember, our FC806 pad this year came online within and around that area, in and around that 1500-ish BOE per day on average. Well, on that pad, it's around 75-ish percent liquids.
Any follow up while results that you can speak to that.
To give you a little bit more comfort as you step out across the land base.
Yes.
So one of the things we lovable K Bob is just how consistent and repeatable. It's been press here since we entered the play in March 2021.
We most recently brought on another pad that is pushing to the east and to the south of the play it is in the.
Volatile oil window.
And it's in an area where.
The previous operator had some some what I would describe as more challenging results.
This really offsets if you remember our <unk> six pad this year came online within and around that area in and around that $500.
Bo per day on average well on that pad is around 75% liquids I'm happy to tell you that that second pad. We just brought on is in and around that that range. So it's been on for a little over 30 days now flowing out is very strong in and around 500 Boe per day per well and right around that 75% liquids.
Craig Bryksa: I'm happy to tell you that the second pad we just brought on is in and around that range. So, it's been on for a little over 30 days, flowing very strong at 1500 BOE per day per well and right around that 75% liquid. So, it's a good follow-up to a good result this year in an area where the previous operator had some challenging, maybe, results, and it really pushes to the south and the east. So, I'm excited about that one.
A good follow up to a good result, this year in an area, where the previous operator had some challenging.
<unk> results in it really pushes to the south and the east so excited about that one.
Okay.
Craig Bryksa: Similar on the KBOB, another follow-up there with respect to the development plans within the phase windows. So when you look at the location count that we have between the volatile oil window and the liquids-rich window within our 10-year plan, how do you think about the lean gas development within there over that period? Yeah, so for us being a liquids company, we're going to zero in and focus on both the volatile oil window and the liquids-rich window here in the near term for the next both five and 10 years. And then as we slowly press to the south and a little bit to the west, you start to get more into that leaner gas, which again, still has a decent amount of liquids coming with it as well.
Similar on the cable, but another follow up there with respect to the development plans within the phase Windows. So when you look at the location count that we have between the volatile oil window in the liquids rich within our 10 year plan. How do you think about the lean gas development within there over that period. So.
So for us being a liquids company, we're going to we're going to zero in and focus on both the volatile oil window and the liquids rich window here in the near term over the next both five and 10 years.
And then as we slowly pressed to the south.
And a little bit to the west you start to get more into that leaner gas, which again still has a decent amount of liquids coming with it as well so for US both the five and 10 year plans really zero in on on the volatile oil and liquids rich window and then beyond 10 years is how we start to look as we push into the south and the west.
Craig Bryksa: So for us, both the five and 10-year plans really zero in on the volatile oil and liquids rich window. And then beyond 10 years, this is how we start to look as we push into the south and the west. And again, inventory supports that, so there is no reason to advance any faster. Thanks for that.
And again inventory supports that so no reason to bounce any faster.
Thanks for that.
Craig Bryksa: Moving to the Montany question here, when should we expect to see results on CPG's optimal well design on the newly acquired hammerhead lands and any other additional follow-up on well results that you could speak to as well from our recent program? Sure. So everyone's aware that the deal closed on December 21st of last year. We picked up operations that have been running since then. We are on our first pads right now that are under that new Crescent Point design.
Moving to the Montney question here, when we should expect to see results on Cpg's optimal well design on the newly acquired Hammerhead lands.
And any other additional follow up on well results that you can speak to as well recently.
From our recent progress.
Sure so.
Just so everyone's aware that deal closed in December 'twenty, one of last year, we picked up operations have been running since then we are on our first pads right now that are under that new Crescent point design.
We're drilling away I would say operations are growing really strong for us on that front, so things look good.
Craig Bryksa: We're drilling away. I would say operations are going really strong for us on that front, so things look good. That first pad that will get done and completed under our new well design. So again, remember that's slightly wider spacing, slightly different completion techniques, will be probably mid-June by the time that the pad is completed and online and then by the time we have results I would expect some potentially around that Q2 press release so at the end of July early August timing on that front so excited about it though operations have been going pretty good and then as far as follow-up results we've had a few good ones here come on when you look at the Montney position that we picked up and and really across the place so both from the eastern side moving to the west and then pushing down south so if you if you think of there's a six to five pad that has come on over the last 80 days it's been online which is east to the north sorry the north eastern position of our land those results have been have been coming in pretty well and then around that 1450 BOE per day it's a little bit gassier over on that side is around 45% liquids but again good strong flowing production results on that pad on average is the wells on that when you look at Gold Creek West where if everybody's familiar, That's where when we did the original Spartan Delta transaction, Spartan Delta had brought on that original two and nine well, that was in that 2000-ish BLE per day and 90% oil. We've offset that pad here and have had that new pad for us come online over the last, it's pretty early. These are early results from that last 10, 15 days.
The first pad that will get done and completed under our new well design. So again remember thats.
Slightly wider spacing slightly different completion techniques.
We'll be probably mid June by the time that the pad is completed and online and then by the time, we have results I would I would expect some are potentially around that Q2 <unk>.
Yes release, so at the end of July early August Tony on that front. So excited about it the operations have been going pretty good and then as far as.
Follow up results, we've had a few good ones here come on when you look at the Montney position that we picked up.
It really across the play so both from eastern side moving to the West and then pushing down so.
So if you think there is a six five pad that has come on.
Over the last 80 days, it's been online, which is east to the north the north eastern position of our land.
<unk> results.
Ben had been coming in pretty well in and around that $14 50 Boe per day.
Little bit gas here will run that site at around 45% liquids, but again good strong flowing production results on that pad on average is that the wells on that when you look at Gold Creek, West where if everybody's familiar.
That's where when we did the original Spartan Delta transaction.
Spartan Delta had brought on that original $2 nine well that was in that 200 for 2000 ish Boe per day at 90% oil.
We've offset that Pat here.
That new pad for us come online over the last it's pretty early these are early results. So in that last 10 15 days and on average we're in that call. It 800, 2200 Boe per day.
Craig Bryksa: And on average, we're in that 1800 to 2200 BLE per day and in and around that 90% oil. So, good strong results from that pad, and keep in mind that is a four well pad, so it's really been coming at us strong. And then again, if you push down south on the hammerhead position, I would highlight that maybe even a couple of the analysts know it's picked up on a couple of the wells on that 511 pad. That hammerhead had been drilling right as we took over.
And then in and around that 90% oil. So good strong results from that Pat and keep in mind that as a four well pad. So it's really been come in at a strong and then again, if you pushed down south on the hammerhead position I would highlight that maybe even a couple of the analysts notes picked up on a couple of the wells on that 511 pad that <unk>.
<unk> had had been drilling right as we took over those.
Craig Bryksa: Those wells are online, and there are some good early results there. But I would also put a caveat in there that keep in mind that we were bringing that new battery online during that period, so the chatter of operations obviously occurs. So you get some chatter in those hours, so you get the kinks worked out of that battery.
Those wells are online some good early results.
And there, but I would also put a caveat in there that keep in mind, we were bringing that new battery on online during that period. So that the chatter of operations, obviously, a courtesy get some chatter in those hours to get the Kinks worked out of that battery, but wells are online seem.
Craig Bryksa: But wells are online, and they seem to be doing pretty good. But we'll continue to monitor that and see how it goes. Thanks for that, Craig.
Seem to be doing doing pretty good.
But we'll continue to monitor that and see how it goes.
Okay. Thanks for that Greg.
Kenneth R. Lamont: Maybe shifting here to you, Ken, just as a return to capital question, it looks like buyback activity has been a little quiet here in Q1 so far. Can you explain any rationale behind that? And at the same time, what should we expect going forward as a preference between buybacks and dividends? And has anything changed as far as our return on capital? Sure, so maybe I'll start with that part of the question. No, we haven't changed anything. As far as our return of capital policy goes, we are going to return 60% of our excess cash based dividend. The preference over and above this cash based dividend will be share repurchases only.
Maybe shifting gears to you can just as a return of capital question. It looks like buyback activity has been a little quiet here in Q1 to date can you just explain any rationale behind that and at the same time, what should we expect going forward as preference between buybacks and dividends and has anything changed as far as our return on capital framework sure. So maybe I'll start with that.
Part of the question no we haven't changed anything as far as a return of capital policy goes we are going to return 60% of our excess cash base dividend preference over and above David base dividend will be share repurchases only so expect that with respect to the share repurchase and the lack of activity in January that's just really.
Kenneth R. Lamont: So expect that. With respect to the share repurchase and the lack of activity in January, that's just really a timing issue. As everyone knows, on this call here, we added a second rig to DuVernay in the fall of this year, and we're on a bit of a growth ramp as you look at the production profile within 2024. So there's a little less free cash here in Q1. And so obviously, we just manage our buybacks in accordance with when our free cash is being generated, and so that's why you see a little lack of activity in January. But expect as we grow our production, and grow our free cash flow during this year, that activity will commensurately increase with that. So it's just a timing issue.
<unk> a timing issue.
As everyone knows on the call here, we added a second rig into the Duvernay in the fall of this year and we're on a bit of a growth ramp as you look at the production profile within 2024 so.
There is a little less free cash here in Q1.
And so obviously, we just manage our buybacks in accordance of when our free cash is being generated and so that's why you see a little lack of activity in January but expect as we grow our production grow our free cash flow during this year that activity will.
Commensurate increase with that so it was just a timing issue nothing else to policy Hasnt changed.
Kenneth R. Lamont: Nothing else. The policy hasn't changed. Okay, maybe another question for you just around debt management strategy. What are some of the tools in the toolkit and things that we're working towards to try and get towards our lower targets at one times a lower commodity price? Sure.
Okay. Okay. Maybe another question for you just around debt management strategy, what are some of the tools in the toolkit and things that we're working towards to try and get towards our lower targets at one times of lower commodity prices.
Sure. So obviously on the back end of the Hammerhead transaction.
Kenneth R. Lamont: So obviously, on the back end of the Hammerhead transaction, our debt did increase to $3.7 billion. And so, you know, this has been outside of operations this year; our next priority is obviously the balance sheet. And the tools in the toolkit, you know, the first thing is that we do generate significant excess cash flow, and we do retain 40% of that. And so that's really the first weapon that's always in the background, paying down your debt as you go. So you know, we do generate really good excess cash, and we'll dedicate that retained portion to the balance sheet only. I would say, secondly, we've talked about the disposition.
Debt did increase to $3 7 billion and so.
This has been outside of operations. This year. Our next priority is obviously balance sheet and the <unk>.
Tools in the tool kit.
First thing is we do generate significant excess cash flow and we do retain 40% of that.
And so that's really the first weapon that's always in the background is paying down your debt as you go so.
We do generate really good excess cash and we will dedicate that retain portion to the balance sheet only.
I would say secondly, we've talked about the disposition.
Kenneth R. Lamont: We obviously and did not talk about any acquisitions right now, but we are looking and active on the disposition front. And I would say you saw us being very active in Q4 with a couple of Alberta properties; we've announced that. So we've had those processes go by; we are looking at some other non-core smaller dispositions here. We've got two formal processes; we also are running, you know, a few informal processes here as well, as Craig alluded to, can be upstream, looking at other things as well as next infrastructure, gores, things like that. So I think we have a lot of tools in the toolkit.
Obviously and did talk about no acquisitions right now, but we are looking and active on the disposition front and I would say you saw us being very active in Q4 with a couple of Alberta properties, we've announced that.
So we've had those processes go by we are looking at some other noncore smaller dispositions here. We've got two formal processes. We also are running a few in formal processes here as well too as Craig alluded to it can be upstream looking at other things as well to <unk> infrastructure doors things like that so.
I think we have a lot of tools in the tool kit and I just want to make.
Kenneth R. Lamont: And I just want to make, you know, clear that, you know, this is a priority for us. And outside of free cash flow, we are going to make some dispositions and get our debt. It's probably also worth mentioning the hedges that we have in place to continue to protect on the downside. Yeah, it's a fair comment.
Clear that this is a priority for us and outside of free cash flow, we are going to make some dispositions and get our debt down.
Alright also worth mentioning the hedges that we have in place will continue to protect on the downside, yes. It's a fair comment we're about 45% hedged on the oil side and 30% hedged on the gas side. So obviously, we've layered on significant protection of that free cash flow as we look out this year and into early 2025%. So very solid on that front end and.
Kenneth R. Lamont: We're about 45% hedged on the oil side and 30% hedged on the gas side. So obviously, we've layered on significant protection of that free cash flow as we look out this year and into early 2025. So very solid on that front.
Kenneth R. Lamont: And, you know, that'll help take the volatility of our excess cash out of the equation as well. I mentioned gas because there are the hedges because there are two additional questions related to that. First, on the gas side.
That will help us take the volatility of our excess cash out of the equation as well.
You mentioned the gas because there are the hedges because there are two additional questions related to that first on the gas side.
Kenneth R. Lamont: The question is, given the collapse in gas prices, how is CPG managing its gas exposure to ensure the profitability of some of its newer assets? Sure.
Question is given the collapse in gas prices, our CPG managing its gas exposure to ensure profitability of some of its newer assets.
Sure. So maybe I'll just start a little bit on the hedge side obviously.
Kenneth R. Lamont: So maybe I'll just start a little bit on the hedge side. Obviously, you know, cost and cost control come into play as well, too. But from a hedge perspective, we do have 30% of our gas fixed price hedged out over two years, so 2024 and 2025. You'll see that in our corporate presentation. You know, these are at $4 a GG and above.
Costs and cost control comes comes into play as well too but from a hedge perspective, we do have 30% of our gas.
Fixed price hedged out over two years, so 2024, and 2025 Youll see that in our corporate presentation. These are at four <unk> and above so.
Kenneth R. Lamont: So, very strong hedge book on the gas side. Secondly, you'll see in our disclosure as well, too, that we've also moved our basis exposure away from ACO. We're now kind of in that 20% exposed to ACO, and we've diversified that away to various points, being NYMEX, Don, Mullin, and the Chicago area. So not only from a fixed price perspective, we remove some risk on gas, but also from a basis perspective. We've done that as well. On the other side of that, on the oil side, can you discuss your hedging strategy perhaps for the remainder of 2024 and maybe looking at 2025 as prices? Yeah, so we obviously are hedgers, and we'll continue to hedge. I would say, you know, 45% for 2024 feels like a good level.
Strong.
Hedge book on the gas side.
Secondly, you will see in our disclosure as well too that time, we've also moved our <unk>.
Basis exposure away from April.
We're now kind of in that 20%.
Close to a co and we've diversified that a way to various points being Nymex Dawn Milan.
In the Chicago area. So.
Not only for a fixed price perspective, we remove some risk on gas, but also from a basis perspective.
We've done that as well.
On the other side of that on the oil side can you discuss your hedging strategy, perhaps for the remainder of 2024 and maybe looking at 2025 as prices continue to move higher here.
Yes. So we obviously are hedgers and we will continue to hedge.
I would say, 45% for 2024 feels like a good level.
So I think that makes a lot of sense for us and just given that we're still.
Kenneth R. Lamont: So I think that makes a lot of sense for us. And just given that we're still, you know, active in trying to deleverage, as that balance sheet gets more into shape, we can look at the hedge percentage a little bit as we go forward as to what levels we're looking for. As you saw in the past, when we were a little lighter, on the leverage side and on the debt side, we were kind of in that 20% hedged range. So I would say look for that, look for us to take advantages, as the back end of the curve hopefully does move up in 2025. Then we'll chip away at that and secure, you know, at least a year out and look just maybe slightly beyond that to where we can.
Active in trying to deleverage.
Is that balance sheet gets more into shape, we can look at the hedge percentage a little bit.
As we go forward as to what levels that we're looking for.
As you saw in the past when we were a little lighter on the leverage side and on the debt side, we were kind of in that 20% hedged range. So.
I would say look for that look for us to take advantages as the back end of the curve hopefully does move up in 2025, and we will chip away there and secure at least a year out.
And looking just maybe slightly beyond that to where we can.
Another question coming back on the return of capital. We've stated our intention to increase the return of capital to shareholders over time can you provide any specifics on what that may entail.
Kenneth R. Lamont: Another question comes back on the return of capital. We've stated our intention to increase the return of capital to shareholders over time. Can you provide any specifics on what that may entail? Sure. And so, Craig, do you want me to take this? So, yeah, I would say that as far as our priorities right now are priorities, obviously operational execution, the next one is our balance sheet. The third one is increasing our return on capital. We've kind of stated that very clearly in all our literature.
And so Craig you want me to take this.
So yeah, I would say that as far as our priorities right now priority is obviously operational execution. The next one is our balance sheet.
Third one is increasing our return of capital and we've kind of stated that very clearly in all our literature with.
Kenneth R. Lamont: With respect to that, we really do need to see our balance sheet paid down. That will be the priority. So, look for us to have a target here of about a billion and a half dollars over the next couple of years of getting our balance sheet down. When we're in that position, that's when we would look to potentially increase our return on capital proposition.
With respect to that we really do need to see.
To get our balance sheet pay down.
That will be the priority so look for us to have a target here of about 1 billion $5 over the next couple of years getting our balance sheet down when we're in that position. That's when we would look to potentially increase our return of capital proposition.
Kenneth R. Lamont: And that's really how we're thinking about it. So, yeah, I'll leave that in. Okay, yeah, I think at this time there are no additional questions from those listening on the line. Thanks to everyone for joining our call today, and if you have any other additional questions. If you didn't get an answer, please call our Investor Relations team at your... Thanks, everyone. Ladies and gentlemen, this concludes today's conference call. Thank you for joining us. You may now disconnect. Transcribed by https://otter.ai
And that's really how we're thinking about that so yes.
Yes.
Okay.
This time there are no additional questions from those listening on the line. Thanks to everyone for joining our call today, but if you have any other additional questions that weren't answered please call our investor relations team at your convenience.
Thanks, everyone.
Ladies and gentlemen, this concludes today's conference call. Thank you for joining you may now disconnect.
Okay.