Crescent Point Energy

Mid-cap oil producer turned out to be a best investment
Steve Proceviat ::: Globe and Mail ::: Dec. 16, 2009

One good idea
Crescent Point Energy (CPG)

The source
Peter Brieger, chief executive officer and managing director of Toronto-based GlobeInvest Capital Management

My Best Investment
One of our very best investments has been Crescent Point. It's a Canadian oil producer focused mostly in southeast Saskatchewan in the Bakken field and the Shaunavon field in southwestern Saskatchewan.

Quite frankly, Crescent Point's going to become Canada's premier pure oil play. You've got the light sweet-gravity crude out of the Bakken, you've got medium-gravity crude out of the Shaunavon, and they have a multitude of undrilled sites – I think it's up around 1,800. If they all were drilled right away, it would add production of about 133,000 barrels of oil a day.

The Return
Crescent Point was an income trust. It recently converted into the corporate structure. We're bought it about three or four years ago, at $15. Since that initial purchase, it's obviously more than doubled. But don't forget – on top of that, you've been receiving a very handsome payout, and the current payout is 23 cents a month, which gives you a very good yield, especially as it will benefit from the Canadian dividend tax credit.

Along the way, we have taken money off the table. When it hit $30, we sold half, just as a matter of principle – clients recovered their capital, so they're playing with free money.

We have been very, very pleased, and certainly, for new accounts coming in, we're adding Crescent Point. In perspective, full positions for most of our accounts would be 4 per cent. We try, especially in a growth account, not to have more than 25 or 30 stocks.

The Takeaway
If you look at the components of total return, there's obviously two – the income side, and the potential capital gains side.

Our philosophy is: Don't forget the income – the point being, the larger the income component is of the total return, the more likely you are to reach your total return targets.