Crescent Point Energy Corp.

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 website home page. 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 U.S. dollars. The complete financial statements and management discussion and analysis for the period ending December 31, 2023, were announced this morning and are available on Crescent Point, Cedar Plus, and Edgar 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. 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, press start to. 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 Crescent Point's most recent annual information form, which may be accessed through Crescent Point, Cedar Plus, or EDGAR websites, or by contacting Crescent Point Energy. Management also calls your attention to the forward-looking information and non-GAAP measure sections of the press release issued early today. I will now turn the call over to Craig Brixa, President and Chief Executive Officer of Crescent Point. Please go ahead, Mr. Brixa.

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 Fourier, 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 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 were taken 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 to capital profile for our shareholders. Through our efforts, we have built a portfolio that now has over 20 years of premium drilling inventory. We also control the largest land position in both the condensate-rich KBOB DuVernay Play and the volatile oil window in the Alberta Mountains. 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 KBOB, our well productivity in the Alberta Montney has been remarkable. We have achieved IP30 results that continually rank in the top 10 oil and liquids wells in the Western Canadian sedimentary basin. In fact, 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. 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 flow, $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 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 metrics. Last year, we replaced over 900% of our 2023 production, including strategic A&D, on a 2P reserve basis. We replaced 150% of our 2023 production organically, driven largely by increased reserves additions in our KBOB Duvernay assets. By entering into the Alberta Montney, 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 change in future development capital. It's also worth highlighting that approximately 60% of our premium locations in the Cape of Duvernay and over 70% of our inventory in the Alberta Montane 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. Operationally, We will continue to focus on enhancing efficiencies and returns, including drilling longer laterals in the KBOC Duvernay and optimizing well design and inter-well spacing in the Alberta Monty. 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 decline mitigation programs and our open hole multilateral development. We expect to generate significant excess cash flow of approximately $830 million under our 2024 budget, assuming a full year average WTI pricing of approximately $75 per barrel and ACO of $230 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 on a compounded annual basis of approximately 10% at $70 per barrel of WTI. 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 net back production, strong excess cash flow generation, 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 transform 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 transformed 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 20th. 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.

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 one on your phone touchpad. And if you wish to cancel your request, please press star two. Your first question comes from Aaron Wilkoski from TD. Your night is now open.