Crescent Point Energy Corp (CPG.TO)

(Market Call Minute.) Expensive but he likes it. Thinks they’ve got the message that they can’t exist by being serial equity issuers.

The energy seasonal period is coming up shortly. From a technical standpoint, the chart shows that we are at the bottom of the trough. We are seeing a recent uptick. It has had trouble breaking above the $38 level but coming into the seasonal period, it is more apt to break above it. If it goes above $39, that will be a good sign.

Energy names do not seem to be reflecting the improvement in WTI prices. The spread has narrowed to almost $5 and was over $20 earlier this year. Maybe the market feels the narrowing spread is not sustainable over the long term. Has been a serial issuer of equity over the last several years to fund acquisitions. Now have decided to focus more on organic growth in drilling versus acquisitions, which is a plus. Nice yield of over 6%, which she thinks is sustainable.

Likes it. A number of investors are frustrated by them continually raising capital. At this level you are getting a good distribution and getting paid to wait. A top quality name.

A core holding. They made an acquisition in the US and the market has not given them credit for it. He thinks that is a catalyst to grow them over the next few years. Future dividend growth. Their model is share issuance and so that makes it okay.

There are a couple of factors in play here. Oil getting over $100 he feels is just a temporary thing. It seemed to spike on the news over Egypt. This is one of his favourite holdings. It continues to meet expectations. Currently producing about 110,000 barrels a day. 7.5% yield is safe. This is a key holding.

He is getting a little more comfortable with their outlook. The problem in the past was issuing equity to pay dividend but now they are getting a cash flow to sustain the dividend. A pipeline in Canada would be positive for this one. Thinks the dividend is safe at this point.

Used to be an income trust. Focused in light oil space. 5 –year plan to increase production to 150K from 115k. Support at $36 level. Took opportunity of price being low to acquire.

This is his largest holding. It’s in a pretty well established trading band between the low $35’s and the high $38’s. Typically trades here until it breaks out. Value of the asset is in the mid-to high $40’s. 7.8% yield which he finds is very safe. There is a lot of hidden optionality that people are overlooking. Trading at 8X next years earnings.

Good company and executing well. Q1 production beat 117,000 barrels versus 113,000. Upped their guidance for the year. The one thing he didn’t like this quarter was their CapX went a little bit higher, back to $1.5 billion, which the market doesn’t want to see. Very low debt levels. Debt to cash level is around 1.1X. Effective payout ratio of about 141% is a little bit higher than their peers. Great, light oil name. Should benefit if the pipelines get built.

(A Top Pick June 28/12. Up 5.93%.) This is in much better shape and has better prospects than it did a year ago so he likes it even more. Have prospects, growth and the dividend is safe.

The 3 names she owns in energy are Arc Resources (ARX-T), Bonavista (BNP-T) and Crescent Point Energy (CPG-T). If you want something that is more levered to crude, that would be this company. Their strategy is to build a big land base, exploit that and grow their production. Net backs are relatively higher compared to their peers. Dividend yield of over 7%.

This is not in heavy oil but is in the Bakken field in Saskatchewan and into Manitoba. Price is very close to WTI but their real problem is getting the product to market. Has one of the best regarded management teams in the oil industry in Western Canada. Doesn’t see the dividend ever being cut.

Canadian market is a very narrow breadth and there are several sectors that are not participating such as the energy group. This one has opportunity to grow and have lots of targets to drill. Also, had the advantage of being a yield payer so gets a little better valuation. However, right now, the sector concern is overwhelming it.

Has been in a range over the last couple of years but feels this has to do more with issuing a lot of equity during that period which diluted the earnings and the cash flow growth. You are getting a 7.5% dividend yield while you are waiting. Although the equity issues diluted the stock by about 20%, land and potential reserve position was almost doubled.