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Noah Zivitz

Managing Editor, BNN Bloomberg

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For the second time in about two months, Crescent Point Energy Corp. announced a richer dividend payment is on the way to shareholders.

In a release after markets closed Wednesday, the Calgary-based oil and gas producer said its quarterly dividend will rise almost 24 per cent to $0.08 per share, as of the payment scheduled for Oct. 3. It was only two days earlier, on July 4, that its shareholders received their first dividend since Crescent Point announced a hike of 40 per cent in May.

The richer payments were made possible by a winnowing-down of the company’s debt.

"Through our continued execution and capital discipline we have achieved our near-term net debt target ahead of our expected timeline," said Crescent Point President and Chief Executive Officer Craig Bryksa in the release Wednesday.

Crescent Point said it was able to hit that debt goal of $1.3 billion sooner than anticipated thanks to proceeds from asset sales, and pointed out in the release that it recently sold some non-core assets in Saskatchewan for $260 million. As well, the company said it closed the sale of non-core Duvernay assets for $40 million.

Crescent Point also stated it plans to continue ramping up its return of capital to shareholders, including a goal of returning as much as half of its excess cash flow after base dividend payments, starting in the third quarter. It said special dividends and share buybacks will be on the table.

"Given Crescent Point's current valuation relative to its intrinsic value at mid-cycle commodity prices, the company initially plans to utilize a greater proportion of share repurchases within its return of capital framework," it stated.

The move was applauded by an energy fund manager who has been pounding the table for companies to dish out returns to their investors. 

“As one of Crescent Point’s largest shareholders, we applaud their codified framework for shareholder returns, and with the stock trading at what we estimate to be 1.1x 2023 enterprise value to cash flow, and a 44 per cent free cash flow yield at US$100 West Texas Intermediate crude, we see the potential for meaningful share buybacks to re-rate Crescent Point’s current valuation from the lowest level that we have ever seen,” said Eric Nuttall, a partner and senior portfolio manager at Ninepoint Partners LP, via email.

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