If Crescent Point Energy Corp. is being targeted by an activist investor seeking a shakeup, the company has yet to receive contact, its chief executive officer said on Thursday.
Chief executive Scott Saxberg, addressing speculation that fuelled a jump in the stock last week, acknowledged the oil producer must do a better job communicating corporate developments and is redoubling efforts to reach out to shareholders. But he said Crescent Point has never been approached by an investor seeking a restructuring.
Mr. Saxberg made the comments after Crescent Point announced a fourth-quarter loss deeper than a year earlier, due largely to a large non-cash impairment charge, but better-than-expected annual production.
“We always welcome feedback and engagement with our shareholders,” Mr. Saxberg told analysts on a conference call. “In our entire history, we’ve never had or been approached by an activist. That’s all I can really say to that. We’re pretty focused on doing the things that we can control as a company.”
Last Friday, the stock jumped 8 per cent on a thinly sourced report that a U.S. activist investor was amassing a position, though none has come forward to confirm it, and no regulatory filings have yet been made that would show one has bought a large stake. Prior to that, the shares had lagged the performance of the Toronto Stock Exchange’s energy group.
The company, known for its dominance in the Canadian portion of the Bakken shale-oil formation, has been the target of criticism by some investors for frequent equity issues and executive compensation some see as out of sync with shareholder returns that have diminished amid the oil-price collapse.
In an interview, Mr. Saxberg said some of the company’s problems stem from unclear messaging about how proceeds from the latest $650-million stock issue, completed in September, were used. The money went mostly to paying down debt. Meanwhile, capital spending in 2016 was less than the company’s cash flow, though investors appear to have read it as issuing stock to fund growth, he said. The initial news release on Sept. 8 said the financing would allow Crescent Point to accelerate drilling and reduce debt.
Numerous other energy companies issued equity in 2016 as well, some offerings representing higher percentages of outstanding shares than Crescent Point’s 6 per cent, he said. The move was necessary to protect finances against the risks of a volatile oil market and the outcome of the U.S. election, he said.
“If oil was $35 [U.S.] a barrel right now, and we hadn’t done equity, we’d be having a different conversation,” Mr. Saxberg said.
The company has pledged to bolster its corporate communications efforts so investors will have a better understand of its direction, as it lifts it operational budget by 32 per cent this year to $1.45-billion.
Production in the fourth-quarter averaged 165,097 barrels of oil equivalent a day, down from 176,108. It has forecast output to average 172,000 barrels of oil equivalent for 2017, hitting 183,000 by the end of the year.
The target may be conservative based on Crescent Point’s history of technical expertise and knowledge of its assets, which has been overshadowed in the past three years by the collapse in crude oil prices, said Lanny Pendill, analyst at Edward Jones in St. Louis, Mo.
“And I think they can do that without [mergers and acquisitions], which hopefully means we’re not going to see the company come back to the market to issue new equity as often as we’ve seen it in the past,” Mr. Pendill said. “If they are able to do that, then I think they get back some of the confidence from investors, and a higher multiple applied to the stock.”
In the fourth quarter, Crescent Point had a net loss of $510.6-million, or 94 cents a share, compared with a year-earlier loss of $382.4-million, or 76 cents a share. The most recent loss included a $457-million non-cash impairment charge related to lower forecast commodity prices versus a year earlier, it said.
Cash flow from operations was $422-million, or 77 cents a share, down 15 per cent from $497-million, or 98 cents a share, in the fourth quarter of 2015.Report Typo/Error