Crescent Point Energy Corp (CPG.TO)

He likes this company. This is a way to get exposure to increasing oil prices. They have a fair bit of leverage to a rising oil price. Recently did an equity financing, which didn’t actually go over that well, which is part of the reason why the stock pulled back. He thinks there is a bit of a catch-up trade here, as investors warm up to this.

One of the best managed companies in the oil patch. If you see $50 oil prices next year, this is going to do quite well. At $55 oil, it will produce about $125 million in free cash flow, after dividend and after CapX. At $60, which he doesn’t think will happen, you will see as much as $250 million free cash flow. This is really a high-tech company in the sense that they’ve taken the wells they have discovered and have applied a technical approach, water flood #1, which has virtually doubled the output per well, and they are doing some other stuff with liners which also enhances. They have 7000 potential locations, many of which could be applied with water flood. As long as the oil price hangs in, you’ll see a gradual upward trend.

Great asset base. Transitioning into more of being like a senior producer where the growth rate is going to be less. He likes this. Dividend yield of about 2%, and the ability to grow it will improve as oil gets closer to $60-$65.

If oil stays over $50, would they increase the dividend? He is modelling $54 oil next year, and this is becoming a really exciting company again. Priced a lot better than its peers. One of the few companies that have had steady production growth over the last 5 years. If you believe oil is going to be above $50, you can own this here. He doesn’t know if they will need to increase their dividend to attract capital.

An excellent company, but very sensitive to oil prices. It will rally up and down quite hard as crude oil prices move up and down. It has a reputation of being a serial equity issuer, which is justified to a certain degree, but overall it is a good company. There will be a lot of volatility.

Doesn’t think this will get back to last year’s levels. A great company with great assets, but oil is only worth what oil is worth. In his view, oil can’t go past a certain point now, because of the excess supply that is out there waiting to come into the market, and the number of drilling rigs that can be employed very quickly, which will drive down the cost of the commodity.

As a stock, this is mispriced. It is undervalued. In order for that situation to get rectified, they need people to care. About a month ago, they came to market to do a raise, and the reasons for doing it sounded really, really quite poor. This has tainted the institutional interest. The appetite for the stock is not what it was. It is going to take time.

Oil stocks have had a good run, and then got beaten up. He thinks oil is going to go higher, and continues to pick away at this. A well-run company, one of the best run oil companies in Canada. It is into the Bakken area which is relatively cheap oil. Longer-term he thinks the stock is fine.

It has been a disappointment this year. They cut their dividend. Their business model became suspect when oil prices dropped. The bloom has come off this one. He sold when he thought the dividend was at risk. It is not a bad play on oil, but the luster on the stock is off.

(Market Call Minute.) He is still quite cautious on energy. This is one of the higher-quality names, although they have had to cut their dividend and issue more shares. He would rather have Suncor (SU-T).

He doesn’t know if oil is going to recover right away, but if it does it will be really good for this company. They just came to market with another big deal recently and it could be argued that they raised their share count by almost 7%. When looking at the metrics, he sees cash flow per share is set to fall from 2015 to 2017 by 5% per year, which is not uncommon in the oil patch. Right now the stock is very cheap and the deal they just did falls to their balance sheet which gives them time to wait out lower oil for longer, or gives them a better war chest to be opportunistic and make acquisitions. The key to all these companies is the balance sheet. If you like oil, at this level you can buy this. The dividend is sustainable even at $45 oil.

Well-run. If he were adding another company to his portfolio, this would be a candidate. They have good production growth ahead of them and they have put their balance sheet in shape. Management has a pretty good track record and he thinks it will continue.

(A Top Pick Sept 2/15. Up 7.79%.) A great story. Long-term you essentially have a free cash flow operation, and lots of upside to the oil price. Unfortunately, the perception is that they have created some dilution with the equity raise they did. A very prudent management team that doesn’t like to employ too much debt.

They got their money from that financing last week. He likes it down here. If the industry got particularly bullish on oil then it could become a takeover target.

Their latest equity issue certainly hasn’t gone very well, and that is overhanging the stock. The street is questioning why they have to do a big equity issue, which has been a criticism in the past. Management wants to finance their incremental growth with equity, just in case the commodity price comes back down.