Why is Crescent Point (TSX:CPG) Stock Surging Today?

Summary

  • Crescent Point (TSX: CPG) stocks surged by over 100 per cent in the last three months.
  • It is one of the most active stocks on the Toronto Stock Exchange for the last 10 days.
  • Crescent’s acquisition of prized Kaybob Duvernay oil fields generates huge interest.

The stock of Canadian oil and gas company Crescent Point Energy Corp. (TSX:CPG) is one of the most actively traded scrips on the Toronto Stock Exchange currently, with 10-day and 30-day volumes averaging 4.7 million and 5.1 million, respectively.

Crescent stocks (TSX: CPG) were priced at C$4.62 on Thursday, which was an increase of 10% from the previous close as they continue their rally on TSX.

Besides its high-performance, investors were drawn to Crescent’s considerable achievements in 2020. But the most significant one has been its recent game-changing deal with Shell Canada Energy for purchasing its Kaybob Duvernay oil fields in Alberta, which puts it on a path of high returns.

Pic Credit: Pixabay.


Why Kaybob Duvernay is a Game-Changer

The company said on Wednesday that the acquisition would guarantee 10 years of high return, with little risk to drilling inventory. It estimates that it can make $600 million in revenues in 2021 alone.

Investors were also impressed by the fact that Kaybob Duvernay is a ready-to-drill site with immense reserves. The Calgary-based company plans to scoop out around 134,000 barrels of oil per day.

Kaybob Duvernay will be one of Crescent’s most valuable assets. The deal execution, however, would be completed only by April 2021. Crescent will pay C$900 million to Royal Dutch Shell Plc. affiliate Shell Canada Energy, which currently owns the field.

The asset is expected to provide a steady cash flow over the next decade. No wonder why investors were rushing to grab the stock.

A day after the shell announcement, some 11 million Crescent shares were bought or sold.

The stock value rose by more than 100 per cent in the last three months.

In the third quarter ended September 31, 2020, the company reported an excess cash flow of $120 million and cut debts considerably by over $575 year-to-date.

Crescent, which has a market cap of $2.4 billion, hopes to maintain the same operational and capital discipline in 2021 to boost production and profits. It will announce its Q4 results on February 24, 2021.

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