Veren Inc T.VRN

RBC

[retiredcf]

Their upside scenario target is $16.00. GLTA

July 27, 2022

Crescent Point Energy Corp. Q2/22 - Smooth Sailing

Outperform

TSX: CPG; CAD 9.42

Price Target CAD 13.00

Our view: CPG delivered solid Q2/22 results which were slightly ahead of consensus, and featured $70 million in share repurchases during the quarter (and $150 million since December). CPG is positioned to generate $1.5 billion in FCF (or ~28% FCF yield) this year with our outlook calling for an additional dividend increase plus meaningful ($400 million FY) buybacks. Reiterate Outperform.

Key points:

• Q2/22 results - FFO slightly ahead of the Street. CPG reported Q2/22 production of 129,176 boe/d (83% liquids) (RBC/Street: 126,750/127,174) driving AFFO (f.d.) of $1.04 ahead of RBCe/Street consensus of $0.95/$1.00 per share. Development capital expenditures came in at $197 million (RBCe/Street: $200 million). Beat vs our model Dividend: 0.32 included higher liquids mix of 83% vs our 81% that drove stronger realizations.

  • 2022 capital guidance - unchanged. Recently updated 2022 capital guidance remains unchanged in the range of $875-900 million (excl. $80 million of capitalized G&A, lease, ARO, etc.), and is expected to drive an unchanged average annual production of 130,000-134,000 boe/d (80% liquids).

• Focus on RoC. CPG returned ~$108 million to shareholders during Q2/22 through base dividends (~$38 million) and share repurchases (~$70 million). CPG's recently increased base dividend stands unchanged at $0.08/sh per quarter (or $0.32 annualized), now mapping to a 3.4% dividend yield. CPG remains committed to its updated RoC framework calling for 50% of excess FCF (post base dividend) to be returned via buybacks and special dividends. On our deck, this translates into ~$400 million of incremental returns in H2/22 via a combination of buybacks, base and special dividends.

• Operations - strong execution at Kaybob continues. During Q2/22, CPG brought on-stream its second fully operated multi-well pad in the Kaybob Duvernay, with IP30 rate of >900 boe/d per well (80% condensate and liquids) exceeding 2P regional type curve. CPG expects payout at the current commodity prices within 6 months. On the latest pad in the area, CPG achieved >30% reduction in drilling days vs CPG's 1st operated pad in the play.

• Updating Estimates. Our 2022 and 2023 production estimates remain roughly unchanged, with a slightly increased liquids mix. Our 2022 AFFO per share estimate increases by 4% on stronger realizations, while our 2023 AFFO per share estimate remains roughly unchanged.

 

 

[Moemoney42]

Yup and RBC, TD and National all hilight the Kaybob assets.. I remember a couple of moronic posters.. BackinBlack to be specific poopooing the buy everytime I spoke of the merits of that acquisition.. the little troll sure hasn't been around anymore.. THANK GOD.! 

[Seppelt]

That was a great acquisition. My focus is liquids-rich (condensate, NGLs) natural gas and that is the reason I bought some CPG which was mainly light and medium oil before buying Kaybob assets. All good but I wish that the management would have more confidence in strong oil prices as many investors who bought the stock do. I wish they would lessen their hedges and stop gambling on derivatives. If

[JamesT]

Hedges makes sure the company doesn't go bankrupt and everyone can still keep their jobs milking the company for years to come.  Hedges or no Hedges, salaries are still the same. Why not secure the golden goose?