Pengrowth's net loss decreases
Pengrowth Oil and Gas reported it's net loss and comprehensive loss for three and six months on August 23.The net loss for the quarter was $9 million in comparison to $53 million for Q2 2013.Revenues were $268 million compared to $364 million in Q2 2013.However the net loss for six months was $125 million compared to $118 million for the six months of 2013.Derek Evans,it's CEO has not been very active;Pengrowth reported production of 75,102 barrels per day but with this fall in revenues from Q2 2013 it seems likely that this is overstated. It is true that Mr. Evans appears to have a more streamlined operation as the net loss has decreased considerably even with a reduction in revenue.
Replacement of production
It is true that production will decline naturally as the oil well ages and as the pool becomes older.But there are properties that Mr. Evans has not exploited such as their Swan Hills property and their Mannville play.They need to spend more money on drilling unexploited properties in order to increase production. In addition,there are a number of small companies in Alberta that would tie in with Pengrowth's operation.One that is close to other Pengrowth properties is Perpetual Energy which has had very good drilling success.But there are others.Pengrowth and Mr. Evans needs to bolster or replace production that has been lost either through increased drilling or an accretive acquisition.
The Lindberg Play
Derek Evans has let shareholders know that he is counting on the development of it's heavy oil play called Lindberg to increase production.They have spent a considerable amount of their capital program on this one play.The problem is that big projects like this one have a habit of coming in late and he expects that positive cash flow will only start sometime in 2015.Many heavy oil operators including Southern Pacific Resources and Connacher Oil have seen start-up problems emerge and slow them down.Can Mr. Evans guarantee that this won't happen to Pengrowth?Lindberg is in pilot production now and producing 1500 to 2000 barrels per day.He has approval for 12,000 barrels per day and should at least squeeze 5000 to 6000 barrels per day out of Lindberg in the third quarter.He should also look around for a small acquisition to bolster production.
Replacement of production
It is true that production will decline naturally as the oil well ages and as the pool becomes older.But there are properties that Mr. Evans has not exploited such as their Swan Hills property and their Mannville play.They need to spend more money on drilling unexploited properties in order to increase production. In addition,there are a number of small companies in Alberta that would tie in with Pengrowth's operation.One that is close to other Pengrowth properties is Perpetual Energy which has had very good drilling success.But there are others.Pengrowth and Mr. Evans needs to bolster or replace production that has been lost either through increased drilling or an accretive acquisition.
The Lindberg Play
Derek Evans has let shareholders know that he is counting on the development of it's heavy oil play called Lindberg to increase production.They have spent a considerable amount of their capital program on this one play.The problem is that big projects like this one have a habit of coming in late and he expects that positive cash flow will only start sometime in 2015.Many heavy oil operators including Southern Pacific Resources and Connacher Oil have seen start-up problems emerge and slow them down.Can Mr. Evans guarantee that this won't happen to Pengrowth?Lindberg is in pilot production now and producing 1500 to 2000 barrels per day.He has approval for 12,000 barrels per day and should at least squeeze 5000 to 6000 barrels per day out of Lindberg in the third quarter.He should also look around for a small acquisition to bolster production.
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