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Veren Inc T.VRN

Alternate Symbol(s):  VRN

Veren Inc., formerly Crescent Point Energy Corp., is a Canada-based oil and gas exploration company. The Company is engaged in the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta and the United States. Its operating areas include Viewfield area of southeastern Saskatchewan; Shaunavon resource play, which is located in southwest Saskatchewan; Flat Lake play, which is a multi-zone resource play located in southeast Saskatchewan; Kaybob Duvernay play, which is situated in the heart of the condensate rich fairway, Central Alberta, and Montney assets in Alberta. Its wholly owned subsidiaries include Crescent Point Resources Partnership, Crescent Point Holdings Ltd. and Crescent Point U.S. Holdings Corp.


TSX:VRN - Post by User

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Post by Darwynon Oct 05, 2022 12:04pm
361 Views
Post# 35006846

TD Securities adds CPG to action buy list

TD Securities adds CPG to action buy listOur Action List Pick Crescent Point Energy Corp. CPG-T: C$8.50; ACTION LIST BUY 12-Month Target: C$18.50 We reiterate our ACTION LIST BUY rating for Crescent Point based on several key factors. Firstly, we forecast the company will generate (and return) a significant amount of FCF to shareholders through our forecast period. Crescent Point provided its long-awaited formulaic return of capital framework in June and is targeting to return 50% of free cash flow (post base dividends) through share buybacks and potential special dividends. We forecast the company will generate $1.9B in FCF through the end of 2023, representing ~40% of the current market capitalization. We also estimate the company will use this FCF to buyback ~80mm shares during this period and payout $250mm in base dividends. Furthermore due to limitations on NCIB volumes, we currently forecast a special dividend of $115mm in 2023 ($0.22/ sh). We see this all being accomplished while already low financial leverage moves even lower (2022/2023E D/CF of 0.4x/0.3x, respectively). In addition to significant and sustainable return of capital, we feel the company's Duvernay acquisition last year (and subsequent commodity price strength) should continue to provide value. So far, CPG has provided robust well results, while efficiency improvements should help offset some inflationary pressures, in our view. Furthermore, with significant tax pools, Crescent Point is one of only a few companies in our coverage universe that is not cash taxable through our forecast period (on strip pricing). CPG currently trades at a 2023E EV/DACF multiple of 2.1x compared to the average for its closest oil-weighted peers (BTE and WCP) of 2.7x. We believe this valuation gap remains unjustified based on the aforementioned factors, along with overall asset quality and balance sheet strength.
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