Written by SmallCapPower.com
Crescent Point Energy Corp. (CPG) is a conventional oil and gas producer with high-quality light and medium oil and natural gas assets across western Canada and the U.S. Unlike other oil and gas stock prices, which typically mirror the underlying oil price, the share price of Crescent Point Energy is trading much lower compared to the trend in WTI crude prices. Its current share price of $8.68 Canadian is down more 60% from the May 2016 high. With production increases in 2017 and beyond, and an expected recovery in oil prices, the stock could appreciate significantly compared to the other oil plays. In terms of EV/EBITDA too, Crescent Point Energy trades at a lower 21.6x versus the peer average of 30.0x.
Investment thesis
High-quality assets
Through its clearly defined strategy of acquiring new assets and developing existing ones, Crescent Point Energy has over the years built a large and high-quality portfolio of light and medium oil and natural gas assets across western Canada and the U.S. While acquisition efforts were focused in core areas in southern Saskatchewan, Crescent Point Energy continues to strategically target emerging plays such as the Bakken/Three Forks and the Uinta Basin. All these efforts have resulted in a large and diversified portfolio of assets encompassing large oil-in-place conventional plays, large low-risk resource plays, and early-stage development plays.
Significant reserves growth through acquisitions
Undeveloped resource base of >23 Bbbls: Crescent Point Energy has Original oil in place (OOIP) of > 23 billion barrels of oil with only 3% recovered to date, which shows vast exploration potential over the next several years. Currently Crescent Point Energy has ~8,085 net drilling locations within low cost, high-return basins (~14,850 including unrisked locations) and added ~1,000 new net risked locations per year on average over the last four years.
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