Crescent Point (CPG) Valuation Update - Mar 12

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Crescent Point (CPG) Valuation Update - Mar 12

Post by dan_s »

CPG.TO closed at $9.34Cdn on Friday, March 10.

I have updated my forecast/valuation model for the Company's strong Q4 results and their detailed guidance for 2023.
My valuation increases to $18.00Cdn (~$13.50USD).

The updated profile and forecast will be posted to the EPG website later today.

The Company’s production was flat year-over-year in 2022 but adjusted operating cash flow increased by $788.2Cdn million to $2,234.4Cdn million ($4.02 per share).

Crescent Point's 2023 capital program is expected to generate significant excess cash flow of approximately $1.0 billion at US$75/bbl WTI, providing returns of over $600 million directly to shareholders, based on its dividends and stock buybacks framework. These returns are in addition to per-share growth and expected net debt reduction of approximately $400 million during the year

Year-over-year production growth of more than 6% is forecast for 2023. With current production of approximately 137,500 Boepd (~80% liquids) and strong free cash flow from operations, this stock deserves a much higher price. As of the date of this report, CPG is trading for less than 2.4 X my 2023 operating cash flow per share forecast of $3.84Cdn.

The Company’s Return of Capital program is attractive to investors seeking “Growth + Income”. CPG’s quarterly dividends payable in Q1 2023 were $0.132/share; a base dividend of $0.10 and a “Special Dividend” of $0.032. They are also aggressively buying back their common stock.
Dan Steffens
Energy Prospectus Group
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