OurStrategy

 

In 2012, we continued to implement our long-standing business strategy of acquiring, developing and exploiting high-quality, large resource-in-place assets and managing our risk through our hedging program and the strength of our balance sheet. We were active on the acquisitions front, while continuing to both develop our core resource plays and to test and refine new concepts. We also bolstered our risk management program by building rail facilities in Saskatchewan and Alberta, and by increasing our oil shipments to other markets. By shipping oil via rail, we are able to hedge against volatile oil price differentials and we view such shipping as a growing component of our business.

Our activities in 2012 aligned with our overall strategy and have laid the groundwork for continued operational excellence, not to mention a portfolio depth that should allow for significant organic growth. We believe that the properties we acquired in 2012 – be they consolidation acquisitions or our new Uinta Basin resource play – are all pieces of a much-larger puzzle. We have assembled a strong portfolio with a mix of assets – all of them high-quality, large oil-in-place assets with plenty of upside potential. In the near-term, we plan to focus on organic production growth across all of these plays.


OurStrategy

We’re proud of what we accomplished in 2012, both operationally and strategically. For the eleventh year in a row, Crescent Point delivered growth in reserves, cash flow and production. We’ve also provided a five-year return greater than 200 percent. In addition, since introducing our dividend in 2003, which has never been reduced, we’ve increased it along the way to its current $0.23 per share. Our disciplined risk management, in the form of our 3 ½-year hedging program, allows us to manage our cash flow and to protect our dividend. By hedging a portion of our expected oil production, we are well positioned to weather commodity price cycles.

Looking ahead, we will continue to focus on operational excellence and strategic discipline. We believe our growing portfolio of large Original Oil In Place assets, as defined below, will translate into production and cash flow growth for many years to come. This vision is outlined in a detailed five-year plan that describes a handful of scenarios under a variety of oil prices. All that we do as a company is aligned with our business strategy, which guarantees the bigger picture is always in sight.

Original Oil In Place (OOIP) is equivalent to Discovered Petroleum Initially-In-Place (DPIIP). DPIIP, as defined in the Canadian Oil and Gas Evaluation Handbook (COGEH), is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves and contingent resources; the remainder is unrecoverable.


OurResults

Monthly Dividend ($/share)


OurResults

Funds Flow from Operations ($ millions)


5-Year Review

(Cdn$000s except shares, per share and per boe amounts)

Financial 2012 2011 2010(1) 2009(1) 2008(1)
Funds flow from operations (2)(3)(5) 1,601,850 1,293,257 882,862 672,895 592,132
Per share (2)(3)(4)(5) 4.83 4.65 3.70 4.15 4.73
Net income (loss) (6)  190,653 201,134 50,921 (31,075) 464,102
Per share (4)(6) 0.57 0.72 0.21 (0.19) 3.71
Dividends 931,400 771,632 657,520 453,318 324,821
Per share (4) 2.76 2.76 2.76 2.76 2.61
Payout ratio (%) (2)(7) 58 60 74 67 55
Per share (%) (2)(4)(7) 57 59 75 67 55
Net debt (2)(8) 1,760,324 1,220,144 1,116,463 370,937 730,932
Capital acquisitions (net) (9) 3,021,230 201,313 2,077,733 2,078,521 140,851
Development capital expenditures 1,488,947 1,238,795 958,606 339,916 454,533
Weighted average shares outstanding (mm)          
Basic 329 275 235 160 124
Diluted 332 278 239 162 126

5-Year Review (cont.)

(Cdn$000s except shares, per share and per boe amounts)

Operating 2012 2011 2010(1) 2009(1) 2008(1)
Average daily production          
Crude oil and NGLs (bbls/d) 89,704 66,604 55,070 39,749 32,583
Natural gas (mcf/d) 54,284 43,172 39,318 30,802 28,883
Total (boe/d) 98,751 73,799 61,623 44,883 37,397
Average selling prices (10)          
Crude oil and NGLs ($/bbl) 80.51 87.62 73.46 64.49 94.36
Natural gas ($/mcf) 2.61 3.87 4.12 4.11 8.36
Total ($/boe) 74.57 81.35 68.28 59.93 88.67
Netback ($/boe)          
Oil and gas sales 74.57 81.35 68.28 59.93 88.67
Royalties (12.95) (13.95) (12.56) (10.54) (16.09)
Operating expenses (11.65) (11.16) (11.03) (8.92) (9.01)
Transportation (1.83) (1.91) (1.65) (1.48) (1.87)
Netback prior to realized derivatives 48.14 54.33 43.04 38.99 61.70
Realized gain (loss) on financialderivatives (11) (0.49) (2.97) 0.25 3.21 (8.77)
Netback (2)(12) 47.65 51.36 43.29 42.20 52.93

5-Year ReviewNotes

Crescent Point’s financial and operating results since July 2, 2010, include the acquisition of Shelter Bay Energy Inc. (“Shelter Bay”); prior to this,Crescent Point’s financial and operating results did not include 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. Also, between March 26, 2008, and July 2, 2010, Crescent Point accounted for its investment in Shelter Bay using the equity method of accounting; accordingly, under previous GAAP, Crescent Point recorded its share of Shelter Bay’s net income or loss in the “equity and other income” caption on the consolidated statements of operations, comprehensive income and deficit.

  1. The Company’s International Financial Reporting Standards (“IFRS”) transition date was January 1, 2010, therefore, comparative information prior to 2010 has not been restated. The Company’s 2010 results were restated to comply with IFRS.
  2. Funds flow from operations, funds flow from operations per share – diluted, payout ratio, net debt and netback as presented do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable with the calculation of similar measures presented by other entities.
  3. Funds flow from operations is calculated based on cash flow from operating activities before changes in non-cash working capital, transaction costs and decommissioning expenditures. Funds flow from operations per share – diluted is calculated as funds flow from operations divided by the number of weighted average diluted shares outstanding.
  4. The per share amounts (with the exception of per share dividends) are the per share – diluted amounts.
  5. Funds flow from operations for the year ended December 31, 2009, includes a realized derivative gain on crystallization of various oil contracts of $72.5 million. The funds flow from operations for the year ended December 31, 2008, includes a loss on crystallization of various oil contracts of $34.5 million.
  6. Net income for the year ended December 31, 2012, includes unrealized derivative gains of $185.7 million. Net income for the year ended December 31, 2011, includes unrealized derivative losses of $6.2 million. Net income for the year ended December 31, 2010, includes unrealized derivative losses of $96.3 million. The net loss for the year ended December 31, 2009, includes unrealized derivative losses of $228.3 million, a $72.5 million realized derivative gain on crystallization of various oil contracts and a $10.1 million bad debt provision for SemCanada. The net income of $464.1 million for the year ended December 31, 2008, includes an unrealized gain on derivatives of $294.3 million.
  7. Payout ratio is calculated as dividends paid or declared (including the value of dividends paid pursuant to the Company’s dividend reinvestment plans) divided by funds flow from operations.
  8. Net debt includes long-term debt, working capital and long-term investments but excludes derivative asset, derivative liability and unrealized foreign exchange on translation of US dollar senior guaranteed notes.
  9. Capital acquisitions represent total consideration for the transactions, including long-term debt and working capital assumed and, commencing January 1, 2010, excluding transaction costs.
  10. The average selling prices reported are before realized derivatives and transportation charges.
  11. The realized derivative gain for the year ended December 31, 2009, excludes a realized derivative gain on crystallization of $72.5 million. The realized derivative loss for the year ended December 31, 2008, excludes a $34.5 million loss on derivative crystallization of various oil contracts.
  12. Netback is calculated on a per boe basis as oil and gas sales, less royalties, operating and transportation expenses and realized derivative gains and losses.

Original Oil In Place (OOIP) is equivalent to Discovered Petroleum Initially-In-Place (DPIIP). DPIIP, as defined in the Canadian Oil and Gas Evaluation Handbook (COGEH), is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production. The recoverable portion of DPIIP includes production, reserves and contingent resources; the remainder is unrecoverable.

Barrels of oil equivalent ("boes") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.