Shares in Crescent Point Energy Corp. surged Friday after a report surfaced the company had been targeted by an activist investor.
Crescent Point declined to comment on the report published in the U.S. business news outlet DealReporter, although the swift and sharp gain in the shares shows investors could welcome such an advance.
Crescent Point shares jumped nearly 8 per cent to $16.24 on the Toronto Stock Exchange. Its New York Stock Exchange-listed shares rose by the same percentage, to $12.41 (U.S.).
Citing unnamed sources, DealReporter said it was rumoured that a U.S.-based activist investor had taken a stake in the company, which concentrates on Canadian and U.S. Bakken oil. None of the unnamed sources claimed firsthand knowledge of such a move, and no name was given for who could be amassing a position.
Crescent Point shares have been under pressure since September when the company issued $650-million (Canadian) in stock to beef up capital spending. The issue was met with lukewarm response by investors, some of whom criticized the dilution after previous issues at higher prices.
Crescent Point has faced pushback on its executive compensation. Last year, chief executive officer Scott Saxberg, who has led the company from its roots as a junior producer in the early part of the last decade, began talks with shareholders about possible changes to its pay practices after losing a say-on-pay vote at its annual meeting. He earned $8.8-million in 2015, including $1.1-million in salary, $6.7-million in share-based awards and $950,000 in incentives. Total pay was nearly $9-million the prior year.
Meanwhile, the company was also forced to slash its dividend as weak oil prices crimped cash flow.
Crescent Point gained a reputation as a frequent share issuer as it bulked up on oil assets. But many deals were done at higher oil prices and now look overpriced, said David Neuhauser, managing director at U.S. activist hedge fund Livermore Partners. The firm owns no stake in Crescent Point but has taken positions in other Canadian energy companies, such as Zargon Oil & Gas.
"I think it's warranted to see a shakeup," he said, although it would require a firm with deep pockets to accumulate a big enough stake. "The company's strategy of buying everything and diluting shareholders hasn't worked."
The company is set to report fourth-quarter results Thursday.