Crescent Point Energy Corp. CEO Craig Bryksa spent five years revamping the Canadian oil driller, and investors are finally starting to see it pay off.
After taking over a company with about C$4 billion in long-term debt and a portfolio of assets from Saskatchewan to Utah, Bryksa sold fields, reduced debt and executed a buyout of $2.5 billion that Crescent focused on Canada’s Duvernay and Montney shale formations. .
Focusing on just a couple of regions allowed the company to cut costs and build technical expertise while reducing debt freed up cash for dividends and buybacks.
“We needed to move into what I would describe as ‘bigger company assets,’ with more scalability, better yields, and that could generate an extreme amount of free cash flow,” Bryksa said during an interview with Toronto.
Analysts and investors have so far applauded the overhaul. After trailing peers for most of Bryksa’s first three years in office, Crescent Point shares rose even with Canada’s broader energy index last year and are currently outperforming it. Of analysts covering Crescent Point, 92% recommend buying the stock, up from 62% five years ago.
Still, the renewal has left Crescent Point “heavily dependent” on continued drilling success for growth, Royal Bank of Canada analyst Michael Harvey said in a note to clients. The company’s production base, which is about 85% weighted by crude oil, also leaves it vulnerable to fluctuations in oil prices, he said.
Still, Harvey rates the stock an “outperform,” the equivalent of a buy, because of its “attractive drilling opportunities.”
Another boost to the stock is the company’s reputation as “business junkies,” in Bryksa’s words. Crescent Point was one of the most acquisitive oil producers in North America, making 30 deals totaling $10.1 billion in the decade before Bryksa took over.
While much of Bryksa’s strategy has focused on acquiring better assets, he has been working to convince investors that Crescent Point will no longer be concerned with the portfolio and is focusing on holdings that has.
Crescent Point’s current five-year plan includes increasing production to the equivalent of 195,000 barrels of oil a day by 2027 from about 160,000 this year. The company has also pledged to return half of the excess discretionary cash to shareholders, in addition to the base dividend.
“We have a very disciplined approach to what fits and what doesn’t,” Bryksa said of the portfolio. “It’s focused on yields, scalability, market access and free cash flow generation.”
