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Good morning, ladies and gentlemen. My name is Grace, and I will be the conference operator for Crescent Point Energy First Quarter 2018 Conference Call. This conference call is being recorded today and will be webcast along with the slide deck, which can be found on Crescent Point's website at www.crescentpointenergy.com by clicking on Invest and Conference Calls and Webcasts. The webcast may not be recorded or rebroadcast without the express consent of Crescent Point Energy. All amounts discussed today are in Canadian dollars unless otherwise stated. The complete financial statements and management's discussion and analysis for the period ending March 31, 2018, were announced this morning and are available on Crescent Point's website and on the SEDAR and EDGAR websites. [Operator Instructions]During the call, management may make projections or other forward-looking statements regarding future events or future financial performance. Actual performance, events or results may differ materially. Additional information or factors that could [ cause/affect ] Crescent Point's operation or financial results are included in Crescent Point's most recent annual information form, which may be accessed through Crescent Point's website, the SEDAR website, the EDGAR website or by contacting Crescent Point Energy. Management also calls your attention to the forward-looking statements and non-measure -- non-GAAP measures sections of the press release issued earlier. I'll now turn the call over to Scott Saxberg, President and Chief Executive Officer. Please go ahead, Mr. Saxberg.
Thank you, operator. I'd like to welcome everybody to our first quarter 2018 conference call. With me is Ken Lamont, Chief Financial Officer; Neil Smith, Chief Operating Officer; and Brad Borggard, Vice President, Corporate Planning and Investor Relations. During the first quarter, Crescent Point continued to focus on financial and operational execution. We achieved first quarter average production ahead of budget and are currently ahead of our second quarter target, with production exceeding 182,000 BOEs per day. We reduced our annual capital expenditures by CAD 25 million. We are finalizing a CAD 225 million noncore asset disposition, disposition that will be -- that will further strengthen our balance sheet. We have increased our hedge positions through 2019 as part of our risk management practices. And we remain focused on allocating capital within our core resource plays based on high rates of return. Our strong results built on our achievements in 2017, which included significant growth in our new play development and organic exit production growth of 10% per share. We remain on track to meet or exceed our guidance and exit growth of 7% to 195,000 BOEs per day and expect to update our guidance following the close of our CAD 225 million disposition, which is expected near the end of second quarter. Differentials were higher than expected, and we believe this is temporary. In addition, we have projects underway that will further improve differentials in 2019. In early April, we announced that land position of over 355,000 net acres in emerging East Shale Duvernay. This light oil resource play provides our company with a significant organic running room in a large oil-in-place resource pool with a strategic land position targeting thickness, pressure and depth. We're excited about this potential high-impact play and its prospective for scalable economic production. One of the highlights of the quarter is the significant growth we achieved in our U.S. operations, with first quarter 2018 production increasing 60% year-over-year. We continue to generate strong results in Uinta Basin, which remains a major growth area for Crescent Point. Within our 5-year plan, we expect from our U.S. assets, driven by Uinta Basin, to more than double to approximately 80,000 BOEs per day. We prioritized balancing our cash outflows with inflows. To this end, at current strip prices, we expect to internally fund our current capital expenditure program and dividends with fund flows from operations. Any excess cash flow realized above our expenditures will be earmarked for continued net debt reduction. As you recall, in fourth quarter 2017, we increased our strategic position in the Flat Lake area and East Shale Duvernay with land expenditures of approximately $100 million. This expenditure will be more than funded through expected closing of our recently announced CAD 225 million disposition of noncore assets. We currently expect to exit the year with net debt to funds flow from operations of less than 1.9x, even excluding any proceeds from this disposition. Since the beginning of 2017, we will have executed approximately CAD 550 million of noncore asset sales post the closing of this transaction. I will now turn it over to Ken to discuss our financial highlights in more detail. Ken?
Thanks, Scott. Fund flow from operations in the quarter totaled CAD 428.9 million or $0.78 per share diluted based on an operating netback of over $32 per BOE. Although our first quarter 2018 netbacks were partially impacted by wider-than-normal oil differentials, we do expect these differentials to improve throughout the remainder of the year. Crescent Point spent CAD 652.8 million on drilling and development activities during the first quarter, in line with its budgeted capital expenditures program, drilling 314 gross or 260.6 net wells. In the first quarter, land, seismic and facilities capital expenditures totaled CAD 80.2 million, primarily comprised of CAD 62.8 million for new facilities in the company's core areas. Our capital allocation strategy is focused in our core areas and on our higher-return projects. Approximately 95% of our 2018 budget is allocated towards the Williston Basin, Southwest Saskatchewan and Uinta Basin resource plays. At current strip prices, approximately 90% of our net wells budgeted to be drilled during 2018 are expected to pay out in 2 years or less. The remaining net wells budgeted for this year represent capital allocated towards longer-term projects, such as our step-out drilling programs, which we conservatively risked during our budget process. As a part of our risk management program to protect cash flow and the strength of our balance sheet, we remain active on layering new hedges during the first quarter. As at April 27, 2018, the company had over 50% of its oil and liquids production, net of royalty interest, hedged for the remainder of 2018 at a weighted average market price of approximately CAD 74 per barrel. For the first 3 quarters of 2019, over 35% of its oil and liquids production is hedged at a weighted average market price of approximately CAD 77 a barrel. Our sensitivity to rising WTI prices is significant. With a USD 5 per barrel increase in WTI adds over CAD 250 million to our 2019 annual fund flow from operations. Subsequent to the quarter, the company closed the private placement of long-term debt in the form of senior guaranteed notes as a part of normal course issuance and added to our near-term liquidity. In total, USD 143.5 million and CAD 80 million was raised through 3 separate series of notes at fixed Canadian dollar coupon rates ranging from 3.58% to 3.98% with maturities of 5 to 7 years. Consistent with our private placements, we entered into cross-currency interest rate swaps to remove the foreign exchange risk for purposes of principal and interest repayment. Proceeds from the private placement were used to retire a portion in the company's outstanding bank debt and other senior note near-term maturities. Crescent Point currently retains a significant amount of liquidity with no material near-term debt maturities and cash and unrealized -- unutilized credit capacity of approximately CAD 1.4 billion. Before I hand things over to Neil for an operational update, I would also like to address tomorrow's AGM. Voting for nonregistered shareholders has now closed, and we will issue a press release following our AGM to announce the results of the meeting. We would like to thank all of our shareholders who have voted and for their ongoing support and engagement. Out of respect for the AGM process, we're not taking questions regarding the AGM during this quarterly conference call, which is focused on our operations results and financials. Neil?
Okay. Great. Thanks, Ken. Crescent Point achieved first quarter 2018 average liquid production of 178,418 BOEs a day, comprised of approximately 90% oil and liquids. Given our active first quarter drilling program, we expect strong second quarter average production of just over 182,000 BOEs a day, despite the seasonal impact of spring breakup. During first quarter, we completed a highly successful multi-zone stacked horizontal development program in the Uinta Basin for which we released results as part of our operational update in early April. Following these strong results, we completed a second stacked horizontal development program, which has been flowing for less than 30 days, but with positive initial results. Both programs targeted the horizontal development of the Castle Peak, Uteland Butte and Wasatch zones within the same drilling spacing unit. During the remainder of 2018 and into 2019, Crescent Point plans to advance downspacing for new potential drilling locations and 2-mile multi-well pad development, which is expected to drive capital cost reductions of just over 10% in 2019. As part of our development plan in the emerging East Shale Duvernay resource play, Crescent Point participated in 2 gross non-operated 1.5-mile horizontal wells. Our first well flowed at an impressive initial 30- and 90-day rates of approximately 570 BOEs a day and 515 BOEs a day, respectively, comprised of approximately 92% oil and liquids. Our second well, which was recently completed, flowed at an initial 30-day rate of 535 BOEs a day. These wells follow other strong results released to date by industry throughout the resource play. Our 2018 capital expenditures budget currently indicates the drilling of 4 net operated East Shale Duvernay wells in the first half of the year. Before I close, I'd like to thank all of our employees and our field staff for their work, especially over the winter months. Scott?
Thanks, Neil. Throughout 2017, we increased the value of our company by identifying new, high-impact drilling locations and adding to our strategic land position in Uinta Basin, Flat Lake and the emerging East Shale Duvernay resource plays for future organic growth. Our new locations simultaneously increased our productive capacity and resulted in improvement in our 5-year plan, which now requires approximately 1,000 fewer net wells to be drilled and includes lower cumulative total capital expenditures while maintaining a similar production profile. We're following up with these successes in 2018, including the East Shale Duvernay, which has not yet reflected in our current 5-year plan. We have made and continue to make strategic decisions that are focused on creating long-term shareholder value. Our strategic decisions have led to changes that have been implemented and remain underway, including our focus on noncore asset sales and organic growth in our high productivity resource plays. Before opening up the line for questions, I'd like to thank all of our employees for their hard work and focus, our shareholders for their continued support and engagement as we continue to execute our plan for long-term value creation. At this point, we're ready to answer questions for the -- from the members of the investment community.
[Operator Instructions] And our first question comes from [indiscernible] Capital. [Operator Instructions] Our first question comes from Brian Kristjansen with Macquarie.
Scott, can you provide any color on the disposition? And with respect to the closing, is that subject to anything on the acquirer side? Or is that just timing related?
Yes. I can't really give you too many details, just several noncore assets. The close will happen before the end of Q2 here, and it's just a timing thing. No requirements that we know of.
I'm not showing any further questions at this time. I would like to turn the call back to Mark Saxberg (sic) [ Scott Saxberg ] for any closing remarks.
Thanks, operator, and thanks -- thank you, everybody, for attending Crescent Point's Q1 2018 Conference Call. And again, we'd love to answer any questions from our Investor Relations group. Thanks a lot.
Thank you, ladies and gentlemen, for participating in Crescent Point Energy First Quarter 2018 Conference Call. If you have more questions, you can call Crescent Point's Investor Relations department at 1 (855) 767-6923. Thank you, and have a great day.