Canadian Oil Producer Draws Upside Call Buys as FCF Surges
Crescent Point Energy (CPG) a smaller Energy name seeing some unusual call action on 6/7 with buyers of 1300 January $10 calls and over 3000 January $15 calls. CPG has over 43,000 calls in open interest and 9,900 puts in open interest. CPG shares are +95% YTD and on a monster three-week run after emerging out of a weekly bull flag. CPG is an oil and gas exploration, development and production company, a conventional oil and gas producer with assets strategically focused in properties comprised of high quality, long life, operated, light and medium crude oil, natural gas liquids and natural gas reserves in Western Canada and the United States. The primary assets of the Corporation are currently its interest in the Partnership, shares in CPHL, shares in CPUSH and, indirectly, shares in CPEUS. For 2021, commodity production mix was approximately 48% tight oil, 22% NGLs, 13% light and medium oil, 13% shale gas, 3% heavy oil and 1% conventional natural gas. CPG has a market cap of $7.3B and trades 3.9X EBITDA with a 2.5% dividend yield and 40% FCF yield. CPG announced on 5/12 its strong operations and excess cash flow and now sees $1.2B to $1.4B excess cash flow in 2022 for Oil at $80-$100. CPG recently raised its dividend 40% and since it is nearing its optimal net debt target will increase capital returns.