Crescent Point Receives Approval for Normal Course Issuer Bid
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Insights
The implementation of a normal course issuer bid (NCIB) by Crescent Point Energy Corp. indicates a strategic move to buy back shares, which is typically perceived as a positive signal about the company's valuation. It suggests that management believes the stock is undervalued and that repurchasing shares will enhance shareholder value. The repurchase plan encompasses a significant portion of the public float, 10%, which could lead to a contraction in the supply of shares and potentially increase the stock price if demand remains constant.
However, investors should consider the opportunity cost of using cash for share buybacks over other potential investments or debt reduction. The financial health of the company and the impact of the NCIB on its balance sheet are critical. The repurchase strategy should align with the company's long-term growth objectives and not just serve as a short-term price support mechanism.
The announcement of an NCIB can have broader implications for market perception and investor sentiment. Historically, share buyback announcements can lead to a positive reaction in the stock market, as they often reflect confidence from management in the company's future performance. Crescent Point's decision to enter into an automatic purchase plan during blackout periods further demonstrates a structured approach to capital management.
Moreover, the market's response to the buyback will depend on the macroeconomic context, industry performance and the company's operational efficiency. The energy sector's volatility, influenced by commodity prices and geopolitical events, adds layers of complexity to the potential outcomes of this buyback program.
From a legal standpoint, the NCIB must comply with securities regulations, which Crescent Point has addressed by stating that purchases will be made through regulated facilities and in accordance with the Canadian Securities Administrators' guidelines. The use of an automatic purchase plan is a compliance measure to manage insider trading risks during blackout periods. This demonstrates Crescent Point's commitment to maintaining governance standards while executing the NCIB.
Investors should note that the repurchase is subject to market conditions and regulatory constraints, such as the daily purchase limits on the TSX and NYSE, which are designed to prevent market manipulation. The legal framework ensures that the NCIB is conducted transparently and fairly, safeguarding the interests of all shareholders.
Purchases of Crescent Point's common shares under the NCIB may be made through the facilities of the TSX, the New York Stock Exchange ("NYSE") and alternative trading systems by means of open market transactions or by such other means as may be permitted by the Canadian Securities Administrators ("CSA") and under applicable securities laws, including by private agreement pursuant to issuer bid exemption orders issued by applicable securities regulatory authorities. The price the Company will pay for any common shares will be the market price at the time of purchase or such other price as may be permitted by the CSA. Any private purchase made under an exemption order issued by a securities regulatory authority will generally be at a discount to the prevailing market price.
In connection with the NCIB, Crescent Point will enter into an automatic purchase plan ("Plan") with its designated broker to allow for purchases of its common shares during internal blackout periods. Such purchases would be at the discretion of the broker based on parameters established by the Company prior to any blackout period or any period when it is in possession of material undisclosed information. Outside of these periods, common shares will be repurchased in accordance with management's discretion, subject to applicable law. The Plan has been reviewed by the TSX and may be terminated by Crescent Point or its broker in accordance with its terms or will terminate on the expiry of the NCIB.
As of February 29, 2024, the Company had a public float of 616,635,222 common shares and 619,949,490 common shares issued and outstanding. Crescent Point will not acquire, through the facilities of the TSX, more than 808,795 common shares during a trading day, being 25 percent of the average daily trading volume of the Company's common shares on the TSX for the six calendar months prior to the date of approval of the NCIB by the TSX (being 3,235,182 common shares), and, in addition, will not acquire per day on the NYSE more than 25 percent of the average daily trading volume for the four calendar weeks preceding the date of purchase, subject to, in both cases, certain exceptions for block purchases.
The actual number of common shares that will be repurchased under the NCIB, and the timing of any such purchases, will be determined by Crescent Point at management's discretion, subject to applicable securities laws. There cannot be any assurances as to how many common shares, if any, will ultimately be acquired by the Company.
Under its current NCIB that expires March 8, 2024, Crescent Point has repurchased, as at February 29, 2024, an aggregate 30,775,500 common shares out of a permitted 54,605,659 common shares, at a weighted average price of
Forward-Looking Statements and Other Matters
Certain statements contained in this press release constitute "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934 and "forward-looking information" for the purposes of Canadian securities regulation (collectively, "forward-looking statements"). The Company has tried to identify such forward-looking statements by use of such words as "could", "should", "can", "anticipate", "expect", "believe", "will", "may", "intend", "projected", "sustain", "continues", "strategy", "potential", "projects", "grow", "take advantage", "estimate", "well-positioned" and other similar expressions, but these words are not the exclusive means of identifying such statements.
In particular, this press release contains forward-looking statements pertaining, among other things, to the Company's normal course issuer bid, return of capital framework, which targets to return to shareholders 60 percent of excess cash flow on an annual basis, the process the Company plans to follow to evaluate purchases under the NCIB, and the expected benefits to shareholders associated with the NCIB and the Plan and its operation.
All forward-looking statements are based on Crescent Point's beliefs and assumptions based on information available at the time the assumption was made. The Company believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this report should not be unduly relied upon. By their nature, such forward-looking statements are subject to a number of risks, uncertainties and assumptions, which could cause actual results or other expectations to differ materially from those anticipated, expressed or implied by such statements, including those material risks discussed in the Company's Annual Information Form for the year ended December 31, 2023 under "Risk Factors," and in our Management's Discussion and Analysis for the year ended December 31, 2023, under the headings "Risk Factors" and "Forward-Looking Information".
Additional information on these and other factors that could affect Crescent Point's operations or financial results are included in Crescent Point's reports on file with Canadian and
FOR MORE INFORMATION ON CRESCENT POINT ENERGY, PLEASE CONTACT:
Shant Madian, Vice President, Capital Markets, or
Sarfraz Somani, Manager, Investor Relations
Telephone: (403) 693-0020 Toll-free (US and
Address: Crescent Point Energy Corp. Suite 2000, 585 - 8th Avenue S.W. Calgary AB T2P 1G1
Crescent Point shares are traded on the Toronto Stock Exchange and New York Stock Exchange under the symbol CPG.
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SOURCE Crescent Point Energy Corp.
FAQ
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