Veren Inc T.VRN

How undervalued is CPG still?

[highalpha1]

One might wonder how undervalued is CPG after the 25+% run up over the last 8 trading sessions. As per CPG's May presentation (see slide 10), at $70 WTI (around the price it is now) and assuming the strock price was trading at C$6.00, CPG would be generating an 18% free cash flow yield on enterprise value (if we use today's closing price of C$5.80, then the FCF yield would be closer to 20%)! Again, I am using the metric of enterprise value (i.e., equity plus debt) rather than just market capitalization (i.e., equity). That would mean CPG could buyback all of it's outstanding shares AND pay off all its debt in just over 5 years. Let these numbers sink in for a moment.

As these numbers come directly from CPG, I am assuming the company is accounting for any losses they may incur in the coming here from hedges (EN's slides don't account for losses from hedges).

[LiquidOctopusV2]

You have it at 5 year and Eric Nuttall's charts have them at 4.5 years.  It's all just estimates and it signals overall health, if the oil market bulls. 

[highalpha1]

@LiquidOctupusV2: Nuttall's chart does NOT account for hedges. He points this out in the footnotes. My numbers come directly from CPG's May corporate presentation, which would account for their hedges. Another good example would be to look at MEG. Nuttall's chart shows that MEG is trading a huge FCF yield based on today's crude prices. However, MEG has hedged 48% of its entire

[Bpultra]

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[LiquidOctopusV2]

Thank you.