Crescent Point Energy Corp. expects to generate “significant” excess cash flow this year as energy prices surge, chief executive Craig Bryksa said Wednesday.
The Calgary-based company raised its 2021 production guidance after swinging to a $2.14-billion profit in the second quarter. Crescent Point says it earned $3.65 per diluted share in the quarter, compared with a loss of 27 cents per share or $145.1-million a year earlier.
The company’s adjusted cash flow totalled $387.8-million during the second quarter, or $0.66 per share diluted, well above analysts’ predictions of $0.62 per share.
“Assuming WTI prices of US$65 to $75 per barrel for the remainder of the year, we expect to generate approximately $675 to $775-million of excess cash flow in 2021,” Mr. Bryksa said in a conference call with analysts.
Mr. Bryksa said the company will use the extra cash flow to increase the strength of its balance sheet while also looking to return additional value to shareholders through an evaluation of its current dividend.
On Wednesday, the company declared a quarterly cash dividend of a quarter cent per share to be paid on Oct. 1.
Crescent Point’s adjusted profits for the three months ended June 30 were $117.6-million or 20 cents per share, up from a loss of $27.9-million or five cents per share in the second quarter of 2020.
Crescent Point was expected to post 22 cents per share in adjusted profits, according to financial data firm Refinitiv.
The company’s average daily production in the quarter was 148,641 boe/d, up from 120,842 boe/d in the second quarter of 2020, while the average selling price was $62.78 per barrel of oil equivalent, up from $23.55 in the same quarter last year.
In the second quarter, Crescent Point completed its previously announced $900-million purchase of Shell Canada’s Kaybob Duvernay assets in Alberta. It also completed the disposition of its remaining non-core conventional assets in southeast Saskatchewan for total cash proceeds of $93-million.
Because of its stronger-than-expected operational results, Crescent Point reduced its net debt in the second quarter by approximately $360-million.
In a note to clients, Desjardins analyst Chris MacCulloch said Crescent Point had a “gold medal quarter.” He said he expects continued strong oil prices should allow the company to significantly deleverage its balance sheet by the end of the year.
“We believe that [Crescent Point] is well-positioned to start returning additional capital to shareholders moving into the new year through some combination of dividend increases and share buybacks,” Mr. MacCulloch wrote.
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