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Opinions John Zechner
Crescent Point Energy CorpCPG.TOBUY ON WEAKNESSFeb 23, 2023
John ZechnerStock price when the opinion was issued
As of May 14, 2024. Market Open.
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Hammerhead was a good deal, horrific timing with oil falling overnight. Deal is 11% accretive on free cashflow per share, extended premium inventory life from 15 years to 20. He sees 75% potential upside at $80 oil. Yield is 4.21%.
He's pro-M&A, if it allows a company to pay shareholders more. CEO promised him last week that the company "is done" with M&A.
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Premium contentOur PAST TOP PICK with CPG has triggered its stop at $9.50. To remain disciplined, we recommend covering the position at this time. This will result in a net investment loss of 1%, when combined with our previous recommendations.
Never a good sign when your stock issue gets hung up. Timing wasn't ideal, with weaker sentiment on oil below $80. New concerns about acquisition binges. Special dividend was a "teaser". On the sidelines, due to short-term indigestion on the acquisition. May need dispositions to bring debt back down.
Expecting 100% upside at current share price. Transitioned from SE Saskatchewan to Montney play in BC (decades of inventory). Largest active shareholder in company. Trading under 3x cash flow given $80 oil price. New frac technique allowing for large increase of production from oil wells. Expecting ~$21 share price.
Eric NuttallPremium contentWith quarterly reported cash reserves growing, while debt is retired and stock bought back, we again reiterate CPG as a TOP PICK. The company recently announced it is selling its N. Dakota assets for $675 million and plans to spend over $1 billion in capital projects next year. We continue to recommend a stop at $9.50, looking to achieve $14 -- upside potential over 24%. Yield 3.2%
(Analysts’ price target is $14.25)
Looks really good for the small- to mid-cap energy space in Canada. At 2.4x, cheaper than peers at 3.4x. Decent dividend, some solid execution. Cashflow rising. Production growth profile of 7%. Investable. But do you want to buy now with a crowded trade and oil prices higher than they'll be in future?
Successfully transitioned into long reserve life company (Duvernay & Montney).
Largest oil wells in Canada.
Returning 60% of free cash flow yield to investors.
~15 years of high quality inventory.
Expecting 100% upside at current share price.
Dividend yield ~3% and will also issue special dividends.
Eric NuttallPremium content
He's buying. Hard to resist a stock that's trading at 3-3.5x operating cashflow when they're starting to pay down debt, return cash to shareholders, and unwind mistakes of the past decade. Risk is oil prices collapsing, but he's not really worried about that despite a slowdown, as there are still lots of supply issues.