Crescent Point Energy Corp. (CPG.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Crescent Point Energy Corp.explores, develops, and produces light and medium crude oil, natural gas liquids, and natural gas reserves in Western Canada and the United States.It's crude oil and natural gas properties, and related assets are located in the provinces of Saskatchewan, Alberta, British Columbia, and Manitoba; and the states of North Dakota and Montana.

The company was incorporated in 1994 and is headquartered in Calgary, Canada.

Show Full description

1.b. Last Insights on CPG

Crescent Point Energy Corp. (CPG) experienced a 3.0% performance over the past three months, driven by strong analyst consensus and a recent asset sale. Analysts' price targets point to a 25.6% upside in the stock, while the company's Q1 2024 results showed a 45% increase in oil and gas sales. The sale of non-core assets and a maintained 'Outperform' rating from National Bank of Canada also contributed to the stock's performance.

1.c. Company Highlights

Last Price	11.72
Change Percentage	-0.34%
Open	11.67
Previous Close	11.76
Market Cap ( Millions)	7243
Volume	2623619
Year High	12.67
Year Low	8.16
M A 50	11.65
M A 200	10.39

FCF Yield	9.49%
Dividend Yield	2.52%
ROE	10.27%
Debt / Equity	45.34%
Net Debt / EBIDTA	151.64%
Price To Book	0.83
Price Earnings Ratio	8.23
Price To FCF	10.54
Price To sales	1.83
EV / EBITDA	4.3

2. Veren Delivers Robust Q4 and Full-Year 2024 Results

Veren reported a strong financial performance in its Q4 and full-year 2024 results, driven by successful integration of its Alberta Montney assets and disciplined capital allocation. The company generated CAD 640 million in excess cash flow for the year, with CAD 213 million realized in Q4, representing a significant increase in free cash flow generation. Veren returned 60% of this cash flow to shareholders through dividends and buybacks, while reducing net debt by 35% (CAD 1.3 billion) and achieving an investment-grade credit rating. Annual production averaged 191,000 BOE/day, with Q4 production at 189,000 BOE/day, reflecting stable operational performance.

Publication Date: Mar -01

                                    📋 Highlights
                                    Strong Cash Flow and Debt Reduction:
                                                Veren generated CAD640 million in excess cash flow for 2024, with CAD1.3 billion in net debt reduction, achieving a 35% year-over-year decrease. The company returned 60% of excess cash flow to shareholders through dividends and buybacks.
Robust Production and Asset Performance:
                                                Annual production averaged 191,000 BOE/day, with Q4 production at 189,000 BOE/day. The Montney and Duvernay assets accounted for 80% of Q4 production, up 10% from Q1, demonstrating strong operational execution.
Reserve Growth and Drilling Efficiency:
                                                Veren reported a 173% reserve replacement ratio on a 2P basis and a 2.1x recycle ratio. Over 65% of premium drilling locations remain un-booked in the Montney and Duvernay, highlighting significant future growth potential.
Cost Reductions and Operational Optimization:
                                                The company achieved lower operating costs through higher production volumes and facility upgrades. Completion design improvements, including single-point entry systems, contributed to a 30% increase in BOE rates in the Montney and 25% in the Duvernay.
2025 Guidance and Strategic Focus:
                                                Veren provided 2025 production guidance of 188,000 to 196,000 BOE/day, with capital expenditures of $1.48 to $1.58 billion. The company emphasized a focus on optimizing existing assets, pausing M&A, and advancing EOR techniques in Saskatchewan to enhance cash flow stability.

                                

Operational Highlights and Guidance

For 2025, Veren provided production guidance of 188,000 to 196,000 BOE/day, with January production already at 191,000 BOE/day. Capital expenditures are guided at $1.48 to $1.58 billion, weighted to the first half of the year. The company expects $625 to $825 million in excess cash flow, with 60% allocated to shareholders through dividends and buybacks. Management emphasized confidence in its asset base and long-term growth prospects, supported by strong reserve additions and operational efficiency gains.

Valuation and Shareholder Returns

Veren's shares are trading at a forward P/E ratio of 17.88x TTM, reflecting a premium for its high-quality asset base and strong free cash flow generation. The company's price-to-sales ratio of 1.19x TTM and enterprise value-to-EBITDA ratio of 4.22x TTM suggest that the market is pricing in the company's growth potential and disciplined capital allocation. With a dividend yield of 5.82% and a free cash flow yield of 10.78%, Veren offers an attractive combination of income and growth for investors. The company's net debt-to-EBITDA ratio of 1.62x TTM indicates a manageable leverage profile, further supported by its debt reduction targets.

3. NewsRoom

Crescent Point Energy Corp. (NYSE:CPG) Q1 2024 Earnings Call Transcript

May -11

Source:

Crescent Point Announces 2024 Annual and Special Meeting of Shareholders Results and Changes Name to Veren

May -10

Source:

Crescent Point Energy Q1 Adjusted Profit From Operations Falls; Oil and Gas Sales Up 45%

May -10

Source:

Crescent Point Announces Q1 2024 Results

May -10

Source:

Crescent Point Confirms Quarterly Dividend

May -10

Source:

Crescent Point (CPG) Divests Non-Core Assets in Saskatchewan

May -09

Source:

Enerflex (EFXT) Reports Q1 Loss, Tops Revenue Estimates

May -08

Source:

Crescent Point Energy Price Target Raised to $14 at BMO

May -07

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.57%)

6. Segments

Business & Industry

Expected Growth: 6%

Crescent Point Energy Corp's 6% growth is driven by increasing crude oil prices, improved operational efficiency, and strategic acquisitions. The company's focus on light oil production in the Williston Basin and Uinta Basin provides a competitive advantage. Additionally, Crescent Point's low debt-to-equity ratio and strong cash flow generation enable the company to invest in growth initiatives and return capital to shareholders.

Healthcare & Seniors

Expected Growth: 8%

Crescent Point Energy Corp.'s Healthcare & Seniors segment growth is driven by an aging population, increasing healthcare expenditure, and a rising demand for senior living facilities. Additionally, the company's focus on providing quality care and services, strategic acquisitions, and investments in technology and infrastructure also contribute to its 8% growth.

Education

Expected Growth: 5%

Crescent Point Energy Corp's 5% growth in education segment is driven by increasing demand for skilled workers in the energy industry, government initiatives to promote vocational training, and the company's strategic partnerships with educational institutions to develop industry-specific programs.

Sports & Leisure

Expected Growth: 9%

Crescent Point Energy Corp's Sports & Leisure segment growth of 9% is driven by increasing participation in outdoor activities, rising disposable income, and growing demand for eco-friendly tourism. Additionally, strategic partnerships, investments in digital infrastructure, and expansion into new markets have contributed to the segment's growth.

Defence, Offshore & Remote

Expected Growth: 4%

Crescent Point Energy Corp.'s Defence, Offshore & Remote segment growth is driven by increasing demand for oil and gas, strategic acquisitions, and efficient operations. The 4% growth rate is also attributed to the company's focus on cost reduction, improved well performance, and successful exploration activities in the region.

Reconciling Items

Expected Growth: 3%

Crescent Point Energy Corp.'s 3% growth is driven by increased oil production, improved operational efficiencies, and strategic cost reductions. Additionally, the company's focus on high-return projects, disciplined capital allocation, and strong balance sheet have contributed to its growth momentum.

7. Detailed Products

Crude Oil

Crescent Point Energy Corp. is a leading producer of high-quality crude oil, extracted from its vast oil reserves in Western Canada and the United States.

Natural Gas

The company produces natural gas, a clean-burning fuel, from its assets in Western Canada and the United States.

Natural Gas Liquids (NGLs)

Crescent Point Energy Corp. also produces NGLs, a group of hydrocarbons that include ethane, propane, and butane.

8. Crescent Point Energy Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Crescent Point Energy Corp. operates in the oil and gas industry, where substitutes are limited. However, the increasing adoption of renewable energy sources and electric vehicles poses a moderate threat to the company.

Bargaining Power Of Customers

Crescent Point Energy Corp. sells its products to a diverse range of customers, including refineries, petrochemical plants, and other energy companies. The bargaining power of customers is low due to the lack of concentration in the customer base.

Bargaining Power Of Suppliers

Crescent Point Energy Corp. relies on a few key suppliers for drilling and extraction services, which gives them some bargaining power. However, the company's scale and diversification of suppliers mitigate this risk.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and technical expertise. This limits the threat of new entrants to Crescent Point Energy Corp.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Crescent Point Energy Corp. faces intense rivalry from other companies, which can lead to downward pressure on prices and margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	34.43%
Debt Cost	4.64%
Equity Weight	65.57%
Equity Cost	18.13%
WACC	13.49%
Leverage	52.52%

11. Quality Control: Crescent Point Energy Corp. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

PrairieSky Royalty

A-Score: 6.5/10

Value: 3.0

Growth: 5.7

Quality: 8.6

Yield: 8.0

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

Northern Oil and Gas

A-Score: 5.8/10

Value: 8.7

Growth: 5.4

Quality: 6.4

Yield: 9.0

Momentum: 1.5

Volatility: 4.0

1-Year Total Return ->

Murphy Oil

A-Score: 5.4/10

Value: 7.7

Growth: 4.6

Quality: 6.0

Yield: 7.0

Momentum: 3.0

Volatility: 4.3

1-Year Total Return ->

Crescent Point Energy

A-Score: 5.2/10

Value: 6.8

Growth: 5.1

Quality: 5.2

Yield: 6.0

Momentum: 5.0

Volatility: 3.0

1-Year Total Return ->

Ovintiv

A-Score: 5.1/10

Value: 7.4

Growth: 4.1

Quality: 5.2

Yield: 5.0

Momentum: 4.0

Volatility: 5.0

1-Year Total Return ->

Enerplus

A-Score: 5.1/10

Value: 6.3

Growth: 7.2

Quality: 7.8

Yield: 1.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

10.50%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

13.49%

Crescent Point Energy Corp. - CA22576C1014

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CPG

1.c. Company Highlights

Average Yield

Fairly Valued

Average Quality

Earnings Miss

Revenues Beats

Average Growth

Expensive

Higher Growth

Lower Quality

Less Volatile

Earnings Beats

Cheaper

Higher Yield

Medium Volatility

Stable Momentum

2. Veren Delivers Robust Q4 and Full-Year 2024 Results

Operational Highlights and Guidance

Valuation and Shareholder Returns

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.57%)

6. Segments

Business & Industry

Expected Growth: 6%

Healthcare & Seniors

Expected Growth: 8%

Education

Expected Growth: 5%

Sports & Leisure

Expected Growth: 9%

Defence, Offshore & Remote

Expected Growth: 4%

Reconciling Items

Expected Growth: 3%

7. Detailed Products

Crude Oil

Natural Gas

Natural Gas Liquids (NGLs)

8. Crescent Point Energy Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Crescent Point Energy Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.72$

Current Price

11.72$

Potential

-0.00%

12.e Scoring ^Insights

12.f DCF ^BETA