Pengrowth cutting $ 30M from 2015 capital budget

Pengrowth Energy Corp. is cutting its 2015 capital spending budget, joining other Calgary producers who are moving to preserve capital after a dramatic slide in world oil prices in July dashed hopes of a second half recovery.

In a news release Thursday after markets closed, the intermediate said it will cut its full year budget by 15 per cent, from a midpoint of $ 230 million to $ 200 million, but will not lower its guidance on production. Benchmark U. S. oil prices closed below US$ 45 per barrel on Thursday.

“These are challenging times for the oil and gas industry and Pengrowth continues to take prudent steps to ensure the financial health and stability of the company in this low commodity price environment,” president and chief executive Derek Evans said.

The company will continue to try to sell $ 600 million in assets, he added, to reduce corporate debt. It noted a seven per cent reduction in head office full- time staff over the past eight months as it continues to cut costs.

Pengrowth reported production in the second quarter ended June 30 averaged 74,100 barrels of oil equivalent per day, up seven per cent from the first quarter, as the ramp- up continued at its Lindbergh thermal heavy oil project, where steaming began in mid- December.

It said the eastern Alberta steamassisted gravity drainage project produced an average of 10,900 barrels per day in the second quarter with a steam- oil ratio of 2.5. In the five- day period ended July 27, it said the project produced 14,600 bpd with an SOR of 2.06. It is expected to reach 16,000 bpd by the end of the year.

The company reported a net loss of $ 134 million in the second quarter, versus a loss of $ 9 million in the same period last year.

Cash flow from operations was $ 111 million, down eight per cent from $ 121 million in the second quarter of 2014, as its average price realized per boe fell 39 per cent to $ 37.05.