Morningstar | Price Realizations a Positive Surprise for Crescent Point Energy; Stock Soars and Is Fairly Valued
No-moat Crescent Point Energy reported third-quarter production volumes of 174.3 thousand barrels of oil equivalent per day, or mboe/d, a slight year-over-year decline and more or less in line our expectations. The company maintained its 2018 full-year production guidance of 177 mboe/d, which was lowered in July. However, the company reported that fourth-quarter production to date is ahead of internal forecasts, suggesting that the company will exceed the full-year production target. Management doesn’t expect material changes to production in 2019, guiding to an annual range of 176-177 mboe/d based on a capital budget of CAD 1.55 billion-CAD 1.6 billion.Crude price realizations averaged CAD 80/boe, ahead of our expectations. Crescent Point’s operations are in a unique position. The majority of the production is located in the U.S. or are not subject to apportionment points on Canadian crude pipelines, vastly lowering exposure to wide heavy and light oil differentials. However, the company expects a 15% decline sequentially in the fourth quarter, which is slightly below our expectations.
We intend to incorporate these financial and operating results shortly, but for now, our $6 (CAD 7.50) fair value estimate and no-moat rating are unchanged.
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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