Crescent Point Energy (CPG) Valuation Update - Apr 5

[dan_s]

I have updated my forecast model for CPG based on my updated oil & gas price deck. My valuation increases by $0.15 to $10.65US per share.

My forecast model assumptions "feel" too conservative, but I still don't have a high level of confidence in my model for this one.

Q1 2024 will be the first full quarter since the Hammerhead Acquistion close on 12/21/2023, which added close to 38,000 Boepd of current production and a lot of "Running Room". CPG also closed two other strategic acquisitions in 2023, so it has a lot of "moving parts". Higher WTI oil prices and declining differentials in Canada are really going to help BTE and CPG.

CPG is currently trading at $8.80US.

TipRanks: "In the last 3 months, 8 ranked analysts set 12-month price targets for CPG. The average price target among the analysts is $9.58. The 8 price targets range from $8.84 to $10.69." < All 8 of the analysts rate CPG a BUY, which is somewhat rare.

Based on their December 31, 2023 3rd party reserve report, which uses much lower oil prices than we see today, CPG's PV10 Net Asset Value of just their proved reserves (1P) was $9.60Cdn per share on that date.

[allen46]

Top pick by Nuttall

[aja57]

Strong move with solid volume today in a down market. Any news ?

[dan_s]

No news. Just more big money managers discovering that the Trans Mountain Pipeline is going to significantly raise oil prices in Western Canada.

My valuation of CPG.TO is $14.39Cdn ($10.65US), which is just 4X annualized operating CFPS. That is a very conservative valuation multiple for a company of this size. Eric Nuttell likes this company for the same reason that I do, it is going to generate a lot of free cash flow if WTI stays over $80US/bbl.

"Multiple Expansion" will show up first in the large-caps and eventually raise all of the Canadian oil producers.