Crescent Point (CPG) Update - Sept 11

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dan_s
Posts: 34579
Joined: Fri Apr 23, 2010 8:22 am

Crescent Point (CPG) Update - Sept 11

Post by dan_s »

My current valuation of CPG is $12.00US per share, which compares to the current share price of $8.38US.

CALGARY, AB, Sept. 11, 2023 /CNW/ - Crescent Point Energy Corp. ("Crescent Point" or the "Company") (TSX: CPG) (NYSE: CPG) is pleased to provide its preliminary 2024 budget and an updated five-year outlook.

KEY HIGHLIGHTS

Annual production of 145,000 to 151,000 boe/d in 2024 based on development capital expenditures of $1.05 to $1.15 billion. < Compares to my 2024 forecast of 148,000 Boepd. In Q4 2023 the Company is expected to close the sale of their North Dakota Assets, which are currently producing ~23,500 Boepd. Cash proceeds from the sale will pay off $500 million of debt, so the Company's balance sheet will be in good shape at year-end.

Generating significant excess cash flow of over $1.0 billion in 2024 at US$80/bbl WTI.

Increasing proportion of capital allocated to Kaybob Duvernay and Alberta Montney, which represent 70 percent of 2024 budget. < This is important for those of you that own InPlay Oil. InPlay has a large leasehold position in the East Basin Duvernay shale play. With WTI firmly over $80/bbl InPlay's acreage in the Duvernay oil play should have a high market value, which is not included in my $6.00US valuation of IPOOF.

Enhancing balance sheet strength with expected net debt of $1.7 billion, or 0.7 times funds flow, at year-end 2024.

Disciplined growth of five percent per year within longer-term outlook with production increasing to 180,000 boe/d by 2028. < CPG has lots of high quality "Running Room".

Significant cumulative after-tax excess cash flow of over $4.3 billion expected in the updated five-year plan at US$75/bbl WTI.

Returning approximately 60 percent of excess cash flow to shareholders through dividends and share repurchases.

"Throughout 2023, our strong results and outperformance have demonstrated the benefits of our improved asset base alongside our ongoing operational execution", said Craig Bryksa, President and CEO of Crescent Point. "This inflection we are seeing in our business is a direct result of our strategy, which is focused on maintaining a resilient portfolio of high-return short- and long-cycle assets. Our disciplined approach is expected to generate sustainable returns and significant excess cash flow for shareholders."

Read more details: https://finance.yahoo.com/news/crescent-point-provides-preliminary-2024-103000750.html
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TipRanks: "In the last 3 months, 9 ranked analysts set 12-month price targets for CPG. The average price target among the analysts is $10.92." < The most recent price target update is from Jeremy Mccrea at Raymond James (rated 5-Star by TipRanks) on 9-8-2023 who rates CPG a BUY with a price target of $11.74US. Jeremy is based in Canada and his valuation model is in Canadian dollars. His actual price target is $16.00Cdn, which compares to my price target of $16.22Cdn.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34579
Joined: Fri Apr 23, 2010 8:22 am

Re: Crescent Point (CPG) Update - Sept 11

Post by dan_s »

CPG's "Running Room" is key to my current valuation of $12.00US, which is just 4X annualized operating CFPS for 2022 to 2024. If WTI stays over $80/bbl, CPG's operating and free cash flow should increase.
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From today's press release:
UPDATED FIVE-YEAR OUTLOOK

Crescent Point's strategy is centered around creating sustainable long-term returns for shareholders through a combination of per-share growth, return of capital and balance sheet strength, as reflected within the Company's longer-term outlook.

Crescent Point is targeting production of approximately 180,000 boe/d by 2028 under its updated five-year plan, which equates to a compounded annual growth rate of five percent. This growth is expected to be driven from each of the Company's Kaybob Duvernay and Alberta Montney assets, which are expected to generate over 70 percent of Crescent Point's total production by 2028.

This disciplined growth is in addition to cumulative after-tax excess cash flow generation of over $4.3 billion ($8.15 per share) through 2028, at US$75/bbl WTI. Crescent Point's updated five-year plan is expected to generate significant return of capital for shareholders and a strong balance sheet with net debt improving to approximately $500 million, or 0.2 times adjusted funds flow, in 2028.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34579
Joined: Fri Apr 23, 2010 8:22 am

Re: Crescent Point (CPG) Update - Sept 11

Post by dan_s »

Crescent Point Energy (CPG-TSX, C$11.23, Buy; Target C$16.00)
Crescent Point Rolls Out Preliminary 2024 Guidance, 5-Year Plan Updated
Cody Kwong at Stifel Nicolaus on 9-11-2023

Following the successful sale of its North Dakota assets, Crescent Point has
released its 2024 preliminary budget and updated 5-year plan. The key takeaway
for us is the Company's focus on shareholder returns and debt repayment, as capex
was refreshingly lower than anticipated, while volumes generally tracked consensus
expectations. Based on our updated 2024 outlook, we expect Crescent Point to
generate >$1.0 billion in FCF, while delivering 5% production growth, 20% reduction
in debt, dividend yield of 4.3% and ~$350 mm in share buybacks. With the positive
attributes, we are maintaining our BUY ranking and target price of $16.00/sh.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34579
Joined: Fri Apr 23, 2010 8:22 am

Re: Crescent Point (CPG) Update - Sept 11

Post by dan_s »

RBC Capital
September 11, 2023
Crescent Point Energy Corp.
Price Target is $13.00Cdn

Outlook Intact - Framing the 2024 Budget
Our view: CPG's 2024 outlook was in line with our expectations, and
leaves the company in good shape to grow modestly (~5% annually) while
returning ~60% of FCF to shareholders. Our outlook calls for $1.2 billion
in FCF in 2024 with $227 million allocated to dividends (common) plus
$505 million in buybacks to largely satisfy the company's NCIB commitment
(which we expect to be renewed in March). Reiterate Outperform.


Key points:
2024 Budget unveiled. CPG provided its preliminary outlook for 2024,
which featured volumes of 145-151 mboe/d on a capital budget of $1.05-
$1.15 billion, which was consistent with our prior estimate. At strip prices,
the plan delivers roughly $1.2 billion in free cash flow in 2024, of which
roughly 60% will be allocated to return of capital initiatives such as
dividends and buybacks with the balance allocated to debt repayment. 70%
of the 2024 budget will be allocated to Montney and Duvernay targets.
The plan incorporates the company's pending sale of North Dakota assets
(23,000 boe/d) (see note here), which is set to close in December.
5-year outlook updated. The company's updated 5-year outlook has
been updated and now includes an annual volume growth rate of 5%,
with corporate volumes set to achieve 180,000 boe/d by 2028 at which
point Montney/Duvernay volumes will map to 70% of total. At $75/bbl,
cumulative free cash would map to over $4 billion in total through this time
horizon, roughly 60% of which we would will to be returned to shareholders
via dividends and buybacks.

Updating estimates. Our updated outlook for 2023/2024 features roughly
unchanged volumes of 158.5/148.0 mboe/d combined with a capital
program of $1.1/$1.1 billion. Under this scenario and our FCF generation
maps to roughly $1.4/$1.2 billion ($2.59/$2.49 per basic share) or about a
FCF yield of 24%/21% at the current share price on strip pricing. We expect
that 60% FCF will continue to be assigned to a return of capital strategy
(base dividend + specials + buybacks) and we have modelled two base
dividend increases in 2024.
Dan Steffens
Energy Prospectus Group
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