Crescent Point Energy Corp. (TSX: CPG) increased its 2017 average production guidance based on strong operating results and better-than-expected spring break-up conditions
SmallCapPower | July 28, 2017: Crescent Point Energy Corp. (TSX: CPG) Thursday reported Q2 results with revenues surging 26% to reach $813.7 million, driven by the higher production and an increase in the average selling price. The Company posted double-digit revenue growth in all its three operating units.
Crude oil sales increased 23% to $744.7 million, due primarily to the 15% increase in realized prices and the 6% increase in crude oil production. The increase in realized prices is largely a result of the 12 percent increase in the Canadian dollar WTI benchmark price as compared to the second quarter of 2016 and a narrower corporate oil differential. The increased production in the second quarter of 2017 is due primarily to the Company’s successful capital development program.
NGL sales increased 86% to $40.6 million, due in large part to the 78% rise in realized NGL prices and the 5% increase in NGL production. Realized prices in 2017 were impacted by the strengthening of prices for propane, butane and condensate resulting from the increase in crude oil prices and production cuts. The increased production in 2017 is due primarily to the Company’s successful capital development program.
Natural gas sales increased 72% to $28.4 million, due mostly to the 76% increase in realized natural gas prices, partially offset by the 3% decrease in natural gas production. The increase in the realized natural gas price is largely due to the increase in the AECO daily benchmark price. The decreased natural gas production in 2017 is primarily due to the one month shut-in of the Company’s gas production in southern Alberta due to a turnaround at a third-party gas plant.
Post the excellent results, Crescent Point Energy increased its 2017 average production guidance to 174,500 boe/d, up from 172,000 boe/d, based on strong operating results and better-than-expected spring break-up conditions. The Company’s exit guidance remains at 183,000 boe/d as it is in the process of disposing additional non-core assets.
If the oil prices recover in the coming months and through 2018, it will help Crescent Point Energy to see an upside to its stock price, which is currently down 43% YTD. Also, Crescent Point Energy owns attractive assets and is growing production, despite the ongoing difficulties in the market. In fact, 2017 exit output is expected to be 10% higher than that of last year.
In terms of valuation, Crescent Point Energy currently trades at price to TTM sales of 2.31x, price to book value of 0.58x and forward PE of 79.62x.
Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.
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