Crescent Point Energy Trust

Crescent Point Energy Trust(TSX: CPG.UN)


Market value(03.11.-08): C$3.47 billion

Yield: 9.94%(C$0.23/month)

Total assets 2007: 2613.4 million 2006: 1371.4 million 2005: 808.2 million

Total liabilities: 2007:1196.4 million 2006: 467.0 million 2005: 375.6 million

Net debt(30.06.-08): C$635.7 million 2007: C$650.0 million 2006: 227.9 million 2005: 194.5 million

Funds flow per unit: 2007: C$ 3.51 2006:C$ 2.98 2005:3.04

Payout ratio: current(YTD-08): 50% :2007:68% 2006:81% 2005:70%

Average realized prices per boe 2007: C$63.55 2006: C$56.52 2005: C$56.55

Netback: 2007: C$40.02 2006: C$30.08 2005: C$28.74

Production current: 36 250 boe/d(87% oil, 13% natural gas)2007:28,117 boe/d 2006: 20,723 boe/d 2005: 12,164 boe/d

Reserves(P&P): 175.7 million BOE 2006: 115.3 million boe 2005: 90.3 million boe

reserves per unit:1.4 BOE

*Original Oil in place(OOIP) >6 billion barrels

*potential of significant production and reserve expansion in the Bakken

CPG's lands hold more than 6 billion barrels of oil, a very impressive figure, which however is some what misleading. Majority of that oil is in the Bakken formation(Saskatchewan portion) and most of it(probably >70%) will never, ever be recovered. Enhanced oil recovery(EOR) techniques may enable CPG to book much more reserves in the future.
CPG is currently one of my largest holdings and I'll probably increase my position by the end of the year.
Value estimate for CPG: ((40.02+30.08+28.74)/3x)0.70)x175.5-1196.4=2850.2 mllion(netbacks discounted with 30%(higher future operating expenses because of EOR-technology use), no discount for reserves(unlikely downside in current booked reserves)). Assuming that CPG could book 50% more reserves(total of 263 million boe) from it's current landbase its value could be 4853 million, which would indicate a potential upside of ~40%.