Their current target is $15.00. GLTA
EQUITY RESEARCH
CRESCENT POINT ENERGY CORP.
First Look: Above Estimates On Adjusted FFO
Crescent Point reported Q2/23 results that were ahead of our expectations
and consensus. Variances to our estimates stemmed primarily from
better-than-expected realizations. Highlights from the quarter include the
repurchase of 9.7 million shares and the declaration of a $0.035/share
special dividend for the quarter, strong results in Alberta Montney [including a
Gold Creek West well which is averaging 1,600 Boe/d (72% light oil and 4%
NGLs)], and no changes to full-year capital spending and production despite
a 7,000 Boe/d Q2 wildfire impact.
Financial And Operating Takeaways
• Q2/23 results: Production of 155,031 Boe/d (78% liquids) was in line
with our estimate of 153,345 Boe/d (77.4% liquids) and consensus of
152,912 Boe/d (range of 150,106 Boe/d to 155,655 Boe/d). Q2
production included the impact of ~7 MBoe/d of downtime in Kaybob
Duvernay related to the recent Alberta wildfires. Adjusted FFO per share
of $1.01 was ~5% ahead of our estimate of $0.96 and consensus of
$0.97 (range of $0.94 to $1.00). Capex of $230 million was below our
estimate of $267 million and consensus of $259 million.
• Return of capital: During the second quarter, the company repurchased
9.7 million shares for $93.1 million. Subsequent to the quarter, the
company repurchased an additional 1.7 million shares for $16.0 million.
Concurrent with the Q2/23 release, the company announced a special
cash dividend of $0.035/share, payable on August 15.
• Operational update: In Kaybob Duvernay, Crescent Point brought on
stream 13 wells across three multi-well pads during late 2022 and in
H1/23. The wells achieved an average IP30 of ~1,150 Boe/d per well
(58% condensate, 13% NGLs). The company plans to drill 15 wells,
adding a second rig in H2/23 to further accelerate development of its
Kaybob inventory. In Q2/23, on the recently acquired Montney acreage,
Gold Creek West wells came on stream during the month of June, which
achieved an IP30 of ~1,500 Boe/d (76% light crude oil, 3% NGLs).
Crescent Point remains on track to drill 15 wells in Montney based on a
one-rig program, with the potential to add a second rig over time.
• Full-year 2023 guidance: Crescent Point remains on track to meet its
2023 annual average production guidance of 160 MBoe/d-166 MBoe/d
with capex of $1.15 billion-$1.25 billion. In H2/23, the company expects
production to average ~179 MBoe/d, reflecting the recent Montney
acquisition and strong performance in Kaybob Duvernay.
• Valuation: Crescent Point trades at a 2024E EV/DACF of 3.2x and a
2024E FCF yield of 20% vs. the oil-weighted SMID cap group at 3.2x
and 16%, respectively.