2012 capital program of $625 million
Mid-sized oil and gas producer Pengrowth Energy Corporation says it is expanding its capital program after a successful year in 2011.
The Calgary-based company (TSX:PGF)(NYSE:PGH) plans to spend $625 million in 2012, a three per cent increase over the previous year.
The capital program will focus on the development of oil and liquids rich gas plays in three key areas: Swan Hills light oil, the Lindbergh steam assisted gravity drainage (SAGD) pilot project, and Olds area liquids rich gas. Pengrowth expects to generate full year average production of between 74,500 and 76,500 barrels of oil equivalent (boe) per day, an increase of approximately two per cent from 2011, excluding production associated with the Lindbergh pilot project.
Exit production for 2012 is expected to be approximately 78,000 boe per day.
Highlights of the 2012 capital program include:
- 100 percent of the drilling and completions program is focused on oil and liquids rich gas projects.
- Liquids as a percentage of production are expected to increase from 51 percent to 54 percent.
- The majority of planned operated projects have forecasted recycle ratios in excess of 2.3 times.
- Capital expenditures and cash dividends will be balanced by cash flow and select non-core asset dispositions.
- The Lindbergh pilot project is expected to have first steam injected by the end of January. $59 million of capital is being directed to the Lindbergh project, prior to commercial production.
Pengrowth says it plans to live within cash flow. The capital program will be primarily funded from operating cash flows and will be supplemented with approximately $200 million of proceeds made up of the sale of non-core assets, a dividend reinvestment plan and the disposition of its equity position in an un-related third party business.
Pengrowth has added a Premium Dividend to its existing dividend reinvestment and optional common share purchase plan and has amended some of the other terms of the plan.
The Amended Plan provides eligible shareholders of Pengrowth with the opportunity to reinvest their dividends in new shares at a five per cent discount to the average trading price on the applicable dividend payment date.
To facilitate the operation of the Amended Plan, Pengrowth has changed the record date under its dividend policy from the last business day of each month to a business day between the 21st and 23rd of each month (the exact date will depend on the number of business days in a particular month).
The ex-dividend date is January 19. The dividend will be payable to all shareholders who hold shares on the record date of January 23.
The dividend is equivalent to approximately U.S. $0.068 per common share using a Canadian/U.S. dollar exchange rate of Cdn$1.00:U.S. $0.98. The above dividend has been designated as an “eligible dividend” for Canadian income tax purposes. Pengrowth’s dividends are also considered “qualified dividends” for U.S. income tax purposes.
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