Disclosure: I/we have a benefici

2021/05/21

Disclosure: I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. For those where this type of investment is their "cup of tea", then it's time to consider getting in and fastening their seatbelts for a very exciting ride.

The company also in effect "went public" through that acquisition. Therefore, they are very likely to benefit the common investors. The high oil percentage of production allows an almost "guaranteed improvement" although the recent price increases of other products certainly "help the cause along.". The decline in hedging will lead to cash flow growth.

Contango (MCF) joined with the company to acquire size so that larger deals could be made. But there are also a lot of profit opportunities here. I am a high school teacher for a decade. made. That accounts receivable growth should diminish in the second quarter. Disclosure: I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. Get analysis on under followed Oil & Gas companies with an edge. Current prices have the debt ratios well within allowable territory. The way that management gets deals is because they occupy a niche where sellers far outnumber demand for the "product". Many times, that plan of operation does not work. Therefore, the amount of receivables from customers also rose along with the prices. So, when this company sells itself, investors will have a good idea that a market top is somewhere in the neighborhood time period. That is a huge advantage over many other companies that offer common stock (with potential capital gains due in the year the deal closes). There are going to be a lot more shares outstanding than was the case before the coronavirus demand destruction.

Investors are advised to review all company documents, and press releases to see if the company fits their own investment qualifications. Please.

Naturally the company will spend "first call" capital money on the highest margin area. Crescent Energy Production Growth Strategy In Eagle Ford And Uinta (Crescent Energy First Quarter 2022, Earnings Conference Call Slides). That means this acquisition will payback faster than expected. In summary, this company will grow by opportunistic acquisitions combined with some organic growth and a lot of operational optimizations of acquired properties. Cost reductions and an emphasis on cash flow at lower selling price levels signal an outperformance during the next downturn. Occassionally write articles for Rida Morwa''s High Dividend Opportunities https://seekingalpha.com/author/rida-morwa/research, Occassionally write articles on Tag Oil for the Panick High Yield Report, https://seekingalpha.com/account/research/subscribe?slug=richard-lejeune. This management, through production increases and repaying debt, has a goal to have reasonable ratios at considerably lower prices. But 2020 abruptly stopped the transition. Therefore, that debt ratio is likely to go a lot lower so that it remains conservative at considerably lower prices. This means that there is less maintenance capital needed to maintain production than is the case with competitors that are strictly unconventional. The low debt allows management to shut-in any unprofitable production while waiting for the next pricing recovery. 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. 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. Crescent Point Energy Second Quarter 2022, Change In Adjusted Funds Flow (Crescent Point Energy Second Quarter 2022, Management Discussion And Analysis). Now let us see what the future holds. The preferred stock elects the board of directors.

Consistent hedging is generally looked at by the market as a zero-sum game. Two years would be even better.

Right now, the ability to repay debt is extremely important to the lending market. That company itself filed bankruptcy with too much debt. Larger companies like Crescent Point do not generally appreciate as much as do smaller companies. Both of those have changed considerably in the last few years. Public companies like this one are relatively rare. Much of the market is still fixated upon the negative cash flow days that are very unlikely to return to the industry. 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.

These assets represent the majority of the old EP Energy (OTCPK:EPEG) company. Not many of these kinds of companies are public. Kaybob Duvernay Acquisition Benefits (Crescent Point Energy Second Quarter 2022, Earnings Conference Call Slides). Smaller brethren can often add a rig or sometimes half a rig and show tremendous growth from a smaller established production base. The costs appear more than reasonable. 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.

Management had a plan that was rudely interrupted first by the OPEC pricing war and then by the coronavirus demand destruction. As growth proceeds and cash flow meets management's objectives, there should be a relaxation of the lender attitude towards debt repayments. Generally, a faster payback raises the profitability of the acquisition. The reason that may happen is that the annualized first quarter cash flow is in the $140 million range. This is a very different strategy from the typical oil and gas company. Lower debt levels also argue for an enterprise valuation increase. These particular securities allow a seller to sell now and literally have years to plan out the tax consequences. Management is trying to tell the market that not many can be bothered with these properties. The Uinta is probably more problematic. That often means switching strategies. (Note: This article appeared in the newsletter on May 29, 2022, and has been updated as needed.

The risk here is the future performance of the business. Evidently, that is not completely the case as management added some hedges with considerably better pricing. That is not an option for this company. Crescent Energy Organizational Structure (Crescent Energy Fourth Quarter 2021, Corporate Slide Earnings Presentation). Investors are advised to review all company documents and press releases to see if the company fits their own investment qualifications. I wrote this article myself, and it expresses my own opinions. That is very good news for shareholders. Before that I was an analyst (operations and financial) and for a short time a Controller I have a B.S. The properties to be sold have some older production that is likely more expensive to produce than the company average. This is really the first business cycle where the results can be seen.

Because management continues to shop for bargains, there is likely to be more acquisitions that will materially change guidance during the current fiscal year. This new company combines two parties with impressive track records of investment gains in a rare public vehicle.

Such an acquisition can be enhanced by the periodic sale of higher cost production (and then plowing that money back into new lower cost wells). I am a high school teacher for a decade. There is a lot of experience here in doing deals.

This management has done a lot for the company over the last few years. That means that initial profits from this acquisition should run above budget as long as commodity prices remain stronger than the assumptions used for the acquisition. Please disable your ad-blocker and refresh.

That will leave management a lot of options to grow this company for the benefit of shareholders. This was probably to be expected as the company grew and was able to acquire larger deals. I/we have a beneficial long position in the shares of CPG either through stock ownership, options, or other derivatives. But an acquisition, if done correctly, often changes the profitability mix of the acquiring company for a few years to enable more per share growth than peers of a similar size. Despite the fact that the debt acquired to purchase the Northwest properties was originally seen as conservative by many, the unplanned challenges of fiscal year 2020 changed that overnight. 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. group has long had a history of buying cheap and selling dear. This new company combines. I am not receiving compensation for it (other than from Seeking Alpha). Crescent Energy Financial Conservatism Description (Crescent Energy Fourth Quarter 2021, Earnings Slide Presentation). Right now, though, I like the chances of management to succeed with this acquisition. If you have an ad-blocker enabled you may be blocked from proceeding. Management has an advantage in the form of some competitive secondary recovery prospects that have very low production decline profiles to lower the company average production decline each year. But the important part to watch is the increasing profitability due to production (and selling price changes). The last deal involving the Unita Basin acquisition is looking very good because prices have risen considerably above the assumptions used for the acquisition. That few years though has lowered costs considerably to make previously uneconomical acreage economic while moving other acreage into Tier 1 territory. In the meantime, management has announced the end of the hedging program.

In commodities, one has to make money where one can. There is a lot of unconventional and secondary recovery companies with wonderful netbacks both historically and currently that do not have enough production to produce a viable amount of cash flow and profits. Production growth will allow for a far superior cash flow stream, even if commodity prices drop significantly from current levels. The first thing to notice is that the company is organized to delay the tax consequences of potential sellers. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. I/we have a beneficial long position in the shares of CRGY either through stock ownership, options, or other derivatives. I am a high school teacher for a decade. (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). Interested? The continuing low debt ratio also hints at bargain purchases. That did not happen in the Eagle Ford where the oil was generally sold at a premium to the corresponding benchmark. Therefore, companies that produce heavy oil, for example, have a lower valuation in the current cycle despite often more profitable earnings because heavy oil is a discounted product. In the meantime, there are a lot of deals for stockholder gains to be made. Ring Energy Growth In Cash Flow From Operations (Non-GAAP) (Ring Energy First Quarter 2022, Earnings Press Release). The market awaits the benefits of the company's strategy. Management experience should reduce the risk of fast growth and the chance of failure. Is this happening to you frequently? Please. 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. 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. I break down everything you need to know about these companies -- the balance sheet, competitive position and development prospects. 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. Therefore, expect Mr. Market to take his time assigning a decent value to the assets. I have no business relationship with any company whose stock is mentioned in this article. Before that I was an analyst (operations and financial) and for a short time a Controller I have a B.S. 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 holds a fair amount of stock itself. I am not receiving compensation for it (other than from Seeking Alpha). Further indications of future outperformance come from the emphasis of cash flow at much lower commodity prices and a focus on the debt ratio at those lower prices. The growth in production and cash flow should go a long way towards resolving debt ratio issues that plague some companies. The company intends to grow through cheap acquisitions rather than solely organically. But the ability to generate some very good cash flow should remain. This is one of the few. The current environment is likely to offer management an excellent opportunity to reduce operating costs. 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. I have a high school teaching credential and an MA in Math Education. I have a high school teaching credential and an MA in Math Education.

I am a high school teacher for a decade. Disclosure: I/we have a beneficial long position in the shares of CPG either through stock ownership, options, or other derivatives. 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. But management has to also demonstrate that there is enough free cash flow to repay the debt while growing production and maintaining operations properly. Crescent Energy Explanation Of Management Choice Of Acquisition Strategy (Crescent Energy Fourth Quarter 2021, Earnings Conference Call Slides). The fourth quarter earnings report has a huge mark-to-market" hedging adjustment that really clouds the operating results.

It is for investors that believe in this management continuing to grow the company through deals as well as organic growth. The only thing that can happen is too many profits were stated during the boom times. Hence, this is an unusually profitable opportunity to take advantage of while it lasts. This management team has accomplished a lot in the time it has been in control of the company. Since really no one in the industry saw the currently strong pricing on the horizon at the time they made the hedge, many in the industry are now selling production at the hedge price with limited exposure. 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. The industry has largely moved past that several years back. The dividend does have priority. Occassionally write articles for Rida Morwa''s High Dividend Opportunities https://seekingalpha.com/author/rida-morwa/research, Occassionally write articles on Tag Oil for the Panick High Yield Report, https://seekingalpha.com/account/research/subscribe?slug=richard-lejeune. Note that the operating expenses are on the high side. If you have an ad-blocker enabled you may be blocked from proceeding. Management has some drilling opportunities to go with the original older production purchases. Now conditions are allowing a gradual return to the original plan. Interested? Not many of these kinds of companies are public. Crescent Energy Management Guidance With Uinta Acquisition (Crescent Energy Press Release February 2022.). This article is an example of what I do. GAAP accounting therefore requires a noncash value adjustment of those hedges every reporting period. These downturns will happen a lot faster (meaning they will not last long) because production declines quickly in the unconventional business that now dominates the industry. I wrote this article myself, and it expresses my own opinions. The sale of some noncore assets can easily be replaced with a second rig drilling for a short time. Investors are advised to review all company documents, and press releases to see if the company fits their own investment qualifications. The hedging program is currently also diminishing results.

This is a company that probably needs a year of the current prices to really get itself back on track. That makes the change in cash flow real important. That is good news for an industry that has managed to surmount several challenging downturns.

That means any investor has to have a fair amount of faith in the ability of this management to do a decent job. That left management with insufficient cash flow compared to the debt, with an asset story that was now meaningless to lenders. I have no business relationship with any company whose stock is mentioned in this article. 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. The specific part of this is the Class B and OpCo units. 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. The acquisition should lead to above-average profitability gains throughout the business cycle. Steady progress in repaying the debt will have a similar effect. 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. 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.

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. I have no business relationship with any company whose stock is mentioned in this article. That payback can easily be protected with some hedging should the need arise. Therefore, hedging programs are generally not valued at all by the market. Then again, the whole reason for acquiring assets is to improve performance. That can be a lot riskier because management does not hedge unless they think they need to. On the other hand, the company management appears ready to patiently "wait out" the market until the market recognizes the value here. Fast growth has its own risks.

Therefore, the market is likely to look favorably upon continuing profit improvements as the cycle progresses. Also, as the company becomes larger, each acquisition will become less material to the company so that recurring operations begin to dominate results. I am not receiving compensation for it (other than from Seeking Alpha). Now some more unplanned events have come to the aid of the company's deleveraging goals. The continuing cash flow is likely to result in more returns to shareholders through higher dividends and share repurchases. 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. 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. This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. A lot of companies during a boom often talk about cost reductions. If you have an ad-blocker enabled you may be blocked from proceeding. Sign up here for a free two-week trial. That outperformance is likely to continue well into the future. Investors have a chance to participate right alongside some very experienced "big boys" in the deal making world. Crescent Energy Company (NYSE:CRGY) has made several accretive acquisitions. 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 market is waiting for that "projected profitability" to show on the quarterly results. For those where this type of investment is their "cup of tea", then it's time to consider getting in and fastening their seatbelts for a very exciting ride. I wrote this article myself, and it expresses my own opinions. That sort of makes the guidance given during the first quarter earnings press release, conference call, and earnings slide presentation somewhat transitory in nature. This usually continues until the older wells no longer generate cash flow.

This management has been digging the company from a debt hole for some years. Organic growth is somewhat down the priority list. That turns out to be the acquisition.

This idea was discussed in more depth with members of my private investing community, Oil & Gas Value Research. (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). The company also in effect "went public" through that acquisition. Disclosure: I/we have a beneficial long position in the shares of REI either through stock ownership, options, or other derivatives. Please. Interested? I have no business relationship with any company whose stock is mentioned in this article. The company is getting "back on track" with the original plan to convert to an operating company with an optimal amount of production. But Mr. Market will still want to see that outperformance during an industry downturn. But the real test of many of these acquisitions will be the performance of the assets during the next industry downturn. What would remain unaffected is the early payback of expensive secondary recovery project costs.

Management has kept the focus on extra cash flow at considerably lower prices. But management is not going "all the way" to opportunistic hedging.

To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. The big deal is the advantage of entering a market without a lot of competition. Management is now raising the guidance shown above due to the stronger than expected commodity prices. The result will be a far different company moving forward than was the debt laden company of years past. The investor is warned about this guidance by the word "initial". with impressive track records of investment gains in a rare public vehicle.

So, when this company sells itself, investors will have a good idea that a market top is somewhere in the neighborhood time period.

It could easily be replaced by operating a second rig for a little while without using all the sales proceeds. Please disable your ad-blocker and refresh. is a Canadian company that also trades on the NYSE. Cash flow before changes in operating accounts should remain at least $35 million in each of the quarters. Please. I have a high school teaching credential and an MA in Math Education.

Newer production tends to be a lot more profitable than older production. Older production often has higher lease operating expenses as volume declines.

Investors are advised to review all company documents and press releases to see if the company fits their own investment qualifications. Therefore, the reduction in cash flow may not be quite as significant as some investors expect. So, there was an unexpected benefit that probably made Eagle Ford operations more profitable during the peak of the last business cycle. I wrote this article myself, and it expresses my own opinions. The second quarter pricing for all oil and gas companies, including Ring Energy (NYSE:REI), was even better than the first quarter. Management has wisely pursued growth as well as debt repayment. 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. Therefore, the logistics challenges of growing fast can be very formidable. The company is likely to grow quickly. 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). It appears management is willing to bear some additional risk. This is a Canadian company listed on the NYSE and the TSX that reports in Canadian dollars unless otherwise noted.). So that will have priority. Get analysis on under followed Oil & Gas companies with an edge.

The guidance above refers to the company "as is".

The reason is that the established production base is much larger.

I personally think the Eagle Ford may yet come out on top at the top of the business cycle one more time. The ability to increase the dividend combined with low debt rate hint at better times to come. The corporate structure is set up to delay the tax consequences of any deal for selling shareholders. But the evaluation of that ability by any investor considering an investment in this entity will be crucial as to the viability of the investment proposal. Management will pursue debt repayment and production growth to decrease key debt ratios at lower commodity prices. Mr. Market clearly has some doubts about all of this as seen in the post-merger price. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Therefore, the gains will come from operating improvements and bargain basement deals. It is, therefore, very easy to justify drilling wells while keeping an eye out for any hint of pricing weakness.

), was even better than the first quarter. This managing is changing to an opportunistic hedging. All management has to do is fix up the properties acquired and report that they meet budgeted goals.

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 wrote this article myself, and it expresses my own opinions. Before that I was an analyst (operations and financial) and for a short time a Controller I have a B.S. So, the loan should be protected as well as it was when it was first made. Crescent Energy 2022 Guidance For Costs, Capital Budget, And Profits (Crescent Energy Fourth Quarter 2021, Earnings Conference Call Slides). The company has begun to branch out from acquiring older production and optimizing those operations to some operations that involve drilling and production increases from new wells. Please disable your ad-blocker and refresh.

Right now, it looks like that may happen again.

The company has projects on both sides of the border to minimize any adverse effects of currency exchange swings. The result is a very valuable company going forward with a stock price that is likely to match. They are not the only ones either, as a lot of development stage and companies converting to operating stage were caught in the consequences of fiscal year 2020 challenges.

That points to a far above average management. Many of them just want out and are not too picky about price. In the meantime, management will use the latest techniques and future technology improvements to continue to lower costs. I am not receiving compensation for it (other than from Seeking Alpha). That happens to be just fine with this group because they are not shy about naming a bargain price. Every single company in the industry will benefit from rising commodity prices. The newly merged company supposedly has the scale to acquire larger properties than the predecessor companies had separately.

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