CPG OutperformIt's quite convincing that the out perform target is very realistic for Crescent Point. 53% oil is hedged above $80 barrel. They have managed to tuck in more hedges at $80+ oil for this coming year. A 3 1/2 year hedging program to hedge a minimal 50% of production. This keeps the cash flow steady, ensures a strong balance sheet, and the ability to pay the dividend.
They have the best low cost drilling locations in North America and are hedged out until 2018. If oil ramps up which we all know it is going to in 2016 they have the option to call forward their hedges and realize the gains which will I think will be around $147 million in gains on contract options.
CPG has production of 165,000 Boed and should be posed to have 1 billion in free cash flow in which they can fund a smart aquisition of assets that could compliment their current key areas of growth.
CPG will come out ahead of the pack and them being conservative with the long term hedging program has them looking like a genius right now. People want to move into winners and CPG is a winner. Hedge funds who are covering their shorts are now getting long and CPG is going to rank highly in their interest. That volume of buying will push up quite quickly, possibly ahead of the fundamentals in the near term. Long term I believe this to be a 20 billion dollar company minimum and is an incredible bargain.
Merry Christmas all.