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Pengrowth Reaches Agreement to Sell North Central Alberta Properties for $180 Million
CALGARY, ALBERTA–(March 20, 2017) – Pengrowth Energy Corporation (TSX:PGF)(NYSE:PGH) (the “Company” or “Pengrowth”) today announced that it has entered into an agreement for the sale of a portion of its Swan Hills assets in North Central Alberta for total cash consideration of $180 million, subject to customary adjustments.
The sale of the Swan Hills assets is in keeping with the Company’s strategy to de-lever its balance sheet while allowing it to streamline and high-grade its remaining portfolio, and to concentrate on its core assets that are expected to position the Company for substantial per share increases in reserves, production and cash flow.
The divested assets generated average daily production of approximately 4,920 barrels of oil equivalent per day (boe per day) (weighted approximately 82 percent towards liquids) during the fourth quarter of 2016 and had Proved plus Probable (2P) reserves of 31 million boe as at December 31, 2016, according to the independent reserve evaluators GLJ Petroleum Consultants Ltd.
This transaction will allow Pengrowth to further reduce its level of debt. The Company expects to use a portion of the sale proceeds to pre-pay the remaining outstanding US $100 million (equivalent Cdn $134 million) of the 6.35% senior term notes which are scheduled to mature on July 26, 2017. Following this prepayment, Pengrowth will have no outstanding debt maturities in 2017 and the Company’s proforma net debt as of May 31, 2017 will fall to approximately Cdn $970 million.
The effective date of the sale is January 1, 2017 and closing is expected to occur on May 31, 2017, subject to the receipt of all necessary regulatory approvals and the satisfaction of other customary closing conditions.
In light of the announced transaction, Pengrowth is taking this opportunity to update its 2017 corporate guidance to reflect the changes that result from the sale and its increased concentration on its core assets. Full year 2017 average production guidance is expected to be impacted by approximately 3,100 boe per day, resulting in revised 2017 production to be between 47,000 and 49,000 boe per day. The remaining changes to 2017 guidance resulting from the sale are outlined in the table below:
|Original Guidance||Revised Guidance|
|Average daily production (boe per day)||50,000 to 52,000||47,000 to 49,000|
|Total capital expenditures ($ millions)||125||125|
|Funds flow from operations1 ($ millions)||195||170|
|Royalties2 (% of sales)||9.0||9.0|
|Operating costs3 ($ per boe)||13.25 to 13.75||13.00 to 13.50|
|Cash G & A3 ($ per boe)||3.50 to 4.00||3.50 to 4.00|
|1. Based on a WTI crude oil price of US $55.00/bbl, an AECO natural gas price of Cdn $3.25/Mcf and a $0.74 USD/Cdn exchange rate|
|2. Royalties are before impacts of commodity risk management activities|
|3. Per boe estimates based on high and low ends of production guidance|
Pengrowth Energy Corporation is an intermediate Canadian producer of oil and natural gas, headquartered in Calgary, Alberta. Pengrowth’s assets include the Lindbergh thermal oil, Cardium light oil, Swan Hills light oil and the Groundbirch and Bernadet Montney gas projects. Pengrowth’s shares trade on both the Toronto Stock Exchange under the symbol “PGF” and on the New York Stock Exchange under the symbol “PGH”.
PENGROWTH ENERGY CORPORATION
Derek Evans, President and Chief Executive Officer
For further information about Pengrowth, please visit our website www.pengrowth.com or contact:
Investor Relations, E-mail: email@example.com
About the Purchaser:
The purchaser of the Swan Hills assets is a private corporation, headquartered in Calgary, focused on light oil exploitation and development in central Alberta. Deloitte Corporate Finance acted as exclusive financial advisor and agent to the purchaser in structuring and financing the transaction. Burgess Energy Advisors and Shea Nerland Law acted as legal advisors to the purchaser.
All amounts are stated in Canadian dollars unless otherwise specified.
Advisory Regarding Reserves and Production Information
All reserves and production information herein is based upon Pengrowth’s company interest (Pengrowth’s working interest share of reserves or production plus Pengrowth’s royalty interest, being Pengrowth’s interest in production and payment that is based on the gross production at the wellhead), before deduction of royalty obligations and using GLJ’s January 1, 2017 forecast prices and costs as disclosed herein. Numbers presented may not add due to rounding.
Caution Regarding Engineering Terms:
When used herein, the term “boe” means barrels of oil equivalent on the basis of one boe being equal to one barrel of oil or NGLs or 6,000 cubic feet of natural gas (6 mcf: 1 bbl). Barrels of oil equivalent may be misleading, particularly if used in isolation. A conversion ratio of six mcf of natural gas to one boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Manager, Investor Relations
Toll free 1-855-336-8814
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