Crescent Point Energy
Stock Rating: Outperform
Industry Rating: Market Perform
Member of: Top 15 Income Stock Selections
March 9, 2012
Research Comment Summary
Gordon Tait, CFA
BMO Nesbitt Burns Inc.
(403) 515-1501 Gordon.Tait@bmo.com
Assoc: Paul Surmanowicz, CFA
Bought Deal Financing; Bakken and Manitoba Asset
We are off restriction following the close of CPG’s bought deal financing of
13.4 million shares at $45.25 for gross proceeds of approximately $604 million.
The proceeds were used to acquire light-oil producing assets in the Viewfield
Bakken for $427 million and in southwest Manitoba for $130 million. As a
result, the company’s 2012 guidance has increased to 86,000 boe/d from 83,500
boe/d, and its 2012 exit rate guidance increased to 93,000 boe/d from 90,000
boe/d. CPG also announced Q4/11 production averaged ~81,000 boe/d, 5%
above our forecast of 77,244 boe/d.
Positive. The acquisitions appear accretive on per share metrics.
We increased our production forecast in 2012E to 86,100 boe/d from 81,500
boe/d and in 2013E to 97,000 boe/d from 91,810 boe/d. Our CFPS increases to
$4.44 from $4.31 in 2012E and to $5.21 from $5.16 in 2013E.
Our $50 target price is based on 11.9x 2012E debt-adjusted cash flow and is
supported by our $51.03 per share NAV estimate (10% dcf).
The asset acquisitions are consistent with Crescent Point’s strategy of
consolidating its positions in key operating regions. Production from the
Viewfield Bakken and southwest Manitoba is all high-netback light oil from
tight reservoirs. Management expects both regions to be amenable to water
flooding, which could potentially increase recovery factors by ~50% and the
PV-10 of cash flows up to 75%. We continue to rate Crescent Point Outperform.