Crescent Point over the years
I have had a position in CPG since late 2008.
Over the years;
The Company has grown dramatically
The Share Count has grown dramatically
The Production has grown dramatically
The Reserves have grown dramatically
The Price of Oil has gone up, down and sideways (currently down)
The Share Price has gone up, down and sideways (currently down)
The FFO has gone up, down and sideways (currently down)
The Production/Share has gone up
The Reserves/Share has gone up
The one thing that has remained constant is the 23 cent/month dividend!
Over the years they have demonstrated the ability to make very good acquisitions financed primarily with Equity and a Minimum of Debt.
Over the years they have demonstrated the ability to increase the production, increase the value of their reserves and reduce the decline rates with a very effective capex program.
Over the years they have done an excellent job of protecting their cash flow with a very effective hedging program. They have also taken advantage of shipping Oil by Rail from their strategically located loading terminals to maximise their netbacks.
Over the years the only “dilution” issue I have had is the DRIP. If I remember correctly at one time the participation was close to 40%. It’s substantially less now. Personally I would like to see the DRIP eliminated at some point in the future. Now is not the time.
Crescent Point is currently going through a “rough patch” due to the current Oil price. It’s not the first time and won’t be the last time. That’s the nature of the Oil industry. Due to the strength of their Balance Sheet, Hedging Program, Quality of Assets and Quality of Management they are very well equipped to “weather this storm”.
If you believe (as some do) that $50 - $60 (or worse) WTI is the “new normal” you should probably sell all of your Oil price sensitive stocks.
If you have a more optimistic opinion re the future Oil price (as many, myself included do) make your decisions accordingly.
The Legacy Transaction
Personally I think that this is a “Good” transaction for Crescent Point. I think that in the current environment it is a “Fair” offer.
It’s understandable that the LEG shareholders are disappointed with the current $ value of the offer. The nature of share for share offers is that the $ value is a moving target.
In my opinion the current weakness in CPG is a result of the WTI rally stalling and all the “noise” re future Oil prices. With very few if any exceptions all the producers are under pressure. CPG and LEG have been trading in “Lock Step” which suggests that the Market expects the transaction to be done without modification in spite of Front Four’s opposition. There is no way to “estimate” what LEG would be trading at if this offer wasn’t on the table. I am not going to try.
At the end of the day the LEG shareholders will have to decide if they will be better off with 95 CPG c/w a $2.76 annual dividend that has been reliable for a very long time or 1,000 LEG.
The “Ball Is In Their Court”!
As Always; Do Your Own Due Diligence; It’s Your Money !!