Pengrowth Energy To Sell Non-core Assets For C$713 Mln

(RTTNews) - Canada-based oil and gas producer Pengrowth Energy Corp. (PGH, PGF.TO) said Tuesday that it has agreed to sell non-core assets for C$713 million, successfully achieving its C$700 million non-core asset disposition program previously announced in January.

The proceeds will be used by the company to fully fund the first commercial phase of its $590 million thermal oilsands project at Lindberg.

Pengrowth will use net proceeds from the disposition program to fund its ongoing capital expenditures. This includes fully funding the remaining budgeted capital expenditures associated with the 12,500 barrels per day or bbl/d first commercial phase of the Lindbergh thermal project that received regulatory approval on Monday.

Pengrowth will sell its interests in its non-core southeast Saskatchewan properties to a junior Canadian oil & gas company for C$510 million, subject to closing adjustments. The transaction, expected to close in mid-September 2013, will have an effective date of June 1, 2013.

The assets being sold currently produce more than 5,700 barrels of oil equivalent per day or boe/d comprising 93 percent 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.

Pengrowth has also closed or executed letters of intent executed with buyers for an additional C$203 million of non-core assets. The assets represent about 5,900 boe/d of net production and 29.0 mmboe of associated proved plus probable reserves. These additional transactions have various closing dates throughout 2013.

Including the net proceeds of C$316 million from the previously announced Weyburn non-core asset divestiture in March this year, Pengrowth's non-core disposition proceeds in 2013 now total about C$1 billion.

Derek Evans, President and Chief Executive Officer of Pengrowth said, "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. 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."

As at June 30, 2013, Pengrowth had C$1.4 billion of fixed term notes and C$234 million of convertible debentures outstanding, and was undrawn on its C$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 have C$575 million of cash on hand. The company will use a portion of this to fund fully the capital expenditures associated with the first commercial phase at Lindbergh.

On a pro-forma basis, following these transactions, Pengrowth now projects fourth-quarter 2013 production to average between 75,000 boe/d and 77,000 boe/d. For fiscal 2013, Pengrowth lowered its outlook for average daily production volume to a range of 82,000-84000 boe/d from the prior range of 85,000 boe/d to 87,000 boe/d.

PGH closed Tuesday's trading on the NYSE at $5.24, up $0.11 or 2.14 percent on a volume of 1.50 million shares.