Calgary-based Pengrowth Energy Corp. had a net loss of $503 million in the fourth quarter of 2018, as well as a net loss of $210.4 million for the entire year of 2018.
The company also reported on Wednesday that it was undergoing a strategic review.
“On March 5, 2019, Pengrowth’s board of directors commenced the strategic review and engaged Perella Weinberg Partners LP and Tudor, Pickering, Holt & Co. to explore the company’s strategic options and alternatives with a view to improving the company’s balance sheet, addressing upcoming debt maturities, and maximizing enterprise value. The strategic review is intended to explore 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; sourcing new financing and equity capital; and other alternatives to improve the company’s financial position and maximize value,” it said in a news release.
“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 advisers expect to actively explore market interest in potential transactions and strategic initiatives with a range of interested parties and capital market participants.”
Pete Sametz, president and chief executive officer of Pengrowth, said fourth quarter production was down only 2.4 per cent year over year after divesting 5,250 barrels of oil equivalent per day (boe/d) and investing $65 million in capital.
“Our ability to successfully maintain production following divestitures of such magnitude is an important achievement. That said, diluent costs and low crude oil prices made the fourth quarter challenging financially,” he said. “During the fourth quarter we actively worked towards refinancing our outstanding term notes. While the markets were initially receptive to the refinancing initiatives being explored by the Company, the downward trajectory of West Texas Intermediate crude oil (WTI) pricing and the expanded discount on Western Canadian Select crude oil (WCS) through the fourth quarter created an extremely cautious atmosphere in the financial markets. The recovery in WTI and WCS pricing subsequent to the quarter is expected to be constructive for our first quarter results and refinancing and strategic initiatives.
“Our board of directors has initiated the strategic review to evaluate various pathways to maximize Pengrowth’s enterprise value and align it to the value of our two long-life low-decline assets of Lindbergh (Lloydminster thermal oil project) and Groundbirch (Montney natural gas project). Each of these assets has a reserve life in excess of 50 years at current production levels and in aggregate represent 447 million boe (MMboe) in proved and probable reserves.”
As one of the top 20 oil producers in Alberta, Pengrowth is subject to the government of Alberta’s curtailment program, which took effect on January 1, 2019, it said.
“Even though Lindbergh is subject to mandatory curtailments, the asset produced more than 18,000 bbl/d in January and February 2019, and continues to deliver production at the upper end of the previously announced 2019 guidance. As a result, the company has not changed its previously announced 2019 production guidance. Pengrowth remains in compliance with Alberta’s Curtailment Program,” Pengrowth added.
It said securing a partner to build a cogeneration facility at Lindbergh is a cornerstone of its strategy to incrementally grow production to 35,000 bbl/d by the end of 2023 at Lindbergh. Pengrowth reached agreement with Ironclad Energy Partners LLC, a wholly owned subsidiary of Stonepeak Infrastructure Partners, and signed a Letter of Intent regarding the engineering, design, construction, commissioning, asset management, energy management and ownership of a new cogeneration facility at Lindbergh. This new facility would be funded and owned by Ironclad and operated and maintained by Pengrowth.
– Mario Toneguzzi for Calgary’s Business
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