Reports 2Q16 Results, Lowers Operating Cost Guidance
Second quarter results were in line to slightly ahead of both our estimates and the consensus. With continued success in terms of cost reductions, Management has reduced operating cost guidance for the year, which will lead to increased financial flexibility to help manage 2017 debt maturities. Given the pullback in commodity prices, Management noted the potential for covenant violations in 2H17 should current strip pricing playout, which could weigh on the stock over the near-term. Despite positive moves to our cash flow forecast, we have maintained both our $2.50 per share target price and Market Perform ranking in light of a deteriorating futures strip outlook.
08 Aug 16
ANNOUNCES 2Q16 RESULTS, LOWERS COST GUIDANCE
Impact - slightly positive given second quarter results that were in line to slightly ahead of expectations, while operating cost guidance for the year has been reduced leading to increased financial flexibility exiting the year
04 Aug 16
2Q16e Quarterly Preview
Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly reversed into summer, market likely to ignore financials for natural gas producers and look ahead to winter and formalization of sell-side 2018e estimates in coming months. Spot AECO natural gas prices recently crested C$2.60/mcf, and with a reasonable alignment of previously distressed NE BC Stn2 differentials, augmented by a withdrawal expected next week, view the market psyche as constructive and looking ahead, with the analogy that this market is shaping up to mirror 2012 still holding. That said, with crude oil poised to retest support levels, combined with strong stock price performance broadly observed YTD, we would characterize sentiment as slightly pessimistic in the near-term which could reduce or unwind momentum-based investment strategies that have worked thus far in 2016.
PGF AAV ARX BTE BNP CPG ERF POU PEY PWT PSK VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS NVA PPY PMT PNE RRX RMP SRX SGY TOG TET ATU CKE GXE IKM LXE MQL PRQ SPE SKX TVE TVL YO ZAR
26 Jul 16
RECEIVES REGULATORY APPROVAL FOR THE 17,500 BARREL PER DAY SECOND COMMERCIAL PHASE OF THE LINDBERGH THERMAL PROJECT
Impact: Neutral. As anticipated, Phase II of Pengrowth's Lindbergh project has received EPEA approval which allows for annual average production above the Phase I nameplate capacity of 12,500 bbl/d.
31 May 16
Reports 1Q16 Results, Maintains Financial Flexibility
Pengrowth’s first quarter financial results were in line with the consensus estimates, although came in ahead of our cash flow estimate as a result of royalties and operating costs that were lower than we had forecast. Management reiterated its 2016e capital expenditure and expense guidance, although has trimmed production guidance by ~3,000 boe/d at the midpoint largely due to minor disposition activity in the first quarter. Notable was a $173 mm decrease in total debt compared to year-end aided by a favorable foreign exchange revaluation on the Company’s US denominated debt, while further reduced by cash flow that outpaced capital spending. Following first quarter results, we have realigned our target price to $1.75 per share and have maintained our Market Perform ranking.
05 May 16
REPORTS FIRST QUARTER RESULTS
Pengrowth reported first quarter results including production of 62,056 boe/d that was in line with our 62,658 boe/d estimate along with the consensus estimate of 62,298 boe/d. The reported cash flow of $106.2 mm or $0.19 per diluted share was also in line with consensus ($0.19 per share), although ahead of our estimate of $94.8 mm or $0.17 per diluted share as a result of lower royalties and operating costs than we had forecast.
04 May 16
Intermediates, Mid Caps & Small Caps
With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe
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26 Apr 16
Domestic E&P Statistical Package and FD&A Review
With this publication we highlight various metrics and statistics forthcoming from yearend reserve books for our Domestic E&P coverage universe (Integrateds, Large Cap, Oilsands, Intermediate, Mid Cap, and Small Cap). Similar charts for YE2014 reserves can be found in our Statistical Package dated April 7, 2015.
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12 Apr 16
Pengrowth’s year-end financial results came in as expected and within Management’s previously announced guidance range. Management reiterated its 2016e guidance that was previously provided at the Company’s annual investor day in late January as detailed in our Facts dated January 22, 2016. Recall, at that time the Company also announced the suspension of its dividend. Year-end reserves were down in the PDP and 1P categories, reflecting disposition activity and the impact of economic factors, although were up modestly on a 2P basis benefiting from reserve additions on the Company’s Lindbergh and Montney projects. With only minor changes to our forecast, we see no reason to revise our $1.25 per share target price or our Market Perform ranking, noting our target 2017e EV/DACF remains unchanged.
10 Mar 16
Intermediate/Mid/Small Cap Commodity Price Update Impact
With this publication we highlight forecast revisions associated with our crude oil commodity price update. Concurrent within a dynamic time for E&Ps, some of which have already begun the process of 2016 capital budget downdrafts, revised estimates attempt to directionally capture a shift towards capital conservation, though severely weakened futures curves have influenced our thinking for the better part of 6 months anyway. We expect further capital investment reductions forthcoming from E&Ps in the coming weeks.
PGF AAV ARX BNP CPG ERF POU PEY SPE SGY TVE TOG TOU VET GXE KEL NVA PPY BTE PSK PWT VII WCP BNE CJ CR DEE JOY LTS LRE PMT PNE RRX RMP SRX TET ATU BXO CKE IKM LXE MQL RE SKX TVL YGR YO ZAR
08 Feb 16
Pengrowth Energy Releases 2016 Guidance, Eliminates Dividend
Pengrowth ended 2015 with production in line with expectations on slightly lower than anticipated capital spending. In light of current commodity prices, Management has eliminated the quarterly dividend, which will save the Company ~$22 mm annually, although will likely lead to near-term pressure on the stock. Efforts continue on the Company’s $600 mm non-core asset sales process, with $263 mm closed in 2015 and another ~$40 mm expected to close in 1Q16e. Formal 2016e guidance will see $60-$70 mm of capital spending to average 59,000- 61,000 boe/d, with excess cash flow used to pay down debt.
22 Jan 16
PENGROWTH ENERGY CORPORATION (PGF) ANNOUNCES PRUDENT 2016 CAPITAL BUDGET, OPERATIONAL UPDATE AND TEMPORARY SUSPENSION OF DIVIDEND
Impact: Neutral to slightly negative given elimination of the dividend and scaled back operations, although in light of current commodity prices and the Company's debt position we view this as a prudent move to ensure the longer term sustainability of the business.
21 Jan 16
New Commodity Price Outlook Impact
“Worse? How could they get any worse? Take a look around you, Ellen. We’re at the threshold of hell”. These are the words spoken by Clark Gris-wold in the holiday classic “Christmas Vacation”, and seem aptly suited for the general sentiment in the Canadian energy space at the moment as we roll out a summary of our regular forecast revisions extending from our most recent crude oil and natural gas price forecast update.
PGF AAV ARX BTE BNP ERF POU PEY PSK PWT VII TOU VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PMT PNE RRX RMP SRX SGY TOG TET ATU BXO CKE GXE IKM LXE MQL RE SPE SKX TVE TVL YGR YO ZAR CPG
14 Dec 15
Pengrowth Energy Third Quarter Results Largely As Expected
Pengrowth announced its third quarter results with production that was in line with both our thinking and the consensus, while cash flow came in slightly ahead of our estimate and the consensus estimate. The Company’s Lindbergh project continues to ramp up as expected with no change to the anticipated exit rate of ~16,000 bbl/d, while total corporate guidance is also unchanged calling for a capital program of $190-$200 mm and average annual production of 70,000-72,000 boe/d.
04 Nov 15
FirstEnergy - DAILY RESEARCH SUMMARY
Cardinal Energy Ltd. (CJ) Generates Predictably Solid 3Q15 Results | Lightstream Resources Ltd. (LTS) 3Q15 Estimates Slightly Ahead of Expectations | Pengrowth Energy Corporation (PGF) Third Quarter Results Largely As Expected | Faroe Petroleum Plc (FPM LN): Value Stock | LGO Energy Plc (LGO LN) Reduced Production Outlook and Financing Risk Results in Strategic Investment Process | Savanna Energy Services Corp. (SVY) Reports Stronger-Than-Expected 3Q15, Additional Asset Sales | AltaGas Ltd. (ALA) 3Q15 Results | Brookfield Renewable Energy Partners (BEP) Reports 3Q15, Missed Estimates, Maintain US$34.00 Target, Outperform
PGF CJ LTS FPM SVY CERP
04 Nov 15
RECEIVES CONTINUED LISTING STANDARD NOTIFICATION FROM THE NEW YORK STOCK EXCHANGE REGARDING THE PRICE OF ITS COMMON STOCK
Impact: Neutral to Slightly Negative as the notice served will not offer any positive sentiment for the stock. Pengrowth announced that it received notice on October 29, 2015 that it is no longer in compliance with one of the NYSE's continued listing standards as the common stock was less than US$1.00 per share over a consecutive 30 trading day period. As of October 28, 2015 the average closing price of Pengrowth's stock was US$0.99 per share. The Company has a period of six months to regain compliance with the NYSE's price listing standard to avoid delisting, which would require a closing price and 30 trading day average of at least US$1.00 per share on the last trading day of any calendar month.
30 Oct 15
Pengrowth Energy Updates Asset Disposition Process and Announces Agreement to Sell Jenner Area Properties for $80 Million
Following the announcement just over two weeks ago that the Company had inked a deal to sell its Bodo property, Pengrowth has followed up with a second transaction, this time selling its Jenner area properties in south eastern Alberta for cash consideration of $80 mm. While the Jenner disposition was completed at below average metrics, in our view the transaction is a necessary step towards strengthening the Company’s balance sheet and improving its financial flexibility.
26 Oct 15
INTERMEDIATES, MID CAPS & SMALL CAPS - 3Q15e Quarterly Preview
With this publication we briefly summarize our projections for 3Q15e quarterly results for our Junior E&P (Intermediate, Mid & Small Cap) coverage universe. Within the backdrop of continued weakness in the commodity price complex that saw the retrenchment of crude oil pricing during the quarter, after what was a short lived rally during the second quarter, we are anticipating yet another lacklustre reporting period in the Junior E&P space, with the key themes coming out of the quarter likely to be centered on further reductions to capital programs, ongoing takeaway capacity constraints, potential dividend cuts, reduced bank lines from fall credit reviews, continued weakness in the Station 2 and CREC natural gas price markers, and for some, the rollout of formal 2016e budgets.
PGF AAV ARX BTE BNP CPG ERF POU PEY PWT PSK VII TOU TET VET WCP BNE CJ CR DEE JOY KEL LTS LRE NVA PPY PMT PNE RRX RMP SRX SGY TOG ATU CKE GXE IKM LXE MQL RE SPE SKX TVE TVL YGR YO ZAR
23 Oct 15
PENGROWTH ENERGY CORP. (PGF) UPDATES ASSET DISPOSITION PROCESS AND ANNOUNCES AGREEMENT TO SELL JENNER AREA PROPERTIES FOR $80 MILLION
Impact: Neutral to Slightly Positive. Although the Jenner disposition was completed at below average metrics, in our view the transaction is a necessary step towards strengthening the Company's balance sheet and improving its financial flexibility. Pengrowth further noted year-to-date expected proceeds from its non-core asset disposition program have grown to over $300 mm, representing ~50% of the Company's 2015e $600 mm target.
22 Oct 15
Pengrowth Announces Sale of Bodo Property, Updates Asset Disposition Program
Pengrowth announced it has entered into an agreement to sell its non-core Bodo property in eastern Alberta for cash consideration of $95 mm, bringing the total tally for anticipated proceeds year-to-date to $260 mm from its non-core disposition program, thus taking yet another important step towards strengthening the Company’s balance sheet and improving its financial flexibility.
07 Oct 15
First Energy Daily Global Research Summary
We have come off restriction following our participation in Cardinal’s recent equity financing, proceeds from which were used to partially fund the Company’s $129 mm (net) acquisition of a suite of mature light oil assets located in the Greater Mitsue region of central Alberta. The assets were acquired from Penn West Exploration (PWT-TSX) in a joint deal between Cardinal (75%) and a private junior E&P (25%). With Cardinal able to successfully execute a high quality transaction at attractive prices in what we would consider a commodity cycle trough, our forward estimates continue to frame a Company that is actually growing stronger despite a domestic E&P market that has been under pressure for over a year now. Further differentiating itself in this fashion has prompted us to reaffirm our Top Pick ranking on an increased target price of $16.50 per share (previously $15.00 per share).
Pengrowth Energy Cardinal Energy
07 Oct 15
PENGROWTH ENERGY CORPORATION (PGF) ANNOUNCES AGREEMENT TO SELL BODO PROPERTY FOR $95 MILLION AND UPDATES ASSET DISPOSITION PROGRAM
Impact: Neutral to Slightly Positive. Year-to-date expected proceeds of $260 mm from Pengrowth's non-core asset disposition program, including the Bodo transaction, are another step towards strengthening the Company's balance sheet and improving its financial flexibility.
06 Oct 15
INTERMEDIATES, MID CAPS & SMALL CAPS- Intermediates, Mid Caps & Small Caps: New Commodity Price Outlook Impact & 2017 Estimates Rollout
With this publication we are formally rolling out our 2017e forecasts for the Intermediate, Mid, and Small Cap groups, which accompanies our regularly scheduled crude oil and natural gas price forecast update. Less than a month removed from making major revisions to our crude oil price outlook in an interim update, this time around only minor changes to our commodity price outlook have been noted, leaving our initial glimpse into 2017e forecasts as the main takeaway in this publication.
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28 Sep 15
Pengrowth Announces New Dividend Policy Including Reduction to Dividend Payment and Suspension of DRIP
Pengrowth has revised its dividend policy to a quarterly payment of $0.01 per share (or $0.04 per share annually) from a monthly payment of $0.02 per share (or $0.24 per share annually), while also suspending its DRIP, effective for its initial quarterly payment in December 2015. Based on the Company’s most recent closing price of $1.65 per share, Pengrowth’s new dividend payment is equivalent to a 2.4% yield.
02 Sep 15
PENGROWTH ENERGY CORP. (PGF) ANNOUNCES NEW DIVIDEND POLICY INCLUDING REDUCTION TO DIVIDEND PAYMENT AND SUSPENSION OF DRIP
Impact: Positive. Although we would anticipate an initial negative response to Pengrowth's dividend cut, in light of a depressed commodity environment, we view these steps as a prudent move to help accelerate the Company's debt reduction initiatives.
01 Sep 15
INTERMEDIATES, MID CAPS & SMALL CAPS - Crude Oil Downdraft, Though Remain Far More Constructive Than Current Forward Strip Would Suggest
With this publication we highlight forecast revisions stemming from an interim commodity price update centered around the crude oil pricing complex. Moves for crude oil weighted producers are significant, with 2016e cash flows down 12%-15%, and portended NAVs reduced sizably on the employment of a materially lower terminal value within the scope of the forecast period, though not reflective of the potential attrition in E&D capital investment and dividend policy should the current forward strip come to fruition in the cash market.
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31 Aug 15
Junior E&P 2Q15 Review
Within this publication we summarize changes to forward estimates coming off of the reporting of second quarter financial and operating results, highlighting equity price movements and a few valuation comparatives through to the end of 2016e.
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20 Aug 15
INTERMEDIATES, MID CAPS & SMALL CAPS 2Q15e - Quarterly Preview
With this publication we briefly summarize our projections for 2Q15e quarterly results for our Junior E&P (Intermediate, Mid & Small Cap) coverage universe. In what could be viewed as the “Perfect Storm”, we are anticipating yet another weak reporting period in the Junior E&P space as continued deterioration of the commodity price complex will surely influence 2H15e capital investment plans, exacerbated by ongoing takeaway capacity constraints that have resulted in rolling shut-ins for many of the names that we cover, within the backdrop of an uncertain fiscal regime in Alberta in the interim. Typically the second quarter is already a relatively quiet period to begin with in terms of activity in the field due to the onset of spring breakup, though with most shuttering operations early in late February motivated in part to extract service cost deflation in a volatile pricing environment, activity specific to 2Q15e should be muted.
PGF ARX BTE BNP CPG CR ERF LTS LRE POU PEY PWT VII TOU TET VET WCP AAV BNE DEE JOY KEL NVA PPY PMT RRX RMP SGY TOG CJ CKE GXE IKM LXE MQL TOU PNE RE SPE SRX SKX TVE TVL YGR YO ZAR
23 Jul 15
PENGROWTH ENERGY CORPORATION (PGF) SHIPS FIRST LINDBERGH PRODUCTION ON THE HUSKY SALES LINE, REPORTS CONTINUED STRENGTH IN LINDBERGH PRODUCTION AND INTENT TO SELL UP TO $600 MILLION OF NON-CORE ASSETS
Impact: Slightly positive. Production ramp-up at Pengrowth's Lindbergh thermal project appears to be ahead of our forecasts for 2Q15e and for the balance of this year given current production of 14,400 bbl/d and a corresponding iSOR of 1.99x which is equivalent to 0.9x its year-end 16,000 bbl/d production target. Further, the Company reiterated its intention to dispose of $600 mm of non-core assets by year-end to help reduce corporate debt levels.
30 Jun 15
Rebalancing of Commodity Price Forecast Preserves Challenging Outlook for Broader Intermediate, Mid, Small Cap Sector: New Commodity Price Outlook Impact
With this publication we provide our regular forecast revisions stemming from our quarterly commodity price update for both the crude oil and natural gas pricing complex. All told, we see only modest moves in the near term to our pricing streams with our longer term view largely intact. Given the current state of commodity prices from an oversupply of both crude oil and natural gas, the kick off of summer, ongoing restrictions on TCPL’s NGTL system, and the recent election of an NDP majority government, we anticipate the market to trade sideways from here for the next few months until further certainty is obtained in the fall as to the direction of commodity prices along with any potential changes to the royalty structure in Alberta. We had anticipated to see an active M&A market by now that would pick up even further heading into the back half of the year, although in reality see this as somewhat sterilized until further clarity is obtained on the NDP’s energy policies.
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25 Jun 15
PENGROWTH ENERGY CORPORATION (PGF) REPORTS LINDBERGH PRODUCTION IN EXCESS OF FACILITY NAMEPLATE CAPACITY OF 12,500 BBL/D
Impact: Slightly Positive. Pengrowth's ramp-up at Lindbergh continues to be strong at 13,000 bbl/d with an ISOR of 1.9x, and appears to be in line to slightly ahead of our current forecast for 2Q15e-4Q15e, which ultimately expects production to reach 16,000 bbl/d of bitumen by year-end.
09 Jun 15
Pengrowth Energy Announces 1Q15 Financial Results, Provides Strong Lindbergh Update
Factoring in a modestly delayed commercialization date of April 1, 2015 for Pengrowth’s Lindbergh project (originally January 2015), the Company’s 1Q15 financial results were reasonably in-line with our original thinking. Further, the Company elected to monetize a portion of its foreign exchange hedge positions in the period, resulting in $84 mm of proceeds that was used to reduce outstanding debt leading to total debt levels of $2.2 billion exiting the quarter, which was 2% below our forecast.
11 May 15
PENGROWTH ENERGY CORPORATION (PGF) ANNOUNCES STRONG FIRST QUARTER FUNDS FLOW, DECLARATION OF COMMERCIALITY AND RECORD PRODUCTION AT ITS LINDBERGH THERMAL PROJECT
Impact: Slightly positive. Factoring in a modestly delayed commercialization date of April 1, 2015 for Pengrowth's Lindbergh project, we view the Company's 1Q15 financial results as reasonably in line with our original thinking. Although the Company has revised its 2015e production guidance down ~4% as a result of the commerciality delay, a non-core asset disposition, and uneconomic well shut-ins, with a concurrent $30 mm increase to capital spending for expanded scope/Phase II projects at Lindbergh, we believe the market will focus on Lindbergh's impressive ramp-up to date that has current volumes at ~10,500 bbl/d of bitumen, or ~65% of the 16,000 bbl/d that the project is expected to reach by the end of the year.
08 May 15