Pengrowth Energy Corporation – PGH – Announces Further Measures to Maintain Financial Flexibility

In response to ongoing 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 (NYSE:PGH) announced that its monthly dividend payment will be reduced to Cdn $0.04 per month. The dividend change will come into effect for the dividend payable August 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 funding to move the Lindbergh SAGD 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 PGH 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.

About Pengrowth – PGH:

Pengrowth Energy Corporation (PGH) is a dividend-paying, intermediate Canadian producer of oil and natural gas, headquartered in Calgary, Alberta.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.