A Crescent Point Energy pump jack
Crescent Point Energy Corp.
Wednesday's close: $38.64 a share, down 19 cents
52-week trading range: $35.84 to $47.30 a share
Annual dividend: $2.76 a share for a yield of 7 per cent
Analysts' ratings: There were 18 buys, 3 holds and one sell, according to Bloomberg data. Target prices ranged from $52 a share from Scotia Capital Markets analyst Patrick Bryden to $39 a share from Salman Partners analyst Gordon Currie.
Recent history: Shares of Calgary-based Crescent Point Energy have shed about 10 per cent over the past year as the oil and gas company continued its aggressive hunt for acquisitions. Its strategy is to acquire large oil and gas resources with potential to boost the amount of recoverable reserves through conventional drilling or new technologies. Crescent, one of the first Canadian companies to tap into the Bakken shale region in Saskatchewan, did several deals last year. The larger ones included the $770-million purchase of Wild Stream Exploration Inc., and a $784-million transaction plus debt for Ute Energy Upstream Holdings LLC, which has a Utah oil play. The deals upset some investors because they were followed by fairly hefty equity financings that took a lot of buying power out of the stock.
Manager insight: Utah may not be on many investors' radar screens for oil and gas production, but more details on this acquisition should in time help move the stock, said Rafi Tahmazian, an energy fund manger at Calgary-based Canoe Financial LP, and who acquired shares in Crescent Point last month.
The company is now saying it is "significantly more encouraged about the asset than it originally anticipated" so that means it will be able to bump up the recoverable reserves and production nicely from the Utah play, suggested Mr. Tahmazian, who met with its management recently.
This U.S. oil play and the fact that management will now likely try to pursue growth through the drill bit rather than more acquisitions are "both strong catalysts," he said. "We think that they recognize the noise the market is making [on financings] and will want to appease it...After the Utah deal, the stock fell dramatically."
The company will probably start actively drilling the Utah pool soon, and "we are banking on results to be very positive," he said. "You have got an asset with current production running around 8,000 barrels a day, and you've got a very, very small recovery of oil to date by primary drilling."
The stock could also get wind in its sails when the company reports its fourth-quarter results on March 14, he said. It will be updating the market on the Utah play, and the fact that 50 per cent of its 2013 production is hedged, he added. "That [hedging] is going to be perceived as more defensive, which people will like."
The stock trades at a high valuation so "you need to see catalysts to keep buying the stock," he said. "This is one of those companies that has several - from a very smartly hedged production base to a market that is going to swing from 'what the heck are they buying in Utah to wow this is a great acquisition' and a very clean balance sheet."