Crescent Point Energy (CPG) Valuation Update - Mar 1

[dan_s]

At the time of this post CPG was trading for $7.49US.

Through a series of acquisitions and the sale of their North Dakota assets, CPG is a much different company than what it was a year ago. The Hammerhead Acquisition that closed 12-21-2023 pushed CPG's production over 200,000 Boepd (~65% liquids).

I have updated my forecast for their Q4 results and updated guidance, which is not very detailed. Relative to the other Sweet 16 companies, I have a lower level of confidence in my model for CPG. I believe my model, based on the midpoint of the Company's production guidance, is based on some rather conservative expense assumptions and I have "cushions" in each forecast period. That said, my valuation remains $10.50US for CPG.

Two highly respected energy sector analysts have submitted updated price targets to TipRanks for CPG.
> On 2/29/2024 Michael Harvey at RBC Capital (Rated 5-Star by TipRanks) rates it a BUY with a price target of $9.58US.
> On 3/1/2024 Jason Bouvier at Scotiabank (Rated 5-Star by TipRanks) rates it a BUY with a price target of $8.85US.
TipRanks' consensus price target is $9.83US

My valuation multiple for CPG is 4X operating cash flow per share. CPG should be generating over $600Cdn million of free cash flow this year. It pays a decent dividend ($0.115Cdn/quarter) for annualized yield of ~4.5% and it has an active stock repurchase program underway.