Morningstar | Crescent Point Rebounds From a Weak Fourth Quarter
Crescent Point Energy engages in the acquisition, exploration, development, and production of crude oil and natural gas in western Canada and the United States. Most of the company's production comes from assets in Saskatchewan and Alberta and is weighted approximately 80% crude oil. Crescent Point's assets contain several low-cost resource plays. While Crescent Point's wells do not typically produce the barnstorming production rates reported by peers in the Permian or U.S. Bakken, the firm still enjoys very favorable economics (even at lower oil prices). In fact, cash break-even prices on Crescent Point's crude production are less than $45 per barrel of oil equivalent West Texas Intermediate. Conversely, high finding and development costs dilute the favorable economic structure with full-cycle break-even prices that exceed $60/boe WTI. Working to offset the higher costs, management is using production optimization techniques and waterflood technology to generate free cash flows from its established Viewfield Bakken and Shaunavon assets. Cash flow from these mature assets is being deployed to fund the buildout of the emerging Flat Lake and Uinta assets, which could represent the next significant growth pillar. Furthermore, the company has been successful in replacing production with additional resources. Crescent Point’s proved and probable reserve replacement ratio averaged 98% over the past three years, indicating that the company is not increasing its reserve levels while growing production. The company continues to strengthen its resource base through acquisitions without significantly deteriorating the balance sheet. However, income-oriented investors will note that the firm's annual dividend has been cut multiple times since the beginning of 2015 and is now set at CAD 0.04 per share. We view this as a prudent response to a very challenging commodity environment. Although the firm possesses high-quality assets, the stock continues to trade in 3-star territory, and we suggest investors remain on the sidelines.Crescent Point Energy is an oil and gas exploration, development and production company with assets focused in properties consist of crude oil and natural gas reserves. Co. is engaged in acquiring, developing and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly owned subsidiaries. As of Dec 31 2016, net proved reserves for light and medium crude oil were 141,850 million barrels, heavy crude oil were 19,993 million barrels, tight oil were 269,461 million barrels, natural gas liquids were 50,767 million cubic feet, shale gas were 221,238 million cubic feet and conventional natural gas were 115,041 million cubic feet.
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