With its recent buying spree behind it, Veren Inc. VRN-T – formerly Crescent Point Energy Corp. – is turning its attention to paying down debt.
The oil and gas producer said Thursday its net debt as of June 30, 2024, was $3.0 -billion, which reflects $620-million in debt that was paid down in the latest quarter.
Some of that debt repayment included the proceeds from Veren’s disposition of non-core assets in Saskatchewan, a transaction that closed during the quarter.
On a conference call with analysts to discuss the company’s second-quarter results, chief executive Craig Bryksa said Veren started the year with about $3.7-billion in debt.
“It ends up being just about $800-million of debt repayment that we’ve made in the first six months of this year. So you know, we feel really good about that,” Mr. Bryksa said.
Veren’s focus on debt repayment comes in the wake of the company’s announcement earlier this year that it is done with major asset purchases for the near future.
The company has been one of the most active Canadian oil and gas companies in recent years on the mergers and acquisitions front, as it sought to restructure its portfolio of assets to focus on the Montney region of northwest Alberta and the adjacent Kaybob Duvernay shale gas play.
A series of blockbuster deals – which included the 2021 purchase of Shell Canada’s Kaybob Duvernay assets for $900-million, the 2023 purchase of Spartan Delta Corp.’s Montney assets for $1.7-billion and the purchase of Hammerhead Energy Corp.’s Montney assets for $2.55-billion shortly after that – has established Veren as the dominant player in two of North America’s most important petroleum plays.
The company said Thursday it is seeing strong and consistent results from both its Montney and Kaybob Duvernay wells.
Veren said its profit rose in its latest quarter to $261-million from $212.3-million a year ago, or 42 cents a share for the quarter ended June 30 compared with a profit of 39 cents a share a year earlier.
Oil and gas sales totalled $1.14-billion, up from $791.6-million in the second quarter of 2023.
The company said Thursday it remains on track to meet its 2024 annual average production forecast of 191,000 to 199,000 barrels of oil equivalent per day with development capital expenditures of $1.4 to $1.5-billion.
But Mr. Bryksa said Veren would like to see its total debt figure lower than it is right now.
“We’d certainly like to get the absolute debt level down. We’d like to be, near-term … around $2.2-billion of absolute debt,” he said.
“If everything stays status quo, with the commodity price range that we’re in today … we’ll be somewhere around $2.8-billion at the end of the year.”
Mr. Bryksa said while Veren is “absolutely taking a good long pause” as far as acquisitions go, it is exploring the potential divestment of some of the infrastructure it acquired in the Hammerhead deal. As part of that deal, Veren acquired significant oil batteries, compressors, water disposal and gathering lines to third-party processing plants.
“If something like that were to happen, that would allow us to strengthen the balance sheet a little bit more rapidly,” he said.
Veren said it will continue to return 60 per cent of its excess cash flow to shareholders through its base dividend and share repurchases. The balance of Veren’s excess cash flow will be directed toward debt reduction.