Crescent Point Energy Corp

Crescent Point Energy Corp (TSX: CPG) is an oil & gas producer company, based out of Canada. Major business operations primarily revolves around exploring, developing, and producing oil and gas with assets located in the United States and Western Canada. The Group has natural gas and crude oil properties located in Manitoba, British Columbia and Alberta in Canada and Utah, Colorado, Montana and North Dakota in the US.  

Financial Highlights – Q1 Financial Year 2020 (31^st March 2020, CAD, million)

(Source: Quarterly Report, Company Website)

In the first quarter of the financial year 2020, the group’s average daily production declined to 141,330 boe/d from 175,955 boe/d in Q1 FY2019. Due to lower production for the period, the group’s oil and gas sales declined to CAD 548.4 million in Q1 FY2020 as against CAD 892.4 million in Q1 FY2019. The total revenue and other income stood at CAD 1,105.1 million in Q1 FY2020 versus CAD 649.1 million in Q1 FY2019. Due to significant increase in the expenses for the period, the Company reported a pre-tax loss of CAD 2,929.3 million in the first quarter of the financial year 2020 versus a pre-tax loss of CAD 5 million in Q1 FY2019. The net loss stood at CAD 2,324.1 million in the first quarter of the financial year 2020 versus a net income of CAD 1.9 million in Q1 FY2019. The group’s basic and diluted loss per share stood at C$4.40 for the period. The cash balance declined to CAD 19.6 million as on 31^st March 2020 versus a cash balance of CAD 56.9 million as on 31^st December 2019.

Share Price Performance

Daily Chart as of 3^rd June 2020, after the market closed (Source: Refinitiv, Thomson Reuters)

Crescent Point Energy Corp shares closed at CAD 2.40 at the time of writing after the market close on 4 June 2020. Stock's 52 weeks High is CAD 6.30 and Low is CAD 0.75.

Conclusion

The Group introduced new technologies and techniques to upgrade its portfolio of services and products to meet the requirements of the faster pace commodity market. The Company is well-positioned to take benefits from growth trends across the energy and industrial markets. The Company has shown a decline in financial performance in the first quarter of the financial year 2020. The top-line performance has improved, while the bottom-line performance has declined significantly, with a decline in the profitability for the period. The revenue from core operations has declined with a decline in the cash balance for the period. The group operations are impacted by the outbreak of covid-19 pandemic and have been focusing on strengthening its balance sheet and return with capital discipline and reducing its costs. The commodity market is extremely volatile, and on the lower side, and the Company has taken additional measures to improve the business’s long-term sustainability. Crescent Point Energy has managed to reduce its net debt significantly as compared to Q1 data for last year.

Based on the above rationale, we have given a “Hold” recommendation at the closing price of CAD 2.40 (as on 4 June 2020).

Disclaimer

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