PGF - Pengrowth Energy

[dustin_johnson25]

Curious if anyone has taken a look at Pengrowth Energy in depth.  I noted that Seymour Schulich continues to buy and now holds ~19% of the company.  I have observed him in Birchcliff Energy over the years and should have bought every time he had been buying.  He is quoted saying he expects PGF to be a 10x.

 

The street seems to hate the name - mostly due to the debt situation I suspect.  It certainly doesn't look cheap at 12.4x EV/DACF for 2017 once their historical high oil price hedges roll into lower prices. Growth doesn't look attractive and production per share is declining.  I struggle to see the angle on a 10x on this aside from being a very leveraged play on oil prices. 

 

Interested to see if anyone thinks otherwise.

[rogermunibond]

http://www.pengrowth.com/investors/news/2016/view/2113045

 

Just started looking into PGF. Balance sheet restructuring and WTI prices improving seem to be the story here.

 

Do you know who bought the royalty interest on Lindbergh?

[bizaro86]

Add me to the list of people who'd very much like to know that. I'm praying it's a SPAC or NOL vehicle or something, because a publicly traded Lindberg royalty as a pure play is something I would make a huge position.

[Cardboard]

What I have noticed relative to Penngrowth and Birchcliff is the very high 2P reserve life relative to current production. That may have played some role in Seymour's interest.

 

Cardboard

[sculpin]

Reawakening the Pengrowth topic. Now that they have materially reduced the debt. Current share price (PGF - TSX - $1.38), 10 year price high $21.56. Could be substantial value here assuming WTI goes >$60 this year. Seymour Schulich seems to think so.

 

 

Feb 8/17 Schulich, Seymour Indirect Ownership Public market buy Common Shares $1.693 1,000,000 3.8% 27,000,000

Feb 7/17 Schulich, Seymour Indirect Ownership Public market buy Common Shares $1.651 1,000,000 4.0% 26,000,000

Dec 9/16 Schulich, Seymour Indirect Ownership Public market buy Common Shares $2.13 2,000,000 2.5% 82,000,000

 

 

Seymour Schulich through The Schulich Foundation acquired 3,000,000 common shares of

Pengrowth Energy Corporation (“Pengrowth”) on Sept. 9, 2016 through the facilities of the Toronto

Stock Exchange (TSX), and now holds a total of 25,000,000 common shares of Pengrowth. Nevada

Capital Corporation Limited, a wholly owned investment corporation, owns an additional 80,000,000

shares. Mr. Schulich’s aggregate holdings at this date are 105,000,000 common shares or 19.1% of the

outstanding common shares of Pengrowth.

 

PENGROWTH ENTERS INTO AGREEMENT TO SELL REMAINING SWAN HILLS ASSETS FOR $185 MILLION

 

2017-04-25 17:25 ET - News Release

 

Pengrowth Energy Corp. has entered into an agreement for the sale of the remaining portion of its Swan Hills assets in north-central Alberta for total cash consideration of $185-million, subject to customary closing conditions and adjustments.

 

The divested assets generated average daily production of approximately 5,150 barrels of oil equivalent per day (boe per day) (weighted approximately 94 per cent toward liquids) during the fourth quarter of 2016 and had proved plus probable reserves of 21.0 million boe assigned to them as at Dec. 31, 2016, according to the independent reserve evaluators GLJ Petroleum Consultants Ltd.

 

This transaction essentially completes Pengrowth's exit from the Swan Hills area and provides the company with additional financial flexibility to further reduce indebtedness. When combined with the $522-million of proceeds from the previously announced Lindbergh GORR, Swan Hills and Bernadet asset sales, the $185-million of proceeds from this sale of the remaining Swan Hills assets result in total disposition proceeds of $707-million to date in 2017.

[Haasje]

@Roger and Bizaro

 

Prairieskyroyalty on the TSX owns the royalty.

 

https://www.prairiesky.com/files/galleries/PrairieSky_Corporate_Presentation_April_24_2017_FINAL.pdf

[dustin_johnson25]

Ya, I have been following since my original post but I haven't done a deep dive on it.  It really just seems to be a highly levered play on oil.  Even the deleveraging hasn't really improved the relative valuation position and it does remain relatively high risk.  Admittedly I have been relying on some sell-side views given my lack deeper research but aside from financial leverage to a recovery it doesn't seem that exciting. 

 

Schulich seems to disagree which I still struggle to see.  It really just looks like a long dated call option.