EX-99.1 2 exh99_1.htm EXHIBIT 99.1 Document
Exhibit 99.1
CONSOLIDATED BALANCE SHEETS
 
 
As at
 
 
September 30,

 
December 31,

 
(UNAUDITED) (Cdn$ millions)
Notes
2016

 
2015

 
ASSETS
 
 
 
 
 
Cash
 
13.8

 
24.7

 
Accounts receivable
 
268.1

 
327.0

 
Prepaids and deposits
 
6.4

 
5.1

 
Reclamation fund
4
26.5

 
-

 
Derivative asset
22
126.7

 
490.5

 
Total current assets
 
441.5

 
847.3

 
Long-term investments
5
36.3

 
30.3

 
Derivative asset
22
339.6

 
540.1

 
Other long-term assets
4, 6
20.2

 
63.5

 
Exploration and evaluation
7, 8
497.1

 
540.7

 
Property, plant and equipment
8, 9
14,799.3

 
14,953.7

 
Goodwill
10
251.9

 
251.9

 
Deferred income tax
 
386.0

 
388.5

 
Total assets
 
16,771.9

 
17,616.0

 
LIABILITIES
 
 
 
 
 
Accounts payable and accrued liabilities
 
502.6

 
679.4

 
Dividends payable
 
16.2

 
50.5

 
Current portion of long-term debt
11
88.5

 
72.0

 
Derivative liability
22
3.2

 
1.8

 
Decommissioning liability
13
26.5

 
32.4

 
Total current liabilities
 
637.0

 
836.1

 
Long-term debt
11
3,711.0

 
4,380.0

 
Derivative liability
22
2.7

 
0.3

 
Other long-term liabilities
12, 20
54.9

 
56.3

 
Decommissioning liability
13
1,405.4

 
1,223.0

 
Deferred income tax
 
868.1

 
995.3

 
Total liabilities
 
6,679.1

 
7,491.0

 
SHAREHOLDERS’ EQUITY
 
 
 
 
 
Shareholders’ capital
14
16,390.6

 
15,693.2

 
Contributed surplus
 
106.8

 
99.3

 
Deficit
15
(6,872.3
)
 
(6,239.3
)
 
Accumulated other comprehensive income
 
467.7

 
571.8

 
Total shareholders' equity
 
10,092.8

 
10,125.0

 
Total liabilities and shareholders' equity
 
16,771.9

 
17,616.0

 
Commitments (Note 24)
See accompanying notes to the consolidated financial statements.


CRESCENT POINT ENERGY CORP.
1

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
(UNAUDITED) (Cdn$ millions, except per share amounts)
Notes
2016

 
2015

 
2016

 
2015

 
REVENUE AND OTHER INCOME
 
 
 
 
 
 
 
 
 
Oil and gas sales
 
645.9

 
730.3

 
1,799.4

 
2,120.1

 
Royalties
 
(92.3
)
 
(115.4
)
 
(252.6
)
 
(332.5
)
 
Oil and gas revenue
 
553.6

 
614.9

 
1,546.8

 
1,787.6

 
Derivative gains (losses)
17, 22
56.2

 
616.9

 
(152.1
)
 
583.7

 
Other income (loss)
18
(13.8
)
 
(6.5
)
 
(6.1
)
 
11.0

 
 
 
596.0

 
1,225.3

 
1,388.6

 
2,382.3

 
EXPENSES
 
 
 
 
 
 
 
 
 
Operating
 
180.2

 
202.8

 
511.2

 
529.3

 
Transportation
 
29.0

 
38.6

 
98.3

 
103.3

 
General and administrative
 
26.5

 
28.5

 
78.5

 
81.7

 
Interest on long-term debt
 
39.9

 
38.0

 
120.3

 
105.0

 
Foreign exchange (gain) loss
19
24.1

 
169.3

 
(169.8
)
 
267.3

 
Share-based compensation
20
12.3

 
11.6

 
46.0

 
47.1

 
Depletion, depreciation, amortization and impairment
7, 9
400.6

 
1,035.9

 
1,244.2

 
1,860.6

 
Accretion
12, 13
6.0

 
6.9

 
19.8

 
18.1

 
 
 
718.6

 
1,531.6

 
1,948.5

 
3,012.4

 
Net income (loss) before tax
 
(122.6
)
 
(306.3
)
 
(559.9
)
 
(630.1
)
 
Tax expense (recovery)
 
 
 
 
 
 
 
 
 
Current
 
-

 
-

 
-

 
0.2

 
Deferred
 
(14.1
)
 
(105.0
)
 
(137.8
)
 
(142.5
)
 
Net income (loss)
 
(108.5
)
 
(201.3
)
 
(422.1
)
 
(487.8
)
 
Other comprehensive income (loss)
 
 
 
 
 
 
 
 
 
Items that may be subsequently reclassified to profit or loss
 
 
 
 
 
 
 
 
Foreign currency translation of foreign operations
 
15.6

 
141.4

 
(104.1
)
 
266.9

 
Comprehensive income (loss)
 
(92.9
)
 
(59.9
)
 
(526.2
)
 
(220.9
)
 
Net income (loss) per share
21
 
 
 
 
 
 
 
 
Basic
 
(0.21
)
 
(0.40
)
 
(0.83
)
 
(1.04
)
 
Diluted
 
(0.21
)
 
(0.40
)
 
(0.83
)
 
(1.04
)
 
See accompanying notes to the consolidated financial statements.

CRESCENT POINT ENERGY CORP.
2

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(Cdn$ millions, except per share amounts)
Notes
Shareholders’ capital

 
Contributed surplus

 
Deficit

 
Accumulated other comprehensive income

 
Total
shareholders’
equity

 
December 31, 2015
 
15,693.2

 
99.3

 
(6,239.3
)
 
571.8

 
10,125.0

 
Issued for cash
14
650.4

 
 
 
 
 
 
 
650.4

 
Issued on capital acquisitions
14
17.7

 
 
 
 
 
 
 
17.7

 
Redemption of restricted shares
14
48.4

 
(49.3
)
 
0.2

 


 
(0.7
)
 
Share issue costs, net of tax
 
(19.1
)
 


 


 


 
(19.1
)
 
Share-based compensation
20


 
60.1

 


 


 
60.1

 
Forfeit of restricted shares
20


 
(3.3
)
 


 


 
(3.3
)
 
Net income (loss)
 


 


 
(422.1
)
 


 
(422.1
)
 
Dividends ($0.41 per share)
 


 


 
(211.1
)
 


 
(211.1
)
 
Foreign currency translation adjustment
 


 


 


 
(104.1
)
 
(104.1
)
 
September 30, 2016
 
16,390.6

 
106.8

 
(6,872.3
)
 
467.7

 
10,092.8

 
December 31, 2014
 
14,157.6

 
118.0

 
(4,357.1
)
 
242.4

 
10,160.9

 
Issued for cash
 
660.1

 


 


 


 
660.1

 
Issued on capital acquisitions
 
541.9

 


 


 


 
541.9

 
Issued pursuant to the DRIP (1) and SDP (2)
 
261.7

 


 
8.4

 


 
270.1

 
Redemption of restricted shares
 
80.0

 
(81.2
)
 
 
 


 
(1.2
)
 
Share issue costs, net of tax
 
(20.6
)
 


 


 


 
(20.6
)
 
Share-based compensation
 


 
62.8

 


 


 
62.8

 
Forfeit of restricted shares
 


 
(1.7
)
 


 


 
(1.7
)
 
Net income (loss)
 


 


 
(487.8
)
 


 
(487.8
)
 
Dividends ($1.81 per share)
 


 


 
(867.6
)
 


 
(867.6
)
 
Foreign currency translation adjustment
 


 


 


 
266.9

 
266.9

 
September 30, 2015
 
15,680.7

 
97.9

 
(5,704.1
)
 
509.3

 
10,583.8

 
(1)
Premium Dividend TM and Dividend Reinvestment Plan.
(2)
Share Dividend Plan.
See accompanying notes to the consolidated financial statements.

CRESCENT POINT ENERGY CORP.
3

CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
(UNAUDITED) (Cdn$ millions)
Notes
2016

 
2015

 
2016

 
2015

 
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net income (loss)
 
(108.5
)
 
(201.3
)
 
(422.1
)
 
(487.8
)
 
Items not affecting cash
 
 
 
 
 
 
 
 
 
Other (income) loss
18
13.8

 
6.5

 
6.1

 
(11.0
)
 
Deferred tax recovery
 
(14.1
)
 
(105.0
)
 
(137.8
)
 
(142.5
)
 
Share-based compensation
20
12.3

 
11.6

 
46.0

 
47.1

 
Depletion, depreciation, amortization and impairment
7, 9
400.6

 
1,035.9

 
1,244.2

 
1,860.6

 
Accretion
12, 13
6.0

 
6.9

 
19.8

 
18.1

 
Unrealized (gains) losses on derivatives
17, 22
31.7

 
(443.1
)
 
568.1

 
(130.6
)
 
Translation of US dollar long-term debt
19
36.0

 
170.0

 
(170.6
)
 
278.3

 
Other
25
(0.4
)
 
0.5

 
(3.5
)
 
6.5

 
Realized gain on cross currency swap maturity
19
(10.5
)
 
-

 
(1.5
)
 
(8.6
)
 
Decommissioning expenditures
 
(2.8
)
 
(3.6
)
 
(9.5
)
 
(11.0
)
 
Change in non-cash working capital
25
(33.9
)
 
68.6

 
(53.4
)
 
18.3

 
 
 
330.2

 
547.0

 
1,085.8

 
1,437.4

 
INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Development capital and other expenditures
 
(333.9
)
 
(330.6
)
 
(753.4
)
 
(1,239.9
)
 
Capital acquisitions, net
8
(189.5
)
 
(2.9
)
 
(212.5
)
 
(20.0
)
 
Reclamation fund
4
2.8

 
(4.7
)
 
16.8

 
1.5

 
Investments
5
-

 
-

 
-

 
2.0

 
Change in non-cash working capital
25
81.7

 
(89.7
)
 
(45.6
)
 
(200.6
)
 
 
 
(438.9
)
 
(427.9
)
 
(994.7
)
 
(1,457.0
)
 
FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Issue of shares, net of issue costs
 
624.3

 
(1.5
)
 
623.3

 
630.9

 
Increase (decrease) in bank debt, net
 
(470.3
)
 
1,117.9

 
(415.7
)
 
783.2

 
Issuance of senior guaranteed notes
 
-

 
-

 
-

 
381.4

 
Repayment of acquired debt and senior guaranteed notes
 
-

 
(1,003.8
)
 
(66.7
)
 
(1,100.6
)
 
Realized gain on cross currency swap maturity
19
10.5

 
-

 
1.5

 
8.6

 
Cash dividends
 
(47.2
)
 
(145.9
)
 
(211.1
)
 
(597.4
)
 
Change in non-cash working capital
25
1.0

 
(65.4
)
 
(34.3
)
 
(52.2
)
 
 
 
118.3

 
(98.7
)
 
(103.0
)
 
53.9

 
Impact of foreign currency on cash balances
 
-

 
1.7

 
1.0

 
4.4

 
INCREASE (DECREASE) IN CASH
 
9.6

 
22.1

 
(10.9
)
 
38.7

 
CASH AT BEGINNING OF PERIOD
 
4.2

 
20.6

 
24.7

 
4.0

 
CASH AT END OF PERIOD
 
13.8

 
42.7

 
13.8

 
42.7

 
See accompanying notes to the consolidated financial statements.

Supplementary Information:
Cash taxes paid
(0.1
)
 
-

 
(0.2
)
 
(0.1
)
 
Cash interest paid
(27.4
)
 
(22.1
)
 
(106.0
)
 
(88.6
)
 


CRESCENT POINT ENERGY CORP.
4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
September 30, 2016 (UNAUDITED)
1.
STRUCTURE OF THE BUSINESS
The principal undertaking of Crescent Point Energy Corp. (the “Company” or “Crescent Point”) is to carry on the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly owned subsidiaries.
Crescent Point is the ultimate parent and is amalgamated in Alberta, Canada under the Alberta Business Corporations Act. The address of the principal place of business is 2000, 585 - 8th Ave S.W., Calgary, Alberta, Canada, T2P 1G1.
These interim consolidated financial statements were approved and authorized for issue by the Company's Board of Directors on November 9, 2016.
2.
BASIS OF PREPARATION
These interim consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). These interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim consolidated financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting, and have been prepared following the same accounting policies as the annual consolidated financial statements for the year ended December 31, 2015. Certain information and disclosures included in the notes to the annual consolidated financial statements are condensed herein or are disclosed on an annual basis only. Accordingly, these interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2015.
The policies applied in these interim consolidated financial statements are based on IFRS issued and outstanding as of November 9, 2016, the date the Board of Directors approved the statements.
The Company’s presentation currency is Canadian dollars and all amounts reported are Canadian dollars unless noted otherwise. References to “US$” are to United States dollars. Crescent Point's operations are aggregated into one reportable segment based on the similar nature of products produced, production processes and economic characteristics between the Company's Canadian and U.S. operations.
3.
CHANGES IN ACCOUNTING POLICIES
In future accounting periods, the Company will adopt the following IFRS:
•
IFRS 15 Revenue from Contracts with Customers - IFRS 15 was issued in May 2014 and replaces IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. The standard is required to be adopted either retrospectively or using a modified transaction approach. In September 2015, the IASB amended IFRS 15, deferring the effective date of the standard by one year to annual periods beginning on or after January 1, 2018 with early adoption still permitted. IFRS 15 will be adopted by the Company on January 1, 2018 and the Company is currently evaluating the impact of the standard on the consolidated financial statements.
•
IFRS 9 Financial Instruments - IFRS 9 was amended in July 2014 to include guidance to assess and recognize impairment losses on financial assets based on an expected loss model. The amendments are effective for fiscal years beginning on or after January 1, 2018 with earlier adoption permitted. This amendment will be adopted by the Company on January 1, 2018 and the Company is currently evaluating the impact of the amendment on the consolidated financial statements.
•
IFRS 16 Leases - IFRS 16 was issued January 2016 and replaces IAS 17 Leases. The standard introduces a single lessee accounting model for leases with required recognition of assets and liabilities for most leases. The standard is effective for fiscal years beginning on or after January 1, 2019 with early adoption permitted if the Company is also applying IFRS 15 Revenue from Contracts with Customers. IFRS 16 will be adopted by the Company on January 1, 2019 and the Company is currently evaluating the impact of the standard on the consolidated financial statements.
4.
RECLAMATION FUND
The following table reconciles the reclamation fund:
($ millions)
September 30, 2016

 
December 31, 2015

 
Balance, beginning of period
49.5

 
47.8

 
Contributions
-

 
27.5

 
Acquired through capital acquisitions
-

 
1.3

 
Expenditures
(16.8
)
 
(27.1
)
 
Balance, end of period
32.7

 
49.5

 
Expected to be spent within one year
26.5

 
-

 
Expected to be spent beyond one year
6.2

 
49.5

 

CRESCENT POINT ENERGY CORP.
5

5.
LONG-TERM INVESTMENTS
($ millions)
September 30, 2016

 
December 31, 2015

 
Investments in public companies, beginning of period
22.8

 
21.0

 
Acquired through capital acquisitions
-

 
2.6

 
Dispositions
-

 
(1.3
)
 
Unrealized gain recognized in other income (loss)
6.0

 
0.5

 
Investments in public companies, end of period
28.8

 
22.8

 
Investments in private companies, beginning of period
7.5

 
28.9

 
Derecognized through capital acquisitions
-

 
(7.0
)
 
Unrealized loss recognized in other income (loss)
-

 
(14.4
)
 
Investment in private company, end of period
7.5

 
7.5

 
Long-term investments, end of period
36.3

 
30.3

 
a)
Public Companies
The Company holds common shares in publicly traded oil and gas companies. The investments are classified as financial assets at fair value through profit or loss and are fair valued with the resulting gain or loss recorded in net income. At September 30, 2016, the investments are recorded at a fair value of $28.8 million which is $18.3 million more than the original cost of the investments. At December 31, 2015, the investments were recorded at a fair value of $22.8 million which was $12.2 million more than the original cost of the investments.
b)
Private Company
The Company holds common shares in a private oil and gas company. The investment is classified as financial assets at fair value through profit or loss and is fair valued with the resulting gain or loss recorded in net income. At September 30, 2016 and December 31, 2015, the investment is recorded at a fair value of $7.5 million which is $17.5 million less than the original cost of the investment.
6.
OTHER LONG-TERM ASSETS
($ millions)
September 30, 2016

 
December 31, 2015

 
Reclamation fund
6.2

 
49.5

 
Other receivables
14.0

 
14.0

 
Other long-term assets
20.2

 
63.5

 
a)
Reclamation fund
See Note 4 - "Reclamation Fund" for additional information regarding the reclamation fund.
b)
Other receivables
At September 30, 2016, the Company had investment tax credits of $14.0 million (December 31, 2015 - $14.0 million).

CRESCENT POINT ENERGY CORP.
6

7.
EXPLORATION AND EVALUATION ASSETS
($ millions)
September 30, 2016

 
December 31, 2015

 
Exploration and evaluation assets at cost
2,041.3

 
1,961.0

 
Accumulated amortization
(1,544.2
)
 
(1,420.3
)
 
Net carrying amount
497.1

 
540.7

 
Reconciliation of movements during the period
 
 
 
 
Cost, beginning of period
1,961.0

 
1,789.8

 
Accumulated amortization, beginning of period
(1,420.3
)
 
(1,167.3
)
 
Net carrying amount, beginning of period
540.7

 
622.5

 
Net carrying amount, beginning of period
540.7

 
622.5

 
Acquisitions through business combinations, net
58.6

 
162.3

 
Additions
196.8

 
385.8

 
Dispositions
(0.4
)
 
-

 
Transfers to property, plant and equipment
(141.9
)
 
(470.6
)
 
Amortization
(143.3
)
 
(205.9
)
 
Foreign exchange
(13.4
)
 
46.6

 
Net carrying amount, end of period
497.1

 
540.7

 
Exploration and evaluation ("E&E") assets consist of the Company's undeveloped land and exploration projects which are pending the determination of technical feasibility. Additions represent the Company's share of the cost of E&E assets. At September 30, 2016, $497.1 million remains in E&E assets after $141.9 million was transferred to property, plant and equipment ("PP&E") following the determination of technical feasibility during the nine months ended September 30, 2016 (year ended December 31, 2015 - $540.7 million and $470.6 million, respectively).
8.
CAPITAL ACQUISITIONS AND DISPOSITIONS
If the material property acquisition outlined below under Major Property Acquisition had closed on January 1, 2016, Crescent Point's oil and gas sales and oil and gas sales less royalties, transportation and operating expenses for the nine months ended September 30, 2016 would have been approximately $1.8 billion and $948.7 million, respectively. This pro-forma information is not necessarily indicative of the results should the material property acquisition have actually occurred on January 1, 2016.
In the nine months ended September 30, 2016, the Company incurred $1.8 million (September 30, 2015 - $11.2 million) of transaction costs related to business combinations that were recorded as general and administrative expenses.
a) Major Property Acquisition
Southeast Saskatchewan Asset Acquisition
On July 4, 2016, Crescent Point completed the acquisition of assets in southeast Saskatchewan for cash consideration of $223.1 million ($183.6 million was allocated to PP&E and $58.1 million was allocated to E&E assets, including $18.6 million related to decommissioning liability). These assets were acquired with full tax pools and no working capital items.
Oil and gas sales and oil and gas sales less royalties, transportation and operating expenses from the acquisition date to September 30, 2016 includes $7.2 million and $2.8 million, respectively, attributable to this major property acquisition.
b) Minor Property Acquisitions and Dispositions
Crescent Point completed minor property acquisitions and dispositions during the nine months ended September 30, 2016 ($31.5 million was allocated to net disposed PP&E and $0.1 million was allocated to E&E assets, including $9.7 million related to net disposed decommissioning liability). These minor property acquisitions and dispositions were completed with full tax pools and no working capital items.

CRESCENT POINT ENERGY CORP.
7

9.
PROPERTY, PLANT AND EQUIPMENT
($ millions)
September 30, 2016

 
December 31, 2015

 
Development and production assets
24,489.5

 
23,677.4

 
Corporate assets
101.9

 
101.5

 
Property, plant and equipment at cost
24,591.4

 
23,778.9

 
Accumulated depletion, depreciation and impairment
(9,792.1
)
 
(8,825.2
)
 
Net carrying amount
14,799.3

 
14,953.7

 
Reconciliation of movements during the period
 
 
 
 
Development and production assets
 
 
 
 
Cost, beginning of period
23,677.4

 
19,891.5

 
Accumulated depletion and impairment, beginning of period
(8,795.5
)
 
(5,708.0
)
 
Net carrying amount, beginning of period
14,881.9

 
14,183.5

 
Net carrying amount, beginning of period
14,881.9

 
14,183.5

 
Acquisitions through business combinations, net
208.3

 
1,513.8

 
Additions
727.9

 
1,357.3

 
Dispositions
(56.2
)
 
(0.5
)
 
Transfers from exploration and evaluation assets
141.9

 
470.6

 
Depletion
(1,094.0
)
 
(1,538.5
)
 
Impairment
-

 
(1,385.3
)
 
Foreign exchange
(75.8
)
 
281.0

 
Net carrying amount, end of period
14,734.0

 
14,881.9

 
Cost, end of period
24,489.5

 
23,677.4

 
Accumulated depletion and impairment, end of period
(9,755.5
)
 
(8,795.5
)
 
Net carrying amount, end of period
14,734.0

 
14,881.9

 
Corporate assets
 
 
 
 
Cost, beginning of period
101.5

 
87.7

 
Accumulated depreciation, beginning of period
(29.7
)
 
(21.1
)
 
Net carrying amount, beginning of period
71.8

 
66.6

 
Net carrying amount, beginning of period
71.8

 
66.6

 
Additions
0.5

 
13.4

 
Depreciation
(6.9
)
 
(8.6
)
 
Foreign exchange
(0.1
)
 
0.4

 
Net carrying amount, end of period
65.3

 
71.8

 
Cost, end of period
101.9

 
101.5

 
Accumulated depreciation, end of period
(36.6
)
 
(29.7
)
 
Net carrying amount, end of period
65.3

 
71.8

 
At September 30, 2016, future development costs of $7.4 billion (December 31, 2015 - $7.2 billion) are included in costs subject to depletion.
Direct general and administrative costs capitalized by the Company during the nine months ended September 30, 2016 were $36.1 million (year ended December 31, 2015 - $46.9 million), including $11.4 million of share-based compensation costs (year ended December 31, 2015 - $16.9 million).

CRESCENT POINT ENERGY CORP.
8

10.
GOODWILL
At September 30, 2016, the Company had goodwill of $251.9 million (December 31, 2015 - $251.9 million). Goodwill has been assigned to the Canadian operating segment.
11.
LONG-TERM DEBT
The following table reconciles long-term debt:
($ millions)
September 30, 2016

 
December 31, 2015

 
Bank debt
1,696.0

 
2,171.4

 
Senior guaranteed notes (1)
2,103.5

 
2,280.6

 
Long-term debt
3,799.5

 
4,452.0

 
Long-term debt due within one year
88.5

 
72.0

 
Long-term debt due beyond one year
3,711.0

 
4,380.0

 
(1)
The Company entered into cross currency swaps and a foreign exchange swap concurrent with the issuance of the US senior guaranteed notes to fix the US dollar amount of the notes for the purpose of principal repayment at Canadian dollar notional amounts. At September 30, 2016, the total principal due on the maturity of the senior guaranteed notes is $1.74 billion (December 31, 2015 - $1.79 billion).
Bank Debt
The Company has combined credit facilities of $3.6 billion, including a $3.5 billion syndicated unsecured credit facility with sixteen banks and a $100.0 million unsecured operating credit facility with one Canadian chartered bank. The syndicated unsecured credit facility totals $3.5 billion until June 8, 2018, after which it reduces to thirteen banks and $3.08 billion through to a maturity date of June 10, 2019. The syndicated unsecured credit facility also includes an accordion feature that allows the Company to increase the facility by up to $500.0 million under certain conditions. The current maturity date of the unsecured operating credit facility is June 10, 2019. Both of these facilities constitute revolving credit facilities and are extendible annually.
The credit facilities bear interest at the applicable market rate plus a margin based on a sliding scale ratio of the Company's senior debt to earnings before interest, taxes, depletion, depreciation, amortization and impairment, adjusted for certain non-cash items including unrealized derivatives, unrealized foreign exchange, share-based compensation expense and accretion ("EBITDA").
The credit facilities and senior guaranteed notes have covenants which restrict the Company's ratio of senior debt to EBITDA to a maximum of 3.5:1.0, the ratio of total debt to EBITDA to a maximum of 4.0:1.0 and the ratio of senior debt to capital, adjusted for certain non-cash items as noted above, to a maximum of 0.55:1.0. The Company is in compliance with all debt covenants at September 30, 2016.
The Company had letters of credit in the amount of $8.5 million outstanding at September 30, 2016 (December 31, 2015 - $13.7 million).
The Company manages its credit facilities through a combination of bankers' acceptance loans, US dollar LIBOR loans and interest rate swaps.

CRESCENT POINT ENERGY CORP.
9

Senior Guaranteed Notes
The Company has closed private offerings of senior guaranteed notes raising total gross proceeds of US$1.45 billion and Cdn$197.0 million. The notes are unsecured and rank pari passu with the Company's bank credit facilities and carry a bullet repayment on maturity. The senior guaranteed notes have financial covenants similar to those of the combined credit facilities described above. The terms, rates, amounts due on maturity and carrying amounts of the Company's outstanding senior guaranteed notes are detailed below:
Principal
($ millions)
Coupon Rate

Principal Due on Maturity (1)
(Cdn$ millions)

Interest Payment Dates
Maturity Date
Financial statement carrying value
September 30, 2016

 
December 31, 2015

 
US$52.0
3.93
%
-

October 14 and April 14
April 14, 2016
-

 
72.0

 
US$67.5
5.48
%
68.9

September 24 and March 24
March 24, 2017
88.5

 
93.3

 
US$31.0
4.58
%
29.9

October 14 and April 14
April 14, 2018
40.7

 
42.9

 
US$20.0
2.65
%
20.4

December 12 and June 12
June 12, 2018
26.2

 
27.7

 
Cdn$7.0
4.29
%
7.0

November 22 and May 22
May 22, 2019
7.0

 
7.0

 
US$68.0
3.39
%
66.7

November 22 and May 22
May 22, 2019
89.2

 
94.1

 
US$155.0
6.03
%
158.3

September 24 and March 24
March 24, 2020
203.3

 
214.5

 
Cdn$50.0
5.53
%
50.0

October 14 and April 14
April 14, 2021
50.0

 
50.0

 
US$82.0
5.13
%
79.0

October 14 and April 14
April 14, 2021
107.6

 
113.5

 
US$52.5
3.29
%
56.3

December 20 and June 20
June 20, 2021
68.9

 
72.7

 
Cdn$25.0
4.76
%
25.0

November 22 and May 22
May 22, 2022
25.0

 
25.0

 
US$200.0
4.00
%
199.1

November 22 and May 22
May 22, 2022
262.3

 
276.8

 
Cdn$10.0
4.11
%
10.0

December 12 and June 12
June 12, 2023
10.0

 
10.0

 
US$270.0
3.78
%
274.7

December 12 and June 12
June 12, 2023
354.2

 
373.7

 
Cdn$40.0
3.85
%
40.0

December 20 and June 20
June 20, 2024
40.0

 
40.0

 
US$257.5
3.75
%
276.4

December 20 and June 20
June 20, 2024
337.8

 
356.4

 
Cdn$65.0
3.94
%
65.0

October 22 and April 22
April 22, 2025
65.0

 
65.0

 
US$230.0
4.08
%
291.1

October 22 and April 22
April 22, 2025
301.6

 
318.3

 
US$20.0
4.18
%
25.3

October 22 and April 22
April 22, 2027
26.2

 
27.7

 
Senior guaranteed notes
1,743.1

 
 
2,103.5

 
2,280.6

 
Senior guaranteed notes due within one year
88.5

 
72.0

 
Senior guaranteed notes due beyond one year
2,015.0

 
2,208.6

 
(1)
Includes underlying derivatives which manage the Company's foreign exchange exposure on its US dollar senior guaranteed notes. The Company considers this to be the economic amount due at maturity instead of the financial statement carrying amount.
Concurrent with the issuance of US$1.42 billion senior guaranteed notes, the Company entered into cross currency swaps ("CCS") to manage the Company's foreign exchange risk. The CCS fix the US dollar amount of the notes for purposes of interest and principal repayments at a notional amount of $1.51 billion. Concurrent with the issuance of US$30.0 million senior guaranteed notes, the Company entered a foreign exchange swap which fixed the principal repayment at a notional amount of $32.2 million. See additional information in Note 22 - “Financial Instruments and Derivatives”.
12.
OTHER LONG-TERM LIABILITIES
($ millions)
September 30, 2016

 
December 31, 2015

 
Lease inducement (1)
44.5

 
47.2

 
Long-term compensation liability (2)
3.1

 
2.5

 
Other long-term liability (3)
7.3

 
6.6

 
Other long-term liabilities
54.9

 
56.3

 
(1)
The Company's lease inducement is associated with the building lease for Crescent Point's corporate office. This non-cash liability is amortized on a straight-line basis over the term of the lease to June 2030.
(2)
Long-term compensation liability relates to the Deferred Share Plan ("DSU"). See additional information in Note 20 - "Share-based Compensation".
(3)
Other long-term liability is related to the estimated unrecoverable portion of a building lease acquired through capital acquisitions.

CRESCENT POINT ENERGY CORP.
10

13.
DECOMMISSIONING LIABILITY
Upon retirement of its oil and gas assets, the Company anticipates substantial costs associated with decommissioning. The estimated cash flows have been discounted using an average risk free rate of approximately 1.75 percent and an inflation rate of 2 percent (December 31, 2015 - approximately 2.25 percent and 2 percent, respectively).
The following table reconciles the decommissioning liability:
($ millions)
September 30, 2016

 
December 31, 2015

 
Decommissioning liability, beginning of period
1,255.4

 
1,023.4

 
Liabilities incurred
24.8

 
57.0

 
Liabilities acquired through capital acquisitions
19.6

 
81.3

 
Liabilities disposed through capital dispositions
(10.7
)
 
(1.2
)
 
Liabilities settled
(9.5
)
 
(15.8
)
 
Revaluation of acquired decommissioning liabilities (1)
28.3

 
111.1

 
Change in estimated future costs
-

 
(14.5
)
 
Change in discount rate
104.3

 
(11.0
)
 
Accretion expense
19.7

 
25.1

 
Decommissioning liability, end of period
1,431.9

 
1,255.4

 
Expected to be incurred within one year
26.5

 
32.4

 
Expected to be incurred beyond one year
1,405.4

 
1,223.0

 
(1)
These amounts relate to the revaluation of acquired decommissioning liabilities at the end of the period using a risk-free discount rate. At the date of acquisition, acquired decommissioning liabilities are fair valued.
14.
SHAREHOLDERS' CAPITAL
Crescent Point has an unlimited number of common shares authorized for issuance.
 
September 30, 2016
 
 
December 31, 2015
 
 


Number of
shares

 
Amount
($ millions)

 
Number of
shares

 
Amount
($ millions)

 
Common shares, beginning of period
504,935,930

 
15,929.7

 
446,510,210

 
14,373.5

 
Issued for cash
33,700,000

 
650.4

 
23,160,000

 
660.1

 
Issued on capital acquisitions
890,648

 
17.7

 
22,548,758

 
541.9

 
Issued on redemption of restricted shares (1)
1,853,085

 
48.4

 
2,459,867

 
92.5

 
Issued pursuant to DRIP (2) and SDP (3)
-

 
-

 
10,257,095

 
261.7

 
Common shares, end of period
541,379,663

 
16,646.2

 
504,935,930

 
15,929.7

 
Cumulative share issue costs, net of tax
-

 
(255.6
)
 
-

 
(236.5
)
 
Total shareholders’ capital, end of period
541,379,663

 
16,390.6

 
504,935,930

 
15,693.2

 
(1)
The amount of shares issued on redemption of restricted shares is net of any employee withholding taxes.
(2)
Premium Dividend TM and Dividend Reinvestment Plan.
(3)
Share Dividend Plan.
15.
DEFICIT
($ millions)
September 30, 2016

 
December 31, 2015

 
Accumulated earnings
270.9

 
693.0

 
Accumulated gain on shares issued pursuant to DRIP (1) and SDP (2)
8.4

 
8.4

 
Accumulated tax effect on redemption of restricted shares
10.1

 
9.9

 
Accumulated dividends
(7,161.7
)
 
(6,950.6
)
 
Deficit
(6,872.3
)
 
(6,239.3
)
 
(1)
Premium Dividend TM and Dividend Reinvestment Plan.
(2)
Share Dividend Plan.

CRESCENT POINT ENERGY CORP.
11

16.
CAPITAL MANAGEMENT
The Company’s capital structure is comprised of shareholders’ equity, long-term debt and working capital. The balance of each of these items is as follows:
($ millions)
September 30, 2016

 
December 31, 2015

 
Long-term debt
3,799.5

 
4,452.0

 
Working capital deficiency (1)
194.2

 
342.8

 
Unrealized foreign exchange on translation of hedged US dollar long-term debt
(376.5
)
 
(531.2
)
 
Net debt
3,617.2

 
4,263.6

 
Shareholders’ equity
10,092.8

 
10,125.0

 
Total capitalization
13,710.0

 
14,388.6

 
(1)
Working capital deficiency is calculated as accounts payable and accrued liabilities plus dividends payable, less cash, accounts receivable, prepaids and deposits and long-term investments.
Crescent Point's objective for managing capital is to maintain a strong balance sheet and capital base to provide financial flexibility, position the Company to fund future development projects and pay dividends. The Company seeks to maximize stakeholder value through its total return strategy of long-term growth plus dividend income.
Crescent Point manages and monitors its capital structure and short-term financing requirements using a measure not defined in IFRS, the ratio of net debt to funds flow from operations. Net debt is calculated as long-term debt plus accounts payable and accrued liabilities and dividends payable, less cash, accounts receivable, prepaids and deposits and long-term investments, excluding the unrealized foreign exchange on translation of hedged US dollar long-term debt. Funds flow from operations is calculated as cash flow from operating activities before changes in non-cash working capital, transaction costs and decommissioning expenditures. Net debt to funds flow from operations is used to measure the Company's overall debt position and to measure the strength of the Company's balance sheet. Crescent Point's objective is to manage this metric to be well positioned to pay monthly dividends and to continue to exploit and develop its resource plays. Crescent Point monitors this ratio and uses this as a key measure in making decisions regarding financing, capital spending and dividend levels. The Company's net debt to funds flow from operations ratio at September 30, 2016 was 2.2 times (December 31, 2015 - 2.2 times). The funds flow from operations only reflects funds flow from operations generated on acquired properties since the closing date of the acquisitions.
Crescent Point strives to fund its capital expenditures, decommissioning expenditures and dividends over time by managing risks associated with the oil and gas industry. To accomplish this, the Company maintains a conservative balance sheet with significant unutilized lines of credit, manages its exposure to fluctuating interest rates and foreign exchange rates on its long-term debt, and actively hedges commodity prices using a 3½ year risk management program. Unless otherwise approved by the Board of Directors, the Company can hedge benchmark prices on up to 65 percent of after royalty volumes using a portfolio of swaps, collars and put option instruments and can hedge price differentials on up to 35 percent of after royalty volumes using a combination of financial derivatives and fixed differential physical contracts. See Note 22 - "Financial Instruments and Derivatives" for additional information regarding the Company's derivative contracts.
Crescent Point is subject to certain financial covenants on its credit facility and senior guaranteed notes agreements and is in compliance with all financial covenants as at September 30, 2016. See Note 11 - "Long-term Debt" for additional information regarding the Company's financial covenant requirements.
17.
DERIVATIVE GAINS (LOSSES)
 
Three months ended September 30
 
 
 Nine months ended September 30
 
 
($ millions)
2016

 
2015

 
2016

 
2015

 
Realized gains
87.9

 
173.8

 
416.0

 
453.1

 
Unrealized gains (losses)
(31.7
)
 
443.1

 
(568.1
)
 
130.6

 
Derivative gains (losses)
56.2

 
616.9

 
(152.1
)
 
583.7

 
18.
OTHER INCOME (LOSS)
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
($ millions)
2016

 
2015

 
2016

 
2015

 
Unrealized gain (loss) on long-term investments
1.1

 
(19.2
)
 
6.0

 
(8.7
)
 
Gain (loss) on capital acquisitions / dispositions
(15.3
)
 
12.5

 
(15.3
)
 
18.8

 
Gain on sale of long-term investments
-

 
-

 
-

 
0.7

 
Other gain
0.4

 
0.2

 
3.2

 
0.2

 
Other income (loss)
(13.8
)
 
(6.5
)
 
(6.1
)
 
11.0

 

CRESCENT POINT ENERGY CORP.
12

19.
FOREIGN EXCHANGE GAIN (LOSS)
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
($ millions)
2016

 
2015

 
2016

 
2015

 
Realized gain (loss)
 
 
 
 
 
 
 
 
CCS - US dollar interest payments
1.6

 
1.7

 
4.9

 
4.1

 
CCS - US dollar debt maturities
10.5

 
-

 
1.5

 
8.6

 
US dollar debt maturities
(10.5
)
 
-

 
(5.3
)
 
(8.6
)
 
Other
-

 
(0.1
)
 
(4.3
)
 
0.3

 
Unrealized gain (loss)
 
 
 
 
 
 
 
 
Translation of US dollar long-term debt
(25.5
)
 
(170.0
)
 
172.1

 
(269.7
)
 
Other
(0.2
)
 
(0.9
)
 
0.9

 
(2.0
)
 
Foreign exchange gain (loss)
(24.1
)
 
(169.3
)
 
169.8

 
(267.3
)
 
20.
SHARE-BASED COMPENSATION
Restricted Share Bonus Plan
The Company has a Restricted Share Bonus Plan pursuant to which the Company may grant restricted shares to directors, officers, employees and consultants. The restricted shares vest on terms up to three years from the grant date as determined by the Board of Directors.
Deferred Share Unit Plan
The Company has a DSU plan for directors. Each DSU vests on the date of the grant, however, the settlement of the DSU occurs following a change of control or when the individual ceases to be a director of the Company. DSUs are settled in cash based on the prevailing Crescent Point share price.
The following table reconciles the number of restricted shares and DSUs for the nine months ended September 30, 2016:
 
Restricted Shares

 
Deferred Share Units

 
Balance, beginning of period
3,960,363

 
153,283

 
Granted
3,483,111

 
25,166

 
Redeemed
(1,907,677
)
 
-

 
Forfeited
(378,497
)
 
-

 
Balance, end of period
5,157,300

 
178,449

 
The following table reconciles the number of restricted shares and DSUs for the year ended December 31, 2015:
 
Restricted Shares

 
Deferred Share Units

 
Balance, beginning of year
3,648,565

 
84,396

 
Granted
3,024,854

 
68,887

 
Redeemed
(2,517,661
)
 
-

 
Forfeited
(195,395
)
 
-

 
Balance, end of year
3,960,363

 
153,283

 
For the nine months ended September 30, 2016, the Company calculated total share-based compensation of $57.4 million (September 30, 2015 - $60.8 million), net of estimated forfeitures, of which $11.4 million was capitalized (September 30, 2015 - $13.7 million).
21.
PER SHARE AMOUNTS
The following table summarizes the weighted average shares used in calculating net income per share:
 
Three months ended September 30
 
 
 Nine months ended September 30
 
 
 
2016

 
2015

 
2016

 
2015

 
Weighted average shares – basic
511,348,931

 
501,291,182

 
507,808,131

 
469,269,078

 
Dilutive impact of restricted shares
-

 
-

 
-

 
-

 
Weighted average shares – diluted (1)
511,348,931

 
501,291,182

 
507,808,131

 
469,269,078

 
(1)
Excludes the impact of 2,668,547 and 2,667,550 weighted average shares related to restricted shares that were anti-dilutive for the three and nine months ended September 30, 2016, respectively (September 30, 2015 - 672,185 and 1,561,322, respectively).

CRESCENT POINT ENERGY CORP.
13

22.
FINANCIAL INSTRUMENTS AND DERIVATIVES
The Company's financial assets and liabilities are comprised of cash, accounts receivable, long-term investments, reclamation fund, derivative assets and liabilities, accounts payable and accrued liabilities, dividends payable and long-term debt.
Crescent Point's derivative assets and liabilities are transacted in active markets. Crescent Point's long-term investments are transacted in active and non-active markets. The Company classifies the fair value of these transactions according to the following fair value hierarchy based on the amount of observable inputs used to value the instrument:
•
Level 1 - Values are based on unadjusted quoted prices available in active markets for identical assets or liabilities as of the reporting date.
•
Level 2 - Values are based on inputs, including quoted forward prices for commodities, time value and volatility factors, which can be substantially observed or corroborated in the marketplace. Prices in Level 2 are either directly or indirectly observable as of the reporting date.
•
Level 3 - Values are based on prices or valuation techniques that are not based on observable market data.
Accordingly, Crescent Point's derivative assets and liabilities are classified as Level 2. Long-term investments are classified as Level 1, Level 2 or Level 3 depending on the valuation methods and inputs used and whether the applicable company is publicly traded or private. Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement within the fair value hierarchy.
Crescent Point's valuation of the investment in a private company is based primarily on recent trading activity in the relevant company's common shares. The Company's finance department is responsible for performing the valuation of financial instruments, including the calculation of Level 3 fair values.
Discussions of the fair values and risks associated with financial assets and liabilities, as well as summarized information related to derivative positions are detailed below:
a) Carrying Amount and Fair Value of Financial Instruments
The fair value of cash, accounts receivable, reclamation fund, accounts payable and accrued liabilities and dividends payable approximate their carrying amount due to the short-term nature of those instruments. The fair value of the amounts drawn on bank credit facilities is equal to its carrying amount as the facilities bear interest at floating rates and credit spreads that are indicative of market rates. These financial instruments are classified as financial assets and liabilities at amortized cost and are reported at amortized cost.
The following table summarizes the carrying value of the Company's remaining financial assets and liabilities as compared to their respective fair values as of September 30, 2016:
 
September 30, 2016 Carrying Value

 
September 30, 2016 Fair Value

 
Quoted prices in active markets for identical assets
(Level 1)

 
Significant other observable inputs
(Level 2)

 
Significant unobservable inputs
 (Level 3)
 
($ millions)
 
 
 
Financial assets
 
 
 
 
 
 
 
 
 
 
Derivatives
466.3

 
466.3

 
-

 
466.3

 
-
 
Long-term investments (1)
36.3

 
36.3

 
28.8

 
7.5

 
-
 
 
502.6

 
502.6

 
28.8

 
473.8

 
-
 
Financial liabilities
 
 
 
 
 
 
 
 
 
 
Derivatives
5.9

 
5.9

 
-

 
5.9

 
-
 
Senior guaranteed notes (2)
2,103.5

 
2,092.1

 
-

 
2,092.1

 
-
 
 
2,109.4

 
2,098.0

 
-

 
2,098.0

 
-
 
(1)
Long-term investments are comprised of equity securities in public and private oil and gas companies.
(2)
The senior guaranteed notes are classified as financial liabilities at amortized cost and are reported at amortized cost. The notes denominated in US dollars are translated to Canadian dollars at the period end exchange rate. The fair value of the notes is calculated based on current interest rates and is not recorded in the financial statements.

CRESCENT POINT ENERGY CORP.
14

The following table summarizes the carrying value of the Company's remaining financial assets and liabilities as compared to their respective fair values as of December 31, 2015:
 
December 31, 2015 Carrying Value

 
December 31, 2015 Fair Value

 
Quoted prices in active markets for identical assets
(Level 1)

 
Significant other observable inputs
(Level 2)

 
Significant unobservable inputs
(Level 3)
 
($ millions)
 
 
 
Financial assets
 
 
 
 
 
 
 
 
 
 
Derivatives
1,030.6

 
1,030.6

 
-

 
1,030.6

 
-
 
Long-term investments (1)
30.3

 
30.3

 
22.8

 
7.5

 
-
 
 
1,060.9

 
1,060.9

 
22.8

 
1,038.1

 
-
 
Financial liabilities
 
 
 
 
 
 
 
 
 
 
Derivatives
2.1

 
2.1

 
-

 
2.1

 
-
 
Senior guaranteed notes (2)
2,280.6

 
2,302.1

 
-

 
2,302.1

 
-
 
 
2,282.7

 
2,304.2

 
-

 
2,304.2

 
-
 
(1)
Long-term investments are comprised of equity securities in public and private oil and gas companies.
(2)
The senior guaranteed notes are classified as financial liabilities at amortized cost and are reported at amortized cost. The notes denominated in US dollars are translated to Canadian dollars at the period end exchange rate. The fair value of the notes is calculated based on current interest rates and is not recorded in the financial statements.
Derivative assets and liabilities
Derivative assets and liabilities arise from the use of derivative contracts. The Company's derivative financial instruments are classified as fair value through profit or loss and are reported at fair value with changes in fair value recorded in net income.
The following table summarizes the fair value as at September 30, 2016 and the change in fair value for the nine months ended September 30, 2016:
($ millions)
Commodity contracts (1)

 
Interest contracts

 
CCS
contracts

 
Foreign exchange contracts

 
Total

 
Derivative assets / (liabilities), beginning of period
527.3

 
(0.4
)
 
493.7

 
7.9

 
1,028.5

 
Unrealized change in fair value
(434.4
)
 
(2.4
)
 
(130.1
)
 
(1.2
)
 
(568.1
)
 
Derivative assets / (liabilities), end of period
92.9

 
(2.8
)
 
363.6

 
6.7

 
460.4

 
Derivative assets, end of period
96.0

 
-

 
363.6

 
6.7

 
466.3

 
Derivative liabilities, end of period
(3.1
)
 
(2.8
)
 
-

 
-

 
(5.9
)
 
(1)
Includes oil, gas and power contracts.
The following table summarizes the fair value as at December 31, 2015 and the change in fair value for the year ended December 31, 2015:
($ millions)
Commodity contracts (1)

 
Interest contracts

 
CCS
contracts

 
Foreign exchange contracts

 
Total

 
Derivative assets / (liabilities), beginning of year
639.6

 
(2.2
)
 
160.6

 
2.4

 
800.4

 
Unrealized change in fair value
(112.3
)
 
1.8

 
333.1

 
5.5

 
228.1

 
Derivative assets / (liabilities), end of year
527.3

 
(0.4
)
 
493.7

 
7.9

 
1,028.5

 
Derivative assets, end of year
528.0

 
1.0

 
493.7

 
7.9

 
1,030.6

 
Derivative liabilities, end of year
(0.7
)
 
(1.4
)
 
-

 
-

 
(2.1
)
 
(1)
Includes oil, gas and power contracts.

CRESCENT POINT ENERGY CORP.
15

Offsetting Financial Assets and Liabilities
Financial assets and liabilities are only offset if the Company has the legal right to offset and intends to settle on a net basis or settle the asset and liability simultaneously. The Company offsets derivative assets and liabilities when the counterparty, commodity, currency and timing of settlement are the same. The following table summarizes the gross asset and liability positions of the Company's financial derivatives by contract that are offset on the balance sheet as at September 30, 2016 and December 31, 2015:
 
September 30, 2016
 
 
December 31, 2015
 
 
($ millions)
Asset

 
Liability

 
Net

 
Asset

 
Liability

 
Net

 
Gross amount
479.9

 
(19.5
)
 
460.4

 
1,029.7

 
(1.2
)
 
1,028.5

 
Amount offset
(13.6
)
 
13.6

 
-

 
0.9

 
(0.9
)
 
-

 
Net amount
466.3

 
(5.9
)
 
460.4

 
1,030.6

 
(2.1
)
 
1,028.5

 
b)
Risks Associated with Financial Assets and Liabilities
The Company is exposed to financial risks from its financial assets and liabilities. The financial risks include market risk relating to commodity prices, interest rates and foreign exchange rates as well as credit and liquidity risk.
Market Risk
Market risk is the risk that the fair value or future cash flows of a derivative will fluctuate because of changes in market prices. Market risk is comprised of commodity price risk, interest rate risk and foreign exchange risk as discussed below.
Commodity Price Risk
The Company is exposed to commodity price risk on crude oil and natural gas revenues as well as power on electricity consumption. As a means to mitigate the exposure to commodity price volatility, the Company has entered into various derivative agreements and physical contracts. The use of derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors.
Crude oil - To partially mitigate exposure to crude oil commodity price risk, the Company enters into option contracts and swaps to manage the Cdn$ WTI price fluctuations. The Company also enters physical delivery and derivative WTI price differential contracts which manage the spread between US$ WTI and various stream prices. The Company manages physical delivery contracts on a month-to-month spot and on a term contract basis. As at September 30, 2016, Crescent Point had committed, on a term contract basis, to deliver an average of approximately 22,500 bbl/d of crude oil from October 2016 to December 2016, approximately 9,500 bbl/d of crude oil for calendar 2017, 4,500 bbl/d of crude oil for calendar 2018 and 2019 and 3,000 bbl/d of crude oil for calendar 2020 and 2021.
Natural gas - To partially mitigate exposure to natural gas commodity price risk, the Company enters into AECO natural gas swaps, which manage the AECO natural gas price fluctuations.
Power - To partially mitigate exposure to electricity price changes, the Company enters into swaps or fixed price physical delivery contracts which fix the power price.
The following table summarizes the sensitivity of the fair value of the Company's derivative positions as at September 30, 2016 and September 30, 2015 to fluctuations in commodity prices or differentials, with all other variables held constant. When assessing the potential impact of these commodity price or differential changes, the Company believes a 10 percent near-term volatility is a reasonable measure. Fluctuations in commodity prices or differentials potentially would have resulted in unrealized gains (losses) impacting income before tax as follows:
 
Impact on Income Before Tax
 
 
Impact on Income Before Tax
 
 
($ millions)
Three and nine months ended September 30, 2016
 
 
Three and nine months ended September 30, 2015
 
 
 
Increase 10%

 
Decrease 10%

 
Increase 10%

 
Decrease 10%

 
Commodity price
 
 
 
 
 
 
 
 
Crude oil
(84.0
)
 
81.0

 
(186.4
)
 
186.4

 
Natural gas
(9.0
)
 
9.0

 
(5.7
)
 
5.7

 
Power
0.1

 
(0.1
)
 
0.2

 
(0.2
)
 
Differential
 
 
 
 
 
 
 
 
Crude oil
0.3

 
(0.3
)
 
-

 
-

 
Interest Rate Risk
The Company is exposed to interest rate risk on bank credit facilities to the extent of changes in market interest rates. Based on the Company's floating rate debt position at September 30, 2016, a one percent increase or decrease in the interest rate on floating rate debt would amount to an impact on income before tax of $3.2 million and $9.7 million in the three and nine months ended September 30, 2016, respectively.

CRESCENT POINT ENERGY CORP.
16

The Company partially mitigates its exposure to interest rate changes by entering into interest rate swap transactions. The following sensitivities show the resulting unrealized gains (losses) and the impact on income before tax of the respective changes in the applicable forward interest rates as at September 30, 2016 and September 30, 2015 with all other variables held constant:
 
Impact on Income Before Tax
 
 
Impact on Income Before Tax
 
 
($ millions)
Three and nine months ended September 30, 2016
 
 
Three and nine months ended September 30, 2015
 
 
Forward interest rates
Increase 10%

 
Decrease 10%

 
Increase 10%

 
Decrease 10%

 
Interest rate swaps
1.1

 
(1.1
)
 
1.8

 
(1.8
)
 
Foreign Exchange Risk
Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value or future cash flows of the Company's financial assets or liabilities. As the Company operates in Canada and the United States, fluctuations in the exchange rate between the US/Canadian dollars can have a significant effect on reported results. The Company is exposed to foreign exchange risk in relation to its US dollar denominated long-term debt, investment in U.S. subsidiaries and in relation to its crude oil sales. Crescent Point entered into various CCS and foreign exchange swaps to hedge its foreign exchange exposure on its US dollar denominated long-term debt.
The Company can partially mitigate its exposure to foreign exchange rate changes by entering into US dollar swaps. To partially mitigate the foreign exchange risk relating to crude oil sales, the Company has fixed crude oil contracts to settle in Cdn$ WTI.
The following sensitivities show the resulting unrealized gains (losses) and the impact on income before tax of the respective changes in the period end and applicable forward foreign exchange rates at September 30, 2016 and September 30, 2015 with all other variables held constant:
 
 
Impact on Income Before Tax
 
 
Impact on Income Before Tax
 
 
($ millions)
Exchange Rate
Three and nine months ended September 30, 2016
 
 
Three and nine months ended September 30, 2015
 
 
Cdn$ relative to US$
 
Increase 10%

 
Decrease 10%

 
Increase 10%

 
Decrease 10%

 
US dollar long-term debt
Period End
348.7

 
(348.7
)
 
276.7

 
(276.7
)
 
Cross currency swaps
Forward
(377.5
)
 
377.5

 
(304.7
)
 
304.7

 
Foreign exchange swaps
Forward
(8.3
)
 
8.3

 
(4.0
)
 
4.0

 
Credit Risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. A substantial portion of the Company's accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risks. The Company monitors the creditworthiness and concentration of credit with customers of its physical oil and gas sales. To mitigate credit risk associated with its physical sales portfolio, Crescent Point obtains financial assurances such as parental guarantees, letters of credit and third party credit insurance. Including these assurances, approximately 96% of the Company's oil and gas sales are with entities considered investment grade.
The Company is authorized to transact derivative contracts with counterparties rated A (or equivalent) or better, based on the lowest rating of the three ratings providers. Should one of the Company's financial counterparties be downgraded below the A rating limit, the Chief Financial Officer will advise the Audit Committee and provide recommendations to minimize the Company's credit risk to that counterparty. The maximum credit exposure associated with accounts receivable is the total carrying amount and the maximum exposure associated with the derivative instruments approximates their fair value.
Approximately 3 percent of the Company's accounts receivable balance at September 30, 2016 was outstanding for more than 90 days and the Company considers the entire balance to be collectible.

CRESCENT POINT ENERGY CORP.
17

Liquidity Risk
The timing of undiscounted cash outflows relating to the financial liabilities outstanding at September 30, 2016 is outlined in the table below:
($ millions)
1 year

 
2 to 3 years

 
4 to 5 years

 
More than 5 years

 
Total

 
Accounts payable and accrued liabilities
502.6

 
-

 
-

 
-

 
502.6

 
Dividends payable
16.2

 
-

 
-

 
-

 
16.2

 
Derivative liabilities (1)
2.9

 
1.8

 
0.6

 
-

 
5.3

 
Senior guaranteed notes (2)
147.9

 
275.6

 
471.0

 
1,345.0

 
2,239.5

 
Bank credit facilities (3)
66.8

 
1,803.9

 
-

 
-

 
1,870.7

 
(1)
These amounts exclude undiscounted cash outflows pursuant to the CCS and foreign exchange swap.
(2)
These amounts include the notional principal and interest payments pursuant to the related CCS and foreign exchange swap, which fix the amounts due in Canadian dollars.
(3)
These amounts include interest based on debt outstanding and interest rates effective as at September 30, 2016. The Company expects that the facilities will continue to be renewed and extended prior to their maturity dates.
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. The Company manages its liquidity risk through managing its capital structure and continuously monitoring forecast cash flows and available credit under existing banking arrangements as well as other potential sources of capital.
At September 30, 2016, the Company had available unused borrowing capacity on bank credit facilities of approximately $1.9 billion, including $8.5 million letters of credit drawn on the facility. Crescent Point believes it has sufficient liquidity to meet its foreseeable spending requirements.
c)
Derivative Contracts
The Company enters into fixed price oil, gas, power, interest rate, cross currency, foreign exchange and crude oil differential contracts to manage its exposure to fluctuations in the price of crude oil, gas, power, foreign exchange and interest on debt.
The following is a summary of the derivative contracts in place as at September 30, 2016:
Financial WTI Crude Oil Derivative Contracts – Canadian Dollar (1)
 
 
 
Swap
 
Collar
 
Three-way Collar
 
Term
Volume
(bbls/d)

 
Average Price
($/bbl)

 
Average
Sold
Call Price
($/bbl)

 
Average Bought
Put Price
($/bbl)

 
Average
Sold
Call Price
($/bbl)

 
Average Bought
Put Price
($/bbl)

 
Average
Sold
Put Price
($/bbl)

 
2016 October - December (2)
56,500

 
79.45

 
62.75

 
51.85

 
71.38

 
61.00

 
55.00

 
2017 (3)
24,751

 
71.27

 
-

 
-

 
82.34

 
62.05

 
55.53

 
(1)
The volumes and prices reported are the weighted average volumes and prices for the period.
(2)
Includes 2,500 bbls/d which can be extended at the option of the counterparty for calendar 2017 at an average swap price of $90.39/bbl.
(3)
Includes 4,000 bbls/d which can be extended at the option of the counterparty for the first half of 2018 at an average swap price of $86.16/bbl.
Financial WTI Crude Oil Differential Derivative Contracts – Canadian Dollar (1)
Term
 
Volume
(bbls/d)

 
Contract
 
Basis
 
Fixed Differential ($/bbl)

 
2016 October - December
 
2,000

 
Basis Swap
 
MSW
 
(4.04
)
 
2017
 
2,000

 
Basis Swap
 
MSW
 
(3.66
)
 
(1)
The volumes and prices reported are the weighted average volumes and prices for the period.
Financial AECO Natural Gas Derivative Contracts – Canadian Dollar (1)
Average Volume
(GJ/d)
 
Average Swap Price
($/GJ)
 
Term
 
2016 October - December
45,500
 
3.32
 
2017
36,836
 
3.09
 
2018
32,493
 
2.82
 
2019
19,948
 
2.71
 
(1)
The volumes and prices reported are the weighted average volumes and prices for the period.

CRESCENT POINT ENERGY CORP.
18

Financial Power Derivative Contracts – Canadian Dollar
 
Volume
(MW/h)
 
Fixed Rate
($/MW/h)
 
Term
Contract
 
2016 October - December
Swap
3.0
 
50.00
 
2017
Swap
3.0
 
52.50
 
Financial Interest Rate Derivative Contracts – Canadian Dollar
 
Notional Principal
($ millions)
 
Fixed Annual
Rate (%)
 
Term
Contract
 
 
October 2016 - September 2018
Swap
50.0
 
0.90
 
October 2016 - September 2018
Swap
50.0
 
0.87
 
October 2016 - August 2020
Swap
50.0
 
1.16
 
October 2016 - August 2020
Swap
50.0
 
1.16
 
October 2016 - August 2020
Swap
100.0
 
1.15
 
October 2016 - September 2020
Swap
50.0
 
1.14
 
October 2016 - September 2020
Swap
50.0
 
1.11
 
Financial Cross Currency Derivative Contracts
 
 
 
 
 
Term
Contract
Receive Notional Principal
(US$ millions)

 
Fixed Annual
Rate (US%)

 
Pay Notional Principal
(Cdn$ millions)

 
Fixed Annual
Rate (Cdn%)

 
October 2016
Swap
75.0

 
2.66

 
97.8

 
2.56

 
October 2016
Swap
100.0

 
2.66

 
130.4

 
2.52

 
October 2016
Swap
100.0

 
2.67

 
130.7

 
2.45

 
October 2016
Swap
200.0

 
2.67

 
261.2

 
2.45

 
October 2016
Swap
200.0

 
2.67

 
261.3

 
2.45

 
October 2016
Swap
150.0

 
2.71

 
193.4

 
2.64

 
October 2016
Swap
165.0

 
2.71

 
212.9

 
2.64

 
October 2016 - November 2016
Swap
100.0

 
2.71

 
130.2

 
2.57

 
October 2016 - November 2016
Swap
115.0

 
2.71

 
149.7

 
2.57

 
October 2016 - March 2017
Swap
67.5

 
5.48

 
68.9

 
5.89

 
October 2016 - April 2018
Swap
31.0

 
4.58

 
29.9

 
5.32

 
October 2016 - June 2018
Swap
20.0

 
2.65

 
20.4

 
3.52

 
October 2016 - May 2019
Swap
68.0

 
3.39

 
66.7

 
4.53

 
October 2016 - March 2020
Swap
155.0

 
6.03

 
158.3

 
6.45

 
October 2016 - April 2021
Swap
82.0

 
5.13

 
79.0

 
5.83

 
October 2016 - June 2021
Swap
52.5

 
3.29

 
56.3

 
3.59

 
October 2016 - May 2022
Swap
170.0

 
4.00

 
166.9

 
5.03

 
October 2016 - June 2023
Swap
270.0

 
3.78

 
274.7

 
4.32

 
October 2016 - June 2024
Swap
257.5

 
3.75

 
276.4

 
4.03

 
October 2016 - April 2025
Swap
230.0

 
4.08

 
291.1

 
4.13

 
October 2016 - April 2027
Swap
20.0

 
4.18

 
25.3

 
4.25

 
Financial Foreign Exchange Forward Derivative Contracts
 
 
 
 
Settlement Date
Contract
 
Receive Notional Principal
(US$ millions)

 
Pay Notional Principal
(Cdn$ millions)

 
October 2016
Swap
 
10.0

 
13.2

 
October 2016
Swap
 
10.0

 
13.1

 
November 2016
Swap
 
7.0

 
9.1

 
December 2016
Swap
 
7.0

 
9.1

 
May 2022
Swap
 
30.0

 
32.2

 

CRESCENT POINT ENERGY CORP.
19

23.
RELATED PARTY TRANSACTIONS
All related party transactions are recorded at the exchange amount.
During the three and nine months ended September 30, 2016, Crescent Point recorded $1.2 million and $4.7 million, respectively, (September 30, 2015 - $2.5 million and $6.5 million, respectively) of expenditures in the normal course of business to an oilfield services company of which a director of Crescent Point is a director and officer.
Crescent Point also recorded less than $0.1 million and $0.5 million, respectively, during the three and nine months ended September 30, 2016 (September 30, 2015 - $0.3 million and $1.0 million, respectively) of legal fees in the normal course of business to a law firm of which a director of Crescent Point is a partner.
24.
COMMITMENTS
At September 30, 2016, the Company had contractual obligations and commitments as follows:
($ millions)
 
1 year

 
2 to 3 years

 
4 to 5 years

 
More than 5 years

 
Total

 
Operating leases (building and vehicle leases) (1)
 
33.0

 
61.8

 
58.0

 
260.6

 
413.4

 
Transportation commitments
 
14.9

 
27.3

 
24.7

 
59.4

 
126.3

 
Total contractual commitments
 
47.9

 
89.1

 
82.7

 
320.0

 
539.7

 
(1)
Included in operating leases are recoveries of rent expense on office space the Company has subleased of $51.7 million.
At December 31, 2015, the Company had contractual obligations and commitments as follows:
($ millions)
 
1 year

 
2 to 3 years

 
4 to 5 years

 
More than 5 years

 
Total

 
Operating leases (building and vehicle leases) (1)
 
35.8

 
66.5

 
61.7

 
283.2

 
447.2

 
Transportation commitments
 
4.3

 
4.6

 
3.5

 
0.2

 
12.6

 
Total contractual commitments
 
40.1

 
71.1

 
65.2

 
283.4

 
459.8

 
(1)
Included in operating leases are recoveries of rent expense on office space the Company has subleased of $40.9 million.
25.
SUPPLEMENTAL DISCLOSURES
Cash Flow Statement Presentation
 
Three months ended September 30
 
 
Nine months ended September 30
 
 
($ millions)
2016

 
2015

 
2016

 
2015

 
Operating activities
 
 
 
 
 
 
 
 
Changes in non-cash working capital:
 
 
 
 
 
 
 
 
Accounts receivable
(7.8
)
 
57.2

 
53.2

 
138.6

 
Prepaids and deposits
0.8

 
1.2

 
(1.5
)
 
-

 
Accounts payable and accrued liabilities
(26.9
)
 
9.3

 
(105.1
)
 
(121.1
)
 
Other long-term liabilities
-

 
0.9

 
-

 
0.8

 
 
(33.9
)
 
68.6

 
(53.4
)
 
18.3

 
Investing activities
 
 
 
 
 
 
 
 
Changes in non-cash working capital:
 
 
 
 
 
 
 
 
Accounts receivable
(2.2
)
 
(14.2
)
 
3.6

 
4.0

 
Accounts payable and accrued liabilities
83.9

 
(75.5
)
 
(49.2
)
 
(204.6
)
 
 
81.7

 
(89.7
)
 
(45.6
)
 
(200.6
)
 
Financing activities
 
 
 
 
 
 
 
 
Changes in non-cash working capital:
 
 
 
 
 
 
 
 
Dividends payable
1.0

 
(65.4
)
 
(34.3
)
 
(52.2
)
 

CRESCENT POINT ENERGY CORP.
20

 
Three months ended September 30
 
 
Nine months ended September 30
 
 
($ millions)
2016

 
2015

 
2016

 
2015

 
Other
 
 
 
 
 
 
 
 
Non-cash lease inducement
(0.9
)
 
(0.9
)
 
(2.7
)
 
5.1

 
Other long-term liability
0.5

 
1.4

 
(0.8
)
 
1.4

 
 
(0.4
)
 
0.5

 
(3.5
)
 
6.5

 
26.
GEOGRAPHICAL DISCLOSURE
As at September 30, 2016, Crescent Point's non-current assets related to the U.S. foreign operations is $2.0 billion (December 31, 2015 - $2.1 billion). For the three and nine months ended September 30, 2016, Crescent Point's oil and gas revenue related to the U.S. foreign operations is $55.4 million and $154.7 million, respectively (September 30, 2015 - $69.8 million and $210.4 million, respectively).

CRESCENT POINT ENERGY CORP.
21

Directors
Peter Bannister, Chairman (1) (3)
Rene Amirault (4) (5)
Laura Cillis (1) (2) (4)
Hugh Gillard (1) (2) (5)
Robert Heinemann (2) (3) (4)
Mike Jackson
Barbara Munroe (2) (5)
Gerald Romanzin (1) (3)
Scott Saxberg (4)
Greg Turnbull (3) (5)
(1) Member of the Audit Committee of the Board of Directors
(2) Member of the Compensation Committee of the Board of Directors
(3) Member of the Reserves Committee of the Board of Directors
(4) Member of the Environmental, Health & Safety Committee of the Board of Directors
(5) Member of the Corporate Governance and Nominating Committee
Officers
Scott Saxberg
President and Chief Executive Officer
Ken Lamont
Chief Financial Officer
Neil Smith
Chief Operating Officer
Tamara MacDonald
Sr. Vice President, Corporate and Business Development
Trent Stangl
Sr. Vice President, Investor Relations and Communications
Brad Borggard
Vice President, Corporate Planning
Derek Christie
Vice President, Exploration and Geosciences
Mark Eade
Vice President, General Counsel and Corporate Secretary
Ryan Gritzfeldt
Vice President, Marketing and Innovation
Steve Toews
Vice President, Engineering and Operations
Head Office
Suite 2000, 585 - 8th Avenue S.W.
Calgary, Alberta T2P 1G1
Tel: (403) 693-0020
Fax: (403) 693-0070
Toll Free: (888) 693-0020
Banker
The Bank of Nova Scotia
Calgary, Alberta
 
Auditor
PricewaterhouseCoopers LLP
Calgary, Alberta
Legal Counsel
Norton Rose Fulbright Canada LLP
Calgary, Alberta
Evaluation Engineers
GLJ Petroleum Consultants Ltd.
Calgary, Alberta
Sproule Associates Ltd.
Calgary, Alberta
Registrar and Transfer Agent
Investors are encouraged to contact Crescent Point's Registrar and Transfer Agent for information regarding their security holdings:
Computershare Trust Company of Canada
600, 530 - 8th Avenue S.W.
Calgary, Alberta T2P 3S8
Tel: (403) 267-6800
Stock Exchanges
Toronto Stock Exchange - TSX
New York Stock Exchange - NYSE
Stock Symbol
CPG
Investor Contacts
Scott Saxberg
President and Chief Executive Officer
(403) 693-0020
Ken Lamont
Chief Financial Officer
(403) 693-0020
Trent Stangl
Sr. Vice President, Investor Relations and Communications
(403) 693-0020
 
CRESCENT POINT ENERGY CORP.
22