Crescent Point (CPG) Valuation Update - July 28

[dan_s]

CPG closed at $8.04US today.

I have updated my forecast/valuation model for their strong Q2 results and updated guidance. It continues to look very good to me.
> Heavily weighted to oil.
> Despite the wildfires in Canada in Q2 they beat my forecast.
> Q2 production of 155,031 Boepd should increase to over 171,000 in Q3 and their exit rate should be well over 180,000. This one is setting up 2024 to be an outstanding year if oil prices stay over $80/bbl US.
> Base + Variable dividend of $0.135Cdn for the quarter for annualized yield of ~5.1%, which is not bad for a company with over 22% production growth locked in. With more FCF in coming quarters, I expect the dividend to be increased for several quarters in a row.
> Debt level is a little too high, the only negative that I see, but no near-term debt issues.
> Plenty of free cash flow to fund dividends and a Share Buyback that is significant.

My current stock valuation of $13.00US is based on 4X annualized operating cash flow per shares. FCF should be up quarter after quarter and outstanding shares keeps falling. This is a recipe for a much higher valuation.

TipRanks: "In the last 3 months, 7 ranked analysts set 12-month price targets for CPG. The average price target among the analysts is $10.65US. The 7 price targets range from $9.83 to $13.61US."