CRESCENT POINT ENERGY $17.64

CRESCENT POINT ENERGY $17.64 (Toronto symbol CPG; Shares outstanding: 504.9 million; Market cap: $8.7 billion; TSINetwork Rating: Extra Risk; Dividend y ield: 2.0%; www.crescentpointenergy.com) produces oil and natural gas in Western Canada, with a focus on its Bakken light oil development in southeastern Saskatchewan. Its output is 90% oil and 10% gas. In the three months ended December 31, 2015, Crescent Point’s cash flow fell 13.3%, to $496.7 million from $572.8 million a year earlier. The company raised its daily output by 14.5%, but lower oil and gas prices offset that increase. Cash flow per share dropped 23.4%, to $0.98 from $1.28, because Crescent Point issued shares to pay for acquisitions. They include the $1.5 billion the company paid for Legacy Oil + Gas in June 2015. Crescent Point will spend $950.0 million on exploration and development spending this year. That’s down 39.2% from $1.56 billion in 2015. Even with the lower capital spending, drilling success should increase the company’s 2016 output to an average of 165,000 barrels of oil equivalent per day from 163,631 in 2015. Crescent Point cut its monthly dividend by 70.0% with the April 2016 payment, to $0.03 from $0.10. The shares now yield 2.0%. The stock trades at just 4.5 times its annual cash flow, based on the latest quarter. Crescent Point Energy is a buy.

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