Crescent Point Energy shut-in certain higher cost production during the second quarter to preserve value and enhance its financial flexibility. The company鈥檚 reactivation plan is now complete, and all economic production has been brought back on-line, representing the majority of volumes previously shut-in.
Crescent Point鈥檚 annual average production guidance is now forecast to be 119,000 to 121,000 barrels of oil equivalent a day (boe/d), approximately 20 per cent higher in comparison to its previous guidance. Crescent Point's 2020 capital expenditures are now expected to be approximately $665 million, in line with the lower end of its prior guidance range of $650 to $700 million.
As a result, the company expects to generate approximately $125 million of excess funds flow during the second half of 2020, based on guidance at current strip prices, which it plans to allocate to continued net debt reduction.
"Our process to shut-in and reactivate economic production demonstrates our continued focus on returns in a disciplined manner. We expect to generate excess cash flow in the current price environment and have further increased our downside protection through our strong hedging portfolio. We have also enhanced our sustainability in a low price environment through both ongoing improvements to our cost structure and the expected moderation in our decline rate,鈥� said Craig Bryksa, President and CEO.
Based on preliminary work done on its 2021 program and current market expectations, Crescent Point anticipates being able to generate annual average production in 2021 that is in line with, or exceeds, its estimated second half 2020 production while spending approximately $500 to $550 million in development capital. The company continues to work through its plans for 2021 and expects to formalize its annual guidance early in the new year.
This 2021 preliminary program is expected to be fully funded in the low US$40 a barrel WTI range and generate excess cash flow at current strip prices. The company also retains flexibility and discretion to adjust spending in the event of lower commodity prices. Crescent Point will continue to focus on its key value drivers of disciplined capital allocation, cost efficiencies and balance sheet strength.
