Crescent Point Energy Swings To A 1Q Profit On Higher Oil Prices; Shares Pop 4%

Shares of Crescent Point Energy (CPG) jumped by 4% in early trading Wednesday. The Calgary-based oil and gas company reported a profit in 1Q compared to a loss in the same quarter a year ago when oil prices fell at the beginning of the pandemic.

Total oil and gas sales came in at C$630.2 million in 1Q, up 15% from C$548.4 million in 1Q 2020, helped by higher pricing. Indeed, the company’s average selling price was C$58.65 per barrel of oil equivalent in the first quarter, 38% higher than C$42.64 in the same quarter last year. However, average daily production fell from 141,330 to 119,384 barrels of oil equivalent per day (boe/d).

Meanwhile, Crescent Point reported a profit of C$21.7 million (C$0.04 per diluted share) for the quarter ended March 31, compared to a loss of C$2.3 billion (C$-4.40 per diluted share) in 1Q 2020. The loss was caused by a C$3.56 billion non-cash impairment charge on its oil and gas assets due to falling oil prices.

On an adjusted basis, the company earned C$95.1 million (C$0.18 per diluted share) for the quarter, compared to adjusted earnings of C$48.7 million (C$0.09 per diluted share) for the prior-year quarter.

Crescent Point’s President and CEO Craig Bryksa said, “Our first-quarter results continued to demonstrate our strong operational execution. Against the backdrop of a rising oil price environment, we have remained disciplined and focused on enhancing balance sheet strength and the sustainability of our business. The Kaybob Duvernay assets strengthen our expected free cash flow outlook, accelerate our deleveraging profile and improve our environmental performance, positioning our company to create significant value for our shareholders in 2021 and beyond.”

Crescent Point said that it expects to meet or exceed its current guidance for 2021 with the production of 132,000 to 136,000 boe/d and development capital spending within the range of C$575 million to C$625 million. (See Crescent Point Energy stock analysis on TipRanks.)

In April, BMO Capital analyst Ray Kwan initiated coverage of CPG with a Buy rating and a C$7.00, for a 33% upside potential.

Kwan expects that the acquisition of Kaybob Duvernay assets will provide incremental growth, significant free cash flow, and a condensate-rich drilling inventory. Given its strategic position in Duvernay, Kwan thinks Crescent could benefit from further consolidation in the longer term.

The rest of the Street is cautiously optimistic on CPG with a Moderate Buy consensus rating based on 8 Buys and 3 Holds. The average analyst price target of C$6.65 implies a 26.6% upside potential to current levels.