Pengrowth Delivers First Quarter 2019 Adjusted Funds Flow of $16 Million on Increased Bitumen Production at Lindbergh, Robust Commodity Prices and Lower Costs
Press Release
May 08, 2019
Corporate Operating Netbacks More Than Triple Since the Prior Quarter to Deliver the Strongest Quarterly Adjusted Funds Flow in More than a Year
CALGARY, Alberta, May 08, 2019 — Pengrowth Energy Corporation (“Pengrowth” or the “Company”) (TSX:PGF, OTCQX:PGHEF), today reported its results for the three months ended March 31, 2019. Unless otherwise indicated, financial figures are expressed in Canadian Dollars.
“After the resilience Pengrowth demonstrated through record low Western Canadian Select crude oil pricing in the fourth quarter of 2018, we delivered the strongest quarterly adjusted funds flow in more than a year in the first quarter of 2019. Our leaner cost structure combined with the ongoing improvement in realized crude oil pricing allowed us to generate $10.1 million in Adjusted Funds Flow in the month of March alone and $16.0 million in the quarter,” said Pete Sametz, President and Chief Executive Officer of Pengrowth. “Lindbergh continues to produce at the high end of guidance while adhering to the terms of Alberta’s curtailment program. We have been actively speaking to our major debt and equity investors who clearly understand the long-life low-decline nature of our reserves, and Pengrowth’s capacity to generate strong adjusted funds flow at current prices.”
First Quarter 2019 Summary:
- Increased adjusted funds flow by 122% year-over-year to $16.0 million through:
– Pengrowth’s leaner cost structure which resulted in a 36% decrease in Cash G&A expenses per boe year-over-year;
– A 20% year-over-year increase in Lindbergh SAGD bitumen production to 18,193 barrels per day (“bbl/d”) in the first quarter compared with 15,118 bbl/d for the same period in the prior year; - 82% of Pengrowth’s production is bitumen and conventional oil. As a result, for every US$1.00/bbl change in the price of West Texas Intermediate crude oil, the estimated impact on 12-month Adjusted Funds Flow is CA$7.9 million (Please refer to this quarter’s MD&A for more information).
- Completed $5.6 million of abandonment and reclamation work during the first quarter on 77 non-core wells in British Columbia. Settling these future liabilities allowed us to reduce the letters of credit we have outstanding with the British Columbia Oil and Gas Commission;
- Finalized the disposition of Fenn Big Valley, a non-core Southern Alberta property that produced 266 boe/d, which decreased ARO by $16 million with over 100 wells disposed;
- Groundbirch natural gas production was restricted in the quarter due to constrained pipeline capacity and well repairs.
Strategic Review Update
The Strategic Review is proceeding as planned. Working with our adviser Perella Weinberg Partners LP, and their subsidiary Tudor, Pickering, Holt & Co., we have assembled the virtual data room and the confidential information memorandum that is being circulated to interested parties. The Strategic Review is exploring a comprehensive range of strategic and transaction alternatives, including a sale, merger or other business combination; a disposition of all or certain assets of the Company; recapitalization and refinancing opportunities including new debt or equity capital and other alternatives to improve the Company’s financial position and maximize value. In addition to Pengrowth’s long-life, low-decline assets, the Company also has potentially attractive tax attributes that complement its strong base operations. Pengrowth and its adviser expect to actively explore market interest in potential transactions and strategic initiatives with a range of interested parties and capital market participants.
There can be no guarantees as to whether the Strategic Review will result in a transaction or the terms or timing of any resulting transaction.
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