June 20, 2019

Crescent Point Energy Corp (CPG)

 

 

 

The Crescent Point Energy Corporation (CPG) is a fairly large Canadian energy company.  They have over six thousand current drilling locations.  Their management team has proven adept at expanding the company, and presenting value to shareholders over a significant period of time.  Crescent Point has an excellent balance sheet that is very conservative in nature.  It has superb cash flow relative to its meagre debt levels, and the quality of their oil properties is high enough that this trend is virtually guaranteed to continue.  Crescent Point (CPG) has an expansion policy in place that sees them target long-life, high-quality oil reserve properties as potential acquisitions in Western Canada.  The energy company is also very conservative in its foreign exposure as they hedge sixty-five percent of their royalty volumes using swaps, collars, and puts.

 

Crescent Point (CPG) began in 2001.  It was originally an amalgamation of several junior mining entities.  Right from the beginning the company was extremely aggressive in pursuing at acquiring potentially lucrative oil-rich properties.  The company was also focused on maintaining a strong balance sheet right from their inception.  In two years Crescent Point grew from a start-up that only produced about 275 boe/d, to a considerable energy producer of 7,000 boe/d by 2003.  Near the end of 2003 the company decided to convert in to a trust business structure (becoming Crescent Point Energy Trust).  The management team, mission statement, and overall strategy stayed in place, the payout structure to unit holders simply improved from a tax management perspective.

 

Crescent (CPG) grew steadily until 2008 when they began making large-scale acquisitions.  First was Pilot Energy Ltd. with a price tag of around $76 million.  This immediately added 1,000 boe/d to Crescent’s portfolio of holdings.  Next came the trust’s purchase of a 20% interest in Shelter Bay Energy Inc. at a total cost of over $60 million.  Finally, in December of 2008 the company announced a massive takeover of Villanova Energy Corp. for about $120 million that added another 1,250 boe/d to Crescent’s drilling capacity.  These recently acquired assets give Crescent (CPG) a considerable presence in Alberta, as well as in the Bakken oil formation in Southern Saskatchewan.

 

Crescent Energy’s rise in less than a decade from a junior mining entity to a massive oil conglomerate with a market capitalization of over $12.8 billion is amazing.  Unitholders/shareholders (the company reverted back to a corporate structure due to changes in the taxation of trusts in January 2011) have been amply rewarded for their faith in the capable management team over the years.  Right now Crescent Energy (CPG) is trading at around $44 per stock  which is near the top of its 52-week trading range.  Its annual dividend of $2.76 represent a substantial yield of 6.2%.  While there may be higher dividend yields amongst Canadian energy companies, Crescent has a proven track record of responsible, sustainable growth.  I believe this has to put them near the front of any list of options within the Canadian energy sector.

 

Crescent Point Energy Corporation (CPG) Graph:

TSE CPG

Crescent Point Energy Corporation (CPG) Trend Analysis:

CPG Trend Analysis

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Crescent Point Energy Corporation (CPG) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
CPGCrescent Point Energy Corp44.586.193284.150.085330034.0782840