Mr. Derek Evans reports
PENGROWTH ENERGY CORPORATION ANNOUNCES FURTHER MEASURES TO MAINTAIN FINANCIAL FLEXIBILITY
In response to continuing weakness in both spot and forward commodity price markets, wider differentials for Alberta crude oil, and increased uncertainty in the capital and property disposition markets, Pengrowth Energy Corp.'s monthly dividend payment will be reduced to four cents per month. The dividend change will come into effect for the dividend payable Aug. 15, 2012, to shareholders of record as of July 23, 2012.
This initiative follows a $200-million pro forma capital expenditure reduction that coincided with the NAL acquisition, which was announced on March 23, 2012.
These measures are intended to safeguard Pengrowth's financial and balance sheet strength. They provide additional flexibility required to continue to capitalize on Pengrowth's expanded, high-quality drilling inventory, take advantage of opportunities in the acquisition market, generate additional financing to move the Lindbergh SAGD (steam-assisted gravity drainage) project forward and expand Pengrowth's inventory of SAGD projects. They complement Pengrowth's continued focus on managing the company's exposure to commodity price fluctuations and providing a measure of stability to cash flow through its hedging program.
"Our first move in this challenging environment was to reduce capital expenditures, which we did with the NAL acquisition. We need to continue to fund our capital program and want to be able to take advantage of attractive acquisition opportunities that present themselves," said Derek Evans, president and chief executive officer of Pengrowth. "The reduction of the dividend, in conjunction with the capital expenditure reduction and our ongoing hedging programs, should enhance our financial flexibility and provide us with dry powder, as Pengrowth becomes a leading operator of high-quality niche SAGD projects like Lindbergh. We are encouraged by the early performance of the Lindbergh pilot, which is meeting our expectations. We look forward to providing a Lindbergh reserve and production update with our second quarter results and remain very confident about the portfolio of opportunities we have assembled."
Dividends are reviewed monthly and will be subject to the discretion of the board of directors of Pengrowth and may vary depending on a variety of factors and conditions existing from time to time, including fluctuations in commodity prices, production levels, capital expenditure requirements, debt service requirements, operating costs, royalty burdens, foreign exchange rates and the satisfaction of the liquidity and solvency tests imposed by the Business Corporations Act (Alberta) for the declaration and payment of dividends.
We seek Safe Harbor.