Crescent Point Transforms Portfolio With Strategic Alberta Montney Consolidation

Crescent Point Energy Corp. ("Crescent Point" or the "Company") is pleased to announce that it has entered into an arrangement agreement (the “Agreement”) to acquire Hammerhead Energy Inc. (“Hammerhead”), an oil and liquids-rich Alberta Montney producer, for total consideration of approximately $2.55B, including approximately $455M in assumed net debt, consisting of cash and common shares of the Company (the “Transaction”).

“This strategic consolidation is an integral part of our overall portfolio transformation,” said Craig Bryksa, President and CEO of Crescent Point. “The acquired assets, which are situated in the volatile oil window in the Alberta Montney and adjacent to our existing lands, provide significant value with premium drilling inventory, infrastructure ownership and scalable market access. This transaction is expected to be immediately accretive to our per share metrics and to enhance our return of capital profile for shareholders. Upon completion of the transaction, Crescent Point will have a dominant position in both the Alberta Montney and Kaybob Duvernay plays, which are complemented by our low-decline, long-cycle assets in Saskatchewan. Moving forward, our strategic priorities will focus on continued operational execution, balance sheet strength and increasing our return of capital to shareholders.”

Key Highlights

• Transforms Company into a Montney and Kaybob Duvernay focused E&P with complementary long-cycle assets in Saskatchewan.
• Adds approximately 800 net Montney drilling locations and increases estimated total corporate premium inventory to over 20 years.
• Accretive to 2024 metrics and enhances excess cash flow per share by over 15 percent, on average, throughout the five-year plan.
• Creates the seventh-largest Canadian E&P by production volume and largest land owner in the Alberta Montney’s volatile oil fairway.
• Plan to increase base dividend by 15 percent to $0.46 per share on an annual basis, subject to closing of the Transaction.
• Leverage ratio of 1.1 times net debt to adjusted funds flow expected at year-end 2024 at US$80/bbl WTI.

Strategic Rationale

• Establishes Dominant Position in the Alberta Montney with 350,000 Net Acres of Contiguous Land Providing Synergies: The Transaction is accretive to Crescent Point’s portfolio and allows the Company to consolidate approximately 105,000 net acres of land with Montney rights, directly adjacent to its existing Alberta Montney position at Gold Creek and Karr. The acquired assets are highly attractive with favourable royalty rates on Crown lands and include a high working interest rate of primarily 100 percent with limited expiry concerns. The acquired lands also have attractive geological characteristics with significant net pay, similar to Crescent Point’s Gold Creek assets, and higher than normal pressure. The Company expects to be able to drive significant operational synergies across the combined asset base with respect to drilling and completion design, shared infrastructure, well-pad development continuity and supply chain management efficiencies. A detailed map of the acquired assets in relation to Crescent Point’s existing land position is provided later in the release.
• Increases Premium Drilling Inventory to Over 20 Years: Adds approximately 800 net Montney drilling locations, further bolstering Crescent Point’s short-cycle asset portfolio. This Transaction provides decades of inventory with highly attractive returns, capital efficiencies and finding and development costs, which all rank in the top quartile within the Company’s portfolio. Crescent Point’s inventory of premium drilling locations is estimated to exceed 20 years on a pro forma basis, providing an attractive growth profile.
• Significant Infrastructure Ownership and Market Access: Enhances the Company’s ownership of significant infrastructure within the Alberta Montney, including oil batteries, compressors, water disposal and gathering lines to third party processing plants. Cumulative capital investment made by Hammerhead on major infrastructure since inception is expected to total approximately $500M by the end of 2023. This infrastructure will support the acquired assets as they grow from approximately 56,000 boe/d (50% oil and liquids) expected in 2024 to over an estimated 80,000 boe/d within Crescent Point’s five-year business plan. Crescent Point also expects to benefit from long-term contracts already in place to ensure the Company has adequate market access for future scalability.
• Expected Accretion of Over 15 Percent Per-Share to Excess Cash Flow and Return of Capital: The Transaction is expected to be accretive to Crescent Point’s 2024 metrics, including adjusted funds flow and excess cash flow per share. Over the Company’s five-year business plan, the Transaction is expected to further strengthen Crescent Point’s excess cash flow and return of capital profile by over 15 percent per share, on average, in addition to its current outlook for mid-single digit organic growth. Crescent Point expects to generate significant financial and operational synergies in the near-term through lower general and administrative expenses and capital costs. The Company will focus on realizing additional value over time, including the efficient development of the acquired assets by optimizing the number of wells drilled per section. The Transaction also provides Crescent Point with an estimated $1.3B of tax pools.
• Creates Seventh-Largest E&P in Canada by Production Volume (Weighted 65% to Oil and Liquids): Pro-forma production is expected to total over 200,000 boe/d, with significant drilling inventory in place to deliver additional long-term organic growth. Crescent Point is expected to immediately become the largest owner of land in the Alberta Montney’s volatile oil fairway, in addition to already controlling the largest amount of land in the condensate-rich Kaybob Duvernay play. This increased scale is expected to allow the Company to continue to improve its cost of capital.

Updated Preliminary 2024 Guidance
Crescent Point’s revised 2024 preliminary guidance, which incorporates the Transaction, includes estimated annual production of 200,000 to 208,000 boe/d (65% oil and liquids) based on development capital expenditures of $1.45 to $1.55B. This budget is expected to generate over $1.2B of excess cash flow at US$80/bbl WTI.

Approximately 80 percent of Crescent Point's 2024 budget is expected to be allocated to its Alberta Montney and Kaybob Duvernay plays, with the remaining capital allocated to the Company's low-decline, long-cycle assets in Saskatchewan.

The revised capital expenditures budget incorporates approximately $400M of development capital associated with the newly acquired assets, which are forecast to grow from approximately 56,000 boe/d in 2024 to approximately 80,000 boe/d within the Company’s five-year business plan. In addition to this long-term growth, capital expenditures for the acquired assets are expected to moderate subsequent to 2024, resulting in significant excess cash flow generation.

The Company plans to release its formal 2024 guidance upon closing of the Transaction, which is expected in December 2023.

Focus On Operational Execution, Balance Sheet, And Increasing Return Of Capital
Crescent Point’s strategic priorities will continue to focus on operational execution, balance sheet strength and increasing return of capital to shareholders.

This Transaction builds on the operational momentum achieved by the Company since its initial entry into the Kaybob Duvernay and Alberta Montney. Crescent Point’s execution to date in these plays has resulted in enhanced returns for shareholders through a combination of realized efficiencies and enhanced productivity through drilling and completion optimization. The Company plans to build on this success with the announced Transaction.

Given the expected accretion from this Transaction, the Company plans to increase its quarterly base dividend by 15 percent to $0.115 per share, or to $0.46 per share annually, up from $0.40 per share currently. This base dividend increase is subject to approval from Crescent Point’s Board of Directors, the successful closing of the Transaction and market conditions. It is expected to be effective in connection with the first quarter 2024 dividend, which is anticipated to be declared in early 2024.

Crescent Point’s net debt is expected to total approximately $3.7B following the Transaction, or 1.4 times adjusted funds flow. This leverage ratio is expected to improve to approximately 1.1 times by year-end 2024, at US$80/bbl WTI. As part of its commitment to balance sheet strength, the Company has established a near-term net debt target of $2.2B, or approximately 1.0 times adjusted funds flow at mid-cycle pricing.

The Company plans to continue to allocate approximately 60 percent of its excess cash flow to dividends and share repurchases in the interim and plans to increase this allocation over time as it further strengthens its balance sheet.

Over the long-term, Crescent Point continues to target a leverage ratio of less than 1.0 times in a low commodity price environment. To protect against commodity price volatility, the Company will continue to hedge a portion of its production, including approximately a third of its anticipated production in 2024, net of royalty interest.

Transaction Metrics
Based on estimated production for the acquired assets of approximately 56,000 boe/d in 2024, the Transaction metrics are as follows, assuming US$80/bbl WTI, $3.50/mcf AECO, and $0.73 US$/CDN exchange rate:

• 3.4 times annual net operating income;
• $45,500 per flowing boe; and
• $8.25 per boe of Proved plus Probable (“2P”) reserves of 308.7 MMboe, as estimated by the independent evaluator McDaniel & Associates Consultants Ltd., as at November 1, 2023. Including approximately $2.7 billion of undiscounted future development capital, the Transaction equates to $16.93 per boe of 2P reserves, resulting in a recycle ratio of approximately 2.2 times.

The net present value (“NPV”) of the Proved (“1P”) and 2P reserves of the acquired assets total approximately $2.1B and $3.4B respectively, based on independent engineering evaluation and pricing as of fourth quarter 2023. The reserves attributed to the acquired assets are based on 252 net booked locations, or approximately a third of the total 800 internally identified net premium drilling locations.

Transaction Financing And Financial Advisors
Total consideration for the Transaction is approximately $2.55B, including approximately $455M of Hammerhead’s net debt. Hammerhead shareholders will receive $21.00 per fully diluted common share of Hammerhead, through a combination of approximately $1.5B in cash and 53.2 million common shares of Crescent Point (approximately $548M).

The Company plans to fund the cash portion of the Transaction through its existing credit facilities, a new three-year term loan totaling $750M and approximately $500M of gross cash proceeds from an equity offering, as announced separately. The closing of the Transaction is not conditional upon closing of the term loan financing or the equity offering.

The Boards of Directors of both Crescent Point and Hammerhead have unanimously approved the Transaction, which is subject to court, Toronto Stock Exchange and other stock exchange and regulatory approvals and other customary closing conditions.

The Agreement provides for mutual non-completion fees of $85M in the event the Transaction is not completed or is terminated by either party in certain circumstances.

Hammerhead shareholders, including certain directors and all of the officers, holding an aggregate of approximately 82 percent of Hammerhead shares outstanding, have entered into voting support agreements with Crescent Point to vote in favour of the Transaction and against any alternative or competing transaction.

Certain affiliates of Riverstone Holdings, LLC (collectively “Riverstone”), Hammerhead’s largest shareholder, will own approximately seven percent of Crescent Point’s pro forma issued and outstanding common shares upon closing of the Transaction. Riverstone has agreed to enter into a lock-up agreement upon the closing of the Transaction whereby it will hold 50 percent of the Crescent Point shares it receives pursuant to the Transaction for a period of at least three months following the closing thereof and hold the remaining 50 percent of the Crescent Point shares that it receives pursuant to the Transaction for a period of at least six months following the closing, subject to the provisions of such lock-up agreement.

BMO Capital Markets and RBC Capital Markets are acting as financial advisors to Crescent Point on the Transaction and have each provided a verbal opinion to Crescent Point's Board of Directors to the effect that, as of the date of each such opinion and based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be paid by Crescent Point under the Agreement is fair from a financial point of view to Crescent Point. Scotiabank is acting as strategic advisor to Crescent Point.

The Bank of Nova Scotia, BMO Capital Markets and Royal Bank of Canada are acting as co-lead arrangers and joint bookrunners on the Company’s new term loan facility.

Norton Rose Fulbright Canada LLP is acting as legal advisor to Crescent Point on the Transaction.

Conference Call Details
Crescent Point management will host a pre-recorded conference call today, Monday, November 6, 2023, starting at 2:30 p.m. MT (4:30 p.m. ET) to discuss the announced Alberta Montney consolidation. A slide deck will accompany the conference call and can be found on Crescent Point’s website.

Participants can listen to this event online via webcast. The conference call can be accessed without operator assistance by registering online to receive an instant automated call back. Alternatively, the conference call can be accessed with operator assistance by dialing 1‑888‑390‑0605. The webcast will be archived for replay and can be accessed on Crescent Point’s conference calls and webcasts webpage. The replay will be available approximately one hour following completion of the call.

Shareholders and investors can also find a presentation on Crescent Point's website, further highlighting details of the Transaction.

Alberta Montney Land Position
The following graphic shows the acquired assets in relation to Crescent Point’s existing land position in the Alberta Montney.

2024 Preliminary Guidance

The revised total annual average production (boe/d) is comprised of approximately 65% Oil, Condensate & NGLs and 35% Natural Gas. Assumes production of 56,000 boe/d (50% oil and liquids) for the assets acquired as part of the Transaction

Land expenditures and net property acquisitions and dispositions are not included. Revised development capital expenditures is allocated as follows: approximately 90% drilling & development and 10% facilities & seismic

Return Of Capital Outlook

The planned quarterly base dividend increase to $0.115 per share is subject to approval from the Board of Directors, the successful closing of the Transaction and market conditions. This dividend increase is expected to be effective in connection with the first quarter 2024 dividend

Total return of capital is based on a framework that targets to return to shareholders approximately 60% of excess cash flow

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor will there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

The common shares offered in the equity offering described herein will be offered to the public through certain underwriters and their affiliates by way of a prospectus supplement (the "Prospectus Supplement") to Crescent Point’s short form base shelf prospectus dated November 3, 2023 (the "Prospectus") filed with the securities regulatory authorities in each of the provinces of Canada and included in its registration statement on Form F-10 filed with the U.S. Securities and Exchange Commission (“SEC”). The Offering is made only by the Prospectus. The Prospectus contains important detailed information about the securities being offered. Before investing, prospective purchasers should read the Prospectus Supplement, the Prospectus and the documents incorporated by reference therein for more complete information about Crescent Point and the Offering.

A copy of the Prospectus is, and a copy of the Prospectus Supplement will be, available free of charge on SEDAR+ at www.sedarplus.com and on the SEC website at www.sec.gov/edgar. Alternatively, copies may be obtained upon request in Canada by contacting the Company at the contacts below.

Definitions / Specified Financial Measures
Throughout this press release, the Company uses the terms "adjusted funds flow" (equivalent to "adjusted funds flow from operations"), "excess cash flow", "excess cash flow per share", "net debt", "leverage ratio" (equivalent to "net debt to adjusted funds flow") "base dividends" and "recycle ratio". These specified financial measures do not have any standardized meaning as prescribed by International Financial Reporting Standards and, therefore, may not be comparable with the calculation of similar measures presented by other issuers.

The most directly comparable financial measure for adjusted funds flow from operations and excess cash flow disclosed in the Company's financial statements is cash flow from operating activities, which, for the three and nine month periods ended September 30, 2023, was $648.9M and $1.58B respectively. The most directly comparable financial measure for net debt disclosed in the Company's financial statements is long-term debt, which, for the nine month period ended September 30, 2023 was $2.95B. The most directly comparable financial measure for base dividends disclosed in the Company’s financial statements is dividends declared, which for the three and nine month periods ended September 30, 2023 was $71.7M and $143.6M, respectively. For the quarter ended September 30, 2023, adjusted funds flow, excess cash flow, discretionary excess cash flow, net debt and base dividends were $687.1M, $321.6M, $268.6M, $2.88B and $53.0M, respectively. For the nine month period ended September 30, 2023, adjusted funds flow, excess cash flow, discretionary excess cash flow, net debt and base dividends were $1.76B, $752.8M, $590.3M, $2.88B and $162.5M, respectively.

Excess cash flow forecasted for 2023 to 2024 is a forward-looking non-IFRS measure and is calculated consistently with the measures disclosed in the Company's MD&A. Refer to the Specified Financial Measures section of the Company's MD&A for the three and nine month periods ended September 30, 2023.

Excess cash flow per share is a non-IFRS ratio and calculated as excess cash flow divided by the number of shares outstanding. Excess cash flow per share presents a measure of financial performance to assess the ability of the Company to finance dividends, potential share repurchases, debt repayments and returns-based growth. This measure is based on current shares outstanding.

Recycle ratio is a non-IFRS ratio and is calculated as operating netback before hedging divided by FD&A costs. Recycle ratios may not be comparable year-over-year given significant changes executed over the last three years. Recycle ratio is a common metric used in the oil and gas industry and is used to measure profitability on a per boe basis.

For an explanation of the composition of adjusted funds flow, excess cash flow, excess cash flow per share, net debt, leverage ratio and how they provide useful information to an investor and qualitative reconciliations to the applicable IFRS measures, see the Company's MD&A for the quarter ended September 30, 2023 available online at www.sedarplus.ca or EDGAR at www.sec.gov and on our website at www.cresecent pointenergy.com. The section of the MD&A entitled "Specific Financial Measures" is incorporated herein by reference. There are no significant differences in calculations between historical and forward-looking specific financial measures. For an explanation of the calculation of "recycle ratio" please see the “Reserves and Drilling Data" advisory below.

Management believes the presentation of the specified financial measures above provides useful information to investors and shareholders as the measures provide increased transparency and the ability to better analyze performance against prior periods on a comparable basis. This information should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.

Notice to US Readers Regarding Oil and Gas Disclosure
The oil and natural gas reserves contained in this press release have generally been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects of United States or other foreign disclosure standards. For example, the United States Securities and Exchange Commission (the "SEC") generally permits oil and gas issuers, in their filings with the SEC, to disclose only proved reserves (as defined in SEC rules), but permits the optional disclosure of "probable reserves" (as defined in SEC rules). Canadian securities laws require oil and gas issuers, in their filings with Canadian securities regulators, to disclose not only proved reserves (which are defined differently from the SEC rules) but also probable reserves, each as defined in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Accordingly, "proved reserves" and "probable reserves" disclosed in this news release may not be comparable to US standards, and in this news release, Crescent Point has disclosed reserves designated as "proved plus probable reserves". Probable reserves are higher-risk and are generally believed to be less likely to be accurately estimated or recovered than proved reserves. In addition, under Canadian disclosure requirements and industry practice, reserves and production are reported using gross volumes, which are volumes prior to deduction of royalties and similar payments. The SEC rules require reserves and production to be presented using net volumes, after deduction of applicable royalties and similar payments. Moreover, Crescent Point has determined and disclosed estimated future net revenue from its reserves using forecast prices and costs, whereas the SEC rules require that reserves be estimated using a 12-month average price, calculated as the arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period. Consequently, Crescent Point's reserve estimates and production volumes in this news release may not be comparable to those made by companies using United States reporting and disclosure standards. Further, the SEC rules are based on unescalated costs and forecasts. All amounts in the news release are stated in Canadian dollars unless otherwise specified.