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Pengrowth Energy
Corporation
today announced that it has entered
into agreements for the successful completion of its $700 million
non-core asset disposition program previously announced on January
11, 2013. The net proceeds from the disposition program will be used
to fund ongoing capital expenditures, including fully funding the
remaining budgeted capital expenditures associated with the 12,500
barrels per day (bbl/d) first commercial phase of the Lindbergh
thermal project, which received regulatory approval on July 15, 2013.
The expected net proceeds from these non-core asset dispositions, in
addition to the $316 million net proceeds received from the
previously announced Weyburn non-core asset divestiture in March of
this year, will bring total 2013 non-core disposition proceeds to
approximately $1.0 billion.
"As we have outlined throughout the year, our focus in 2013 has been
to demonstrate that we have the funds in hand to develop the first
commercial phase of the Lindbergh project," said Derek Evans,
President and Chief Executive Officer of Pengrowth. "These combined
transactions achieve our goal of disposing of $1.0 billion of
non-core assets in 2013 and fully funding the first commercial phase
of the Lindbergh development. We are very pleased with the results of
our disposition program, particularly given the competitiveness of
the current asset disposition market."
Southeast Saskatchewan Non-Core Asset Disposition
As part of the $700 million, Pengrowth is pleased to announce that it
has entered into an agreement to sell its interests in its non-core
southeast Saskatchewan properties to a junior Canadian oil & gas
company for $510 million, subject to closing adjustments.
The assets being sold currently produce more than 5,700 barrels of
oil equivalent per day (boe/d) (93% liquids) and had proved plus
probable reserves of 21.3 million barrels assigned to them at
December 31, 2012, according to the independent reserve evaluators
GLJ Petroleum Consultants Ltd.
Subject to customary regulatory and other closing conditions, the
southeast Saskatchewan disposition is expecte
d to close in
mid-September 2013 and will have an effective date of June 1, 2013.
BMO Capital Markets is acting as financial advisor to Pengrowth on
this transaction.
Additional Asset Dispositions
In addition to the southeast Saskatchewan disposition, Pengrowth has
closed or has letters of intent executed with purchasers for an
additional $203 million of non-core assets, representing
approximately 5,900 boe/d of net production (72% natural gas) and
29.0 mmboe of associated proved plus probable reserves. Average
implied transaction metrics for these minor additional dispositions
equates to approximately $34,400 per flowing barrel and $7.00 per boe
of proved plus probable reserves. These additional transactions have
various closing dates throughout 2013.
Financial and Guidance Update
At June 30, 2013, Pengrowth had $1.4 billion of fixed term notes and
$234 million of convertible debentures outstanding and was undrawn on
its $1.0 billion committed bank facility. Following closing of these
dispositions, at September 30, 2013, Pengrowth expects to remain
undrawn on its bank facility and anticipates having $575 million of
cash on hand, a portion of which will be used to fund fully the
capital expenditures associated with the first commercial phase at
Lindbergh.
On a pro-forma basis, following these transactions, Pengrowth is now
projecting fourth quarter 2013 production to average between 75,000
and 77,000 boe/d. A full summary of updated guidance estimates for
2013 is provided below:
Original Guidance Updated Guidance
----------------------------------------------------------------------------
Average daily production volume (boe/d) 85,000 to 87,000 82,000 to 84,000
Total capital expenditures ($millions)(1) 770 770
EBITDA ($millions)(2,3) 680 650
Net operating costs ($ per boe) 14.00 to 14.50 14.75
G & A expense (cash and non-cash) ($ per
boe)(4) 3.30 3.50
1. Includes $300 million at Lindbergh
2. Earnings Before Interest, Taxes, Depletion, Depreciation, Accretion
and Amortization
3. Assumes WTI USD$90/bbl, 9% discount for light oil, 23% discount for
heavy oil and AECO Cdn$3.50/Mcf
4. Includes $0.47/boe of non-cash G & A
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