In a bid to reduce debt, Pengrowth Energy Corp. (TSX: PGF)(NYSE: PGH) has been looking to unload its ownership in light oil production at its Swan Hill properties in Alberta. The company is looking to square a balance sheet that has been dented by nearly four years of cheap oil prices.
In March, it looked like an escape was in the works, with Pengrowth agreeing to sell its Swan Hill assets to a privately-held Grand Valley Resources, a startup backed by the Reignwood Group, which in turn was backed by Chinese-Thai billionaire Chanchai Ruayrungruang, for $180 million. Following an $18-million down payment to secure the deal, the rest of the financing never came to fruition, with the agreement eventually scrapped in July.
Like so many other highly-indebted energy companies trying to cope with stubbornly-low crude prices, Pengrowth is divesting to commit its focus to specific properties that could be more cost effective, such as its Lindbergh project in the Cold Lake oilsands. The Calgary-based company’s asset sales for the year are now in the area of $1 billion.
The Swan Hill wells produced about 5,060 barrels of oil equivalent per day, weighted about 82% towards liquids, during the second quarter. Proven and probable reserves at the property are recorded at 31 million barrels of oil equivalent, as of the end of 2016.
Late Wednesday, Pengrowth said it worked a new deal to sell the assets, accepting $12 million less than the original sale price. No buyer was identified. Management only said that the property fetched cash consideration of $150 million, which when combined with the $18 from the failed sale attempt, made the total value $168 million.
The sale is backdated to January 1, 2017 and is expected to be closed during Q4 this year.
Shares of TSX-listed PGF had fallen about 4.8% to 79 cents each with about 30 minutes left in the trading session. Shares are down 60% on the year. U.S.-listed shares are lower by 3.4% at 65 cents in today’s action and 55% in 2017.
