The company also in effect "went public" through that acquisition. Is this happening to you frequently? 
made. Right now, there is more production exposed to commodity prices than has been the case for some time. That makes the change in cash flow real important. The Eagle Ford, in particular, is one of the most profitable basins in the United States. This management has done a lot for the company over the last few years. Furthermore, a selling price environment like the current one provides a fairly quick (if unexpected) payback of the sizable costs needed to begin secondary recovery in the first place.
In fact, at some point, the company could be acquired now that it is in far better shape than was the case a few years back. This article is an example of what I do. On the other hand, the company management appears ready to patiently "wait out" the market until the market recognizes the value here.
It appears management is willing to bear some additional risk.
The result is a very valuable company going forward with a stock price that is likely to match. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. Please. This increases the chances of financial outperformance during the next industry downturn. Kaybob Duvernay Acquisition Benefits (Crescent Point Energy Second Quarter 2022, Earnings Conference Call Slides).
The outlook at Ring Energy is very good for the first time in a few years. Get analysis on under followed Oil & Gas companies with an edge. I am not receiving compensation for it (other than from Seeking Alpha). All management has to do is fix up the properties acquired and report that they meet budgeted goals. That adjustment represents an opportunity cost in that the hedges represent the cost of forward selling the production for the price listed in the hedge. Crescent Energy 2022 Guidance For Costs, Capital Budget, And Profits (Crescent Energy Fourth Quarter 2021, Earnings Conference Call Slides). Additional disclosure: Disclaimer: I am not an investment advisor, and this article is not meant to be a recommendation of the purchase or sale of stock. I am not receiving compensation for it (other than from Seeking Alpha).
Therefore, the appearance of the latest hedges is a welcome sight. Current prices have the debt ratios well within allowable territory.
I am not receiving compensation for it (other than from Seeking Alpha). A large acquisition often takes a few years to optimize. Note that the operating expenses are on the high side. I am a high school teacher for a decade. I wrote this article myself, and it expresses my own opinions.
That is very good news for shareholders.
This is a very different strategy from the typical oil and gas company. Naturally the company will spend "first call" capital money on the highest margin area. If you have an ad-blocker enabled you may be blocked from proceeding. Get analysis on under followed Oil & Gas companies with an edge. I analyze oil and gas companies like Crescent Energy and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. Management sees a lot of potential bargains in the market. Investors are advised to review all company documents, and press releases to see if the company fits their own investment qualifications.
I am not receiving compensation for it (other than from Seeking Alpha). The backers of this company generally get involved to make a lot of money or they do not get involved. The costs appear more than reasonable. Management is free to issue as much of these securities as is necessary because all of the voting power is with the preferred shareholders. The acquisition provided significant exposure to the premium condensate market that exists in Canada. But the management strategy tells you that the company is not expected to remain "as is" because this management continues to shop for bargain deals. Mitigating those risks is the experience of management in doing "deals" and integrating those deals into a combined entity that is more valuable than its parts. This is one of the few. In summary, this company will grow by opportunistic acquisitions combined with some organic growth and a lot of operational optimizations of acquired properties. Two years would be even better. Organic growth is somewhat down the priority list.
Additional disclosure: Disclaimer: I am not an investment advisor, and this article is not meant to be a recommendation of the purchase or sale of stock.
It could easily be replaced by operating a second rig for a little while without using all the sales proceeds. This means that there is less maintenance capital needed to maintain production than is the case with competitors that are strictly unconventional. That payback can easily be protected with some hedging should the need arise. Disclosure: I/we have a beneficial long position in the shares of CPG either through stock ownership, options, or other derivatives. (Crescent Energy Fourth Quarter 2021, Corporate Slide Earnings Presentation), (Crescent Energy Fourth Quarter 2021, Earnings Slide Presentation), (Crescent Energy Fourth Quarter 2021, Earnings Conference Call Slides). That also means as a public shareholder you do not get to elect the directors (and hence really have no say in the company operations). This very experienced management can handle a growth-by-acquisition strategy. But for Oil & Gas Value Research members, they get it first and they get analysis on some companies that is not published on the free site. Time will tell how much the market values this management style. The only thing that can happen is too many profits were stated during the boom times. The reason is that the established production base is much larger. Evidently, that is not completely the case as management added some hedges with considerably better pricing. That gives this company a little more exposure than is the case for many Canadian companies as well as access to the United States debt market.
Mr. Market clearly has some doubts about all of this as seen in the post-merger price. Not many of these kinds of companies are public. Contango (MCF) joined with the company to acquire size so that larger deals could be made. But now Mr. Market demands proof of the ability to pay investors while growing the business profitably. is a Canadian company that also trades on the NYSE. But for Oil & Gas Value Research members, they get it first, and they get analysis on some companies that is not published on the free site. This management team has accomplished a lot in the time it has been in control of the company. Management holds a fair amount of stock itself.
So, that means earnings and cash flow will jump in the second quarter when compared to the first quarter. with impressive track records of investment gains in a rare public vehicle. Additional disclosure: Disclaimer: I am not an investment advisor, and this article is not meant to be a recommendation of the purchase or sale of stock. Now some more unplanned events have come to the aid of the company's deleveraging goals. Please. The other key part of the slide above is that management is going to avoid the trap that sentenced many limited partnerships to the graveyard by keeping the dividend low (and the debt low as well).
But for Oil & Gas Value Research members, they get it first and they get analysis on some companies that is not published on the free site. I have no business relationship with any company whose stock is mentioned in this article. Those opportunities may be somewhat offset as older production ages.
Cost reductions and an emphasis on cash flow at lower selling price levels signal an outperformance during the next downturn. The beauty of operating here is that "everyone" wants to be in the Permian to the point that the Permian had bottlenecks that led to significant pricing discounts in the last business cycle. The hedging program is currently also diminishing results. I am not receiving compensation for it (other than from Seeking Alpha). Public companies like this one are relatively rare. Interested? Therefore, the market is likely to look favorably upon continuing profit improvements as the cycle progresses. Is this happening to you frequently? Now conditions are allowing a gradual return to the original plan. But the real test of many of these acquisitions will be the performance of the assets during the next industry downturn. Investors are advised to review all company documents and press releases to see if the company fits their own investment qualifications. Disclosure: I/we have a beneficial long position in the shares of REI either through stock ownership, options, or other derivatives.
Most wells drilled in the current environment pay back within months. I wrote this article myself, and it expresses my own opinions. So far, the recovery has been somewhat muted by the debt issues and the increase in shares outstanding. Therefore, the logistics challenges of growing fast can be very formidable. Ordinary maintenance was delayed due to bankruptcy proceedings or seller financial distress. Most likely, the asset story of the value of the leases is back in operating order in the current environment. Cash flow before changes in operating accounts should remain at least $35 million in each of the quarters.
I analyze oil and gas companies like Ring Energy and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. with an emphasis in Accounting and an MBA (for which I studied Finance, Economics, and Management) I passed the CPA exam on the first try and am a retired CPA in the state of Maryland. group has long had a history of buying cheap and selling dear. This new company combines two parties with impressive track records of investment gains in a rare public vehicle. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Larger companies like Crescent Point do not generally appreciate as much as do smaller companies. Here, the debt levels combined with the very profitable wells will allow management to "drill its way out" of the whole situation. Disclosure: I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. The company has projects on both sides of the border to minimize any adverse effects of currency exchange swings.
Probably the largest progress by far is the growth in cash flow before the changes in operating assets and liabilities. But the oil price drop in 2015 followed by the 2019 decline (then came the OPEC Pricing War and the coronavirus demand destruction) has thoroughly disillusioned this crowd. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. This managing is changing to an opportunistic hedging.
I have no business relationship with any company whose stock is mentioned in this article. I wrote this article myself, and it expresses my own opinions.
It also has an acquisition that will likely continue to provide a positive earnings influence that is not available to many of its peers of a similar size. In the meantime, high commodity prices will provide the necessary cash flow to optimize this acquisition faster than was expected to be the case.
That consideration alone may allow the company at some point to entertain more debt to get that production to the minimum optimal amount that is cost-effective. The growth in production and cash flow should go a long way towards resolving debt ratio issues that plague some companies. I am not receiving compensation for it (other than from Seeking Alpha).
I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Not many companies can deleverage successfully in this industry. As growth proceeds and cash flow meets management's objectives, there should be a relaxation of the lender attitude towards debt repayments. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. But the important part to watch is the increasing profitability due to production (and selling price changes). Those debt ratings and the market price of the common should climb appropriately. with an emphasis in Accounting and an MBA (for which I studied Finance, Economics, and Management) I passed the CPA exam on the first try and am a retired CPA in the state of Maryland. That is not an option for this company.
I analyze oil and gas companies like Crescent Energy and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. There are always risks to growth by acquisitions in that the acquisitions fail to meet desired goals or management pays too much for the acquisition.
Get analysis on under followed Oil & Gas companies with an edge. That kind of revaluation is going to be favorable for long term shareholders. Growth will then come from bargain acquisitions that are accretive as well as organic growth. I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. These particular securities allow a seller to sell now and literally have years to plan out the tax consequences. Therefore, that debt ratio is likely to go a lot lower so that it remains conservative at considerably lower prices. The high oil percentage of production allows an almost "guaranteed improvement" although the recent price increases of other products certainly "help the cause along.". Even though geology may usually give the advantage to Permian operators, there is nothing like a good old-fashioned bottleneck in the midstream capacity to completely obliterate that advantage. Crescent Point Energy Second Quarter 2022, Change In Adjusted Funds Flow (Crescent Point Energy Second Quarter 2022, Management Discussion And Analysis). That means this company goes into the next cyclical downturn with the initial secondary costs paid back (regardless of what the accounting reports). That should increase the competitiveness of the Uinta assets. Many of them just want out and are not too picky about price. That means this acquisition will payback faster than expected.
There is a lot of experience here in doing deals. I personally think the Eagle Ford may yet come out on top at the top of the business cycle one more time. Lower debt levels also argue for an enterprise valuation increase. Therefore, management was able to acquire properties for some extremely low prices. That often means switching strategies. The big deal is the advantage of entering a market without a lot of competition. They then scramble to reduce costs a lot more during the next cyclical downturn.
I have a high school teaching credential and an MA in Math Education. That is a huge advantage over many other companies that offer common stock (with potential capital gains due in the year the deal closes). That turns out to be the acquisition. I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. So that will have priority.
Right now, it looks like that may happen again. The corporate structure is set up to delay the tax consequences of any deal for selling shareholders. with an emphasis in Accounting and an MBA (for which I studied Finance, Economics, and Management) I passed the CPA exam on the first try and am a retired CPA in the state of Maryland. The acquisition of the condensate production exposure is a huge plus for profitability in the future. The properties to be sold have some older production that is likely more expensive to produce than the company average. In the meantime, management is able to spend the generous cash flow to optimize acquired operations while drilling new production to increase the performance of the properties acquired. So, when this company sells itself, investors will have a good idea that a market top is somewhere in the neighborhood time period.
In this case, management appears to be in a very good position because that older production was purchased either in bankruptcy court or during a time of considerably lower prices. But Mr. Market will still want to see that outperformance during an industry downturn. Is this happening to you frequently? Steady progress in repaying the debt will have a similar effect. But management is not going "all the way" to opportunistic hedging. The Uinta is probably more problematic. The company has projects on both sides of the border to minimize any adverse effects of currency exchange swings. Before that I was an analyst (operations and financial) and for a short time a Controller I have a B.S. That sort of makes the guidance given during the first quarter earnings press release, conference call, and earnings slide presentation somewhat transitory in nature. The specific part of this is the Class B and OpCo units. Losses are far worse when the discount often expands during a cyclical downturn to produce an overall lower level of profitability than is the case with light oil. I have no business relationship with any company whose stock is mentioned in this article. Sign up here for a free two-week trial. This new company combines. Crescent Point Energy Corp. (NYSE:CPG, CPG:CA) is a Canadian company that also trades on the NYSE. The current environment is likely to offer management an excellent opportunity to reduce operating costs. Accounts Receivable alone soaked up a fair amount of cash generated in the first quarter because commodity prices rose. Therefore, they are very likely to benefit the common investors. Crescent Energy (NYSE:CRGY) is a KKR backed company with well-known John Goff as chairman.
(Crescent Energy First Quarter 2022, Earnings Conference Call Slides), (Crescent Energy Press Release February 2022.). What would remain unaffected is the early payback of expensive secondary recovery project costs. In the current environment, the banks may allow a second rig, as was originally planned, to operate. But there are also a lot of profit opportunities here. Accounts receivable soaked up a fair amount of cash flow because sales prices climbed in the first quarter. Right now, the ability to repay debt is extremely important to the lending market. The newly merged company supposedly has the scale to acquire larger properties than the predecessor companies had separately. In the meantime, the "shop 'til you drop" attitude is ok as long as the discipline remains in place to ensure relatively fast paybacks of assets purchased.
This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. Sign up here for a free two-week trial. Many times, that plan of operation does not work. In the meantime, management has announced the end of the hedging program. What is left out of the discussion is that there needs to be enough production at that wonderful netback to enable a decent return on investment and return on capital. Management has purchased a lot of older production that will be more expensive to operate. Get analysis on under followed Oil & Gas companies with an edge. Please disable your ad-blocker and refresh. I am a high school teacher for a decade.
There is a fear of great ratios without the necessary cash to pay investors. Management is likely to repay about $40 million of debt in the current fiscal year while growing production roughly 15%. Mr. Market usually values what he can see. Management has some drilling opportunities to go with the original older production purchases.
Crescent Energy Financial Conservatism Description (Crescent Energy Fourth Quarter 2021, Earnings Slide Presentation).
(Canadian Dollars Unless Otherwise Noted), Crescent Point Energy Excess Cash Flow At Far Lower Selling Prices (Crescent Point Energy First Quarter 2022, Earnings Conference Call Slides). That is good news for an industry that has managed to surmount several challenging downturns. I am a high school teacher for a decade.
Right now, though, I like the chances of management to succeed with this acquisition.
The fourth quarter earnings report has a huge mark-to-market" hedging adjustment that really clouds the operating results. Please disable your ad-blocker and refresh. Investors can bet that this management will be watching positive cash flow very closely. Sign up here for a free two-week trial. I analyze oil and gas companies like Crescent Point Energy and related companies in my service, Oil & Gas Value Research, where I look for undervalued names in the oil and gas space. Disclosure: I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. A large company like this has a fairly diversified amount of production with an emphasis on light oil and condensate. This has been going on for as long as I can remember and it appears to be continuing for the foreseeable future.
Ring Energy Growth In Cash Flow From Operations (Non-GAAP) (Ring Energy First Quarter 2022, Earnings Press Release). The result will be a far different company moving forward than was the debt laden company of years past.
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