OT (kinda) - Royalty sale at Pengrowth (pgf.tsx)So the Lindburgh GORR that Pengrowth enjoyed was sold. Pengrowth owes a lot of money. I mean they got 1Bn down to 600Mil the last time I looked but they are still in deep ..
I posted this so as to compare GORR's and illustrate renumeration considerations. Thoughts ? Observations ?
Here is the breakdown NR for the sale:
Pengrowth to sell 4% royalty on Lindbergh for $250M
2016-12-14 16:16 ET - News Release
Mr. Derek Evans reports
PENGROWTH ANNOUNCES THE SALE OF A 4.0% GROSS OVERRIDING ROYALTY INTEREST ON ITS LINDBERGH THERMAL ASSETS FOR $250 MILLION
Pengrowth Energy Corp. has entered into a definitive agreement for the sale of a non-convertible gross overriding royalty interest on its Lindbergh thermal property for $250-million cash consideration.
Under the terms of the agreement, Pengrowth is selling a 4.0-per-cent royalty on all of its Lindbergh thermal properties, including existing production from the first commercial phase, as well as production from future development phases, including its Muriel Lake lease. As part of the agreement, the purchaser of the royalty retains the option to receive the royalty either in cash or as production in kind. Included with the sale is a working interest in certain of Pengrowth's proprietary seismic data.
Lindbergh remains a top-tier thermal project demonstrating strong production and a low steam oil ratio. Production from Lindbergh averaged 15,190 barrels per day during the third quarter, and the project remains on track to achieve 2016 average annual production of approximately 15,600 bbl per day for the year. The royalty is not expected to materially impact the economics of the project, which is still expected to generate a top-quartile netback among thermal projects.
Transaction summary:
Purchase price: $250-million
Implied current royalty interest production (net to purchaser): 608 bbl per day (1)
Implied 2016 royalty interest production (net to purchaser): 624 bbl per day (2)
(1) Based on third quarter 2016 average daily production of 15,190 bbl per day.
(2) Based on full-year 2016 average daily production of 15,600 bbl per day.
Derek Evans, president and chief executive officer, commented: "We believe this transaction captures significant value for Pengrowth shareholders while also strengthening our balance sheet and granting us the flexibility to invest in organic projects with strong returns. The consideration received reflects the exceptional performance and significant embedded value from our Lindbergh thermal project, while preserving strong future growth potential. We believe the sale of the royalty interest will not have a material impact on the overall economics of the project, but offers us an immediate cash injection at a very attractive multiple. Lindbergh has delivered some of the best operating metrics in the industry and continues to be a core component of Pengrowth's value and long-term growth strategy."
TD Securities Inc. acted as Pengrowth's exclusive financial adviser on the sale. The effective date of the transaction is Jan. 1, 2017, and closing is expected to occur on or about Jan. 6, 2017.
About Pengrowth
Pengrowth is an intermediate Canadian producer of oil and natural gas, headquartered in Calgary, Alta. Pengrowth's assets include the Lindbergh thermal oil, Cardium light oil, Swan Hills light oil, and the Groundbirch and Bernadet Montney gas projects.
We seek Safe Harbor.
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