Form 20-F o | Form 40-F þ |
Yes o | No þ |
1. | Press Release announcing Second Quarter 2006 Results |
PENGROWTH ENERGY TRUST by its administrator PENGROWTH CORPORATION |
||||
August 3, 2006
|
By: | /s/ Gordon M. Anderson | ||
Name: Gordon M. Anderson | ||||
Title: Vice President |
Attention:
|
Financial Editors | Stock Symbol: | (PGF.UN) TSX; | |||
(PGH) NYSE |
| an inability to effectively raise capital at the lowest possible cost; | ||
| a significant impediment to completing mergers or acquisitions using trust units as consideration; | ||
| significantly reduced liquidity in the trading of Pengrowths trust units; | ||
| an inability to complete efficient equity financings; and | ||
| a diversion of managements time. |
| Under the agreement, each Esprit unit will be exchanged for 0.53 of a Pengrowth unit. | ||
| In addition, Esprits Board of Directors expects to pay a $0.30 per unit special distribution. This special distribution is expected to be paid immediately prior to the closing of the transaction. If and when declared, this is intended to effectively maintain the equivalent cash distribution to Esprit unitholders for 17 months. | ||
| Including the special distribution, the total consideration to be received by Esprit unitholders represents a 26 percent premium based on the closing prices on July 21, 2006 for each of the Esprit and Pengrowth units. This represents a substantial premium for Esprit Unitholders, almost ten times the average of all previous trust mergers. It also reflects an excellent opportunity for Pengrowth to acquire high quality, long life, natural gas weighted reserves through corporate acquisition at a cost of approximately $72,450 per boe per day and $18.50 per boe of proved plus probable reserves. These are favourable metrics in todays competitive acquisition environment. | ||
| The Combination is expected to be accretive to Pengrowth unitholders on all pertinent financial and operational measures, including reserves, production and distributable cash flow per trust unit. | ||
| The combination will provide Pengrowth with approximately 18,350 barrels of oil equivalent (boe) per day of current production, 71.7 million boe of proved plus probable oil and natural gas reserves, 250,000 net acres of undeveloped land and includes shallow gas and coalbed methane potential. | ||
| Esprit unitholders will be able to participate in a larger pool of development and growth opportunities, including Pengrowths enhanced oil recovery programs, coalbed methane initiatives, oil sands assets and conventional development. | ||
| The transaction significantly reduces portfolio risk by creating a combined trust that will have a more diversified asset base and more balanced production mix than either entity on a stand-alone basis. | ||
| The combined trust will continue to hold Pengrowths interests in five of the largest oil pools in western Canada which are expected to continue to deliver incremental reserves through technological advances in enhanced recovery. | ||
| The combined trust will have increased financial strength with a more competitive cost of capital which is critical in the tight acquisition market. |
Three Months ended | Six Months ended | |||||||||||||||||||||||
June 30 | % | June 30 | % | |||||||||||||||||||||
(thousands, except per unit amounts) | 2006 | 2005 | Change | 2006 | 2005 | Change | ||||||||||||||||||
INCOME STATEMENT |
||||||||||||||||||||||||
Oil and gas sales |
$ | 283,532 | $ | 253,189 | 12 | % | $ | 575,428 | $ | 493,103 | 17 | % | ||||||||||||
Net income |
$ | 110,116 | $ | 53,106 | 107 | % | $ | 176,451 | $ | 109,420 | 61 | % | ||||||||||||
Net income per trust unit |
$ | 0.69 | $ | 0.34 | 103 | % | $ | 1.10 | $ | 0.71 | 55 | % | ||||||||||||
CASH FLOW |
||||||||||||||||||||||||
Cash generated from operations |
$ | 118,326 | $ | 126,086 | -6 | % | $ | 309,925 | $ | 262,506 | 18 | % | ||||||||||||
Cash generated from operations per trust unit |
$ | 0.74 | $ | 0.80 | -8 | % | $ | 1.93 | $ | 1.69 | 14 | % | ||||||||||||
Distributable cash * |
$ | 149,080 | $ | 134,047 | 11 | % | $ | 293,257 | $ | 261,851 | 12 | % | ||||||||||||
Distributable cash per trust unit * |
$ | 0.93 | $ | 0.86 | 8 | % | $ | 1.83 | $ | 1.69 | 8 | % | ||||||||||||
Distributions paid or declared |
$ | 120,597 | $ | 110,268 | 9 | % | $ | 240,899 | $ | 216,266 | 11 | % | ||||||||||||
Distributions paid or declared per trust unit |
$ | 0.75 | $ | 0.69 | 9 | % | $ | 1.50 | $ | 1.38 | 9 | % | ||||||||||||
Payout ratio* |
81 | % | 82 | % | -1 | % | 82 | % | 83 | % | -1 | % | ||||||||||||
Development capital |
$ | 47,176 | $ | 29,016 | 63 | % | $ | 122,254 | $ | 74,752 | 64 | % | ||||||||||||
Weighted average number of trust units outstanding |
160,592 | 156,718 | 2 | % | 160,372 | 155,062 | 3 | % | ||||||||||||||||
BALANCE SHEET |
||||||||||||||||||||||||
Working capital |
$ | (97,150 | ) | $ | (90,479 | ) | 7 | % | ||||||||||||||||
Property, plant and equipment and other assets |
$ | 2,081,403 | $ | 2,141,769 | -3 | % | ||||||||||||||||||
Long term debt |
$ | 488,310 | $ | 461,508 | 6 | % | ||||||||||||||||||
Unitholders equity |
$ | 1,430,850 | $ | 1,461,384 | -2 | % | ||||||||||||||||||
Unitholders equity per trust unit |
$ | 8.90 | $ | 9.23 | -4 | % | ||||||||||||||||||
Number of trust units outstanding at period end |
160,777 | 158,283 | 2 | % | ||||||||||||||||||||
DAILY PRODUCTION |
||||||||||||||||||||||||
Crude oil (barrels) |
20,342 | 20,906 | -3 | % | 20,800 | 20,676 | 1 | % | ||||||||||||||||
Heavy oil (barrels) |
4,869 | 5,641 | -14 | % | 4,943 | 5,842 | -15 | % | ||||||||||||||||
Natural gas (mcf) |
150,976 | 153,423 | -2 | % | 154,407 | 155,446 | -1 | % | ||||||||||||||||
Natural gas liquids (barrels) |
5,952 | 5,870 | 1 | % | 6,101 | 6,106 | 0 | % | ||||||||||||||||
Total production (boe) |
56,325 | 57,988 | -3 | % | 57,578 | 58,532 | -2 | % | ||||||||||||||||
TOTAL PRODUCTION (mboe) |
5,126 | 5,277 | -3 | % | 10,422 | 10,594 | -2 | % | ||||||||||||||||
PRODUCTION PROFILE |
||||||||||||||||||||||||
Crude oil |
36 | % | 36 | % | 36 | % | 35 | % | ||||||||||||||||
Heavy oil |
9 | % | 10 | % | 8 | % | 10 | % | ||||||||||||||||
Natural gas |
45 | % | 44 | % | 45 | % | 44 | % | ||||||||||||||||
Natural gas liquids |
10 | % | 10 | % | 11 | % | 11 | % | ||||||||||||||||
AVERAGE REALIZED PRICES (after hedging) |
||||||||||||||||||||||||
Crude oil (per barrel) |
$ | 72.67 | $ | 56.44 | 29 | % | $ | 67.91 | $ | 55.45 | 22 | % | ||||||||||||
Heavy oil (per barrel) |
$ | 50.07 | $ | 30.32 | 65 | % | $ | 39.52 | $ | 27.27 | 45 | % | ||||||||||||
Natural gas (per mcf) |
$ | 6.76 | $ | 7.34 | -8 | % | $ | 7.77 | $ | 7.09 | 10 | % | ||||||||||||
Natural gas liquids (per barrel) |
$ | 58.92 | $ | 50.03 | 18 | % | $ | 58.57 | $ | 50.26 | 17 | % | ||||||||||||
Average realized price per boe |
$ | 54.91 | $ | 47.79 | 15 | % | $ | 54.98 | $ | 46.38 | 19 | % |
* | See the section entitled Non-GAAP Financial Measures |
Three Months ended | Six Months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
(thousands, except per trust unit amounts) | 2006 | 2005 | 2006 | 2005 | ||||||||||||
TRUST UNIT TRADING (Class A) |
||||||||||||||||
PGH (NYSE) |
||||||||||||||||
High |
$ | 25.00 | U.S. | $ | 22.74 | U.S. | $ | 25.15 | U.S. | $ | 22.94 | U.S. | ||||
Low |
$ | 21.85 | U.S. | $ | 19.05 | U.S. | $ | 21.50 | U.S. | $ | 18.11 | U.S. | ||||
Close |
$ | 24.09 | U.S. | $ | 22.25 | U.S. | $ | 24.09 | U.S. | $ | 22.25 | U.S. | ||||
Value |
$ | 336,990 | U.S. | $ | 334,986 | U.S. | $ | 653,208 | U.S. | $ | 850,117 | U.S. | ||||
Volume (thousands of trust units) |
14,277 | 16,153 | 27,698 | 40,774 | ||||||||||||
PGF.A (TSX) |
||||||||||||||||
High |
$ | 28.50 | $ | 27.90 | $ | 28.96 | $ | 28.29 | ||||||||
Low |
$ | 24.20 | $ | 23.95 | $ | 24.20 | $ | 22.15 | ||||||||
Close |
$ | 26.70 | $ | 27.20 | $ | 26.70 | $ | 27.20 | ||||||||
Value |
$ | 47,608 | $ | 46,405 | $ | 81,449 | $ | 99,672 | ||||||||
Volume (thousands of trust units) |
1,810 | 1,798 | 3,054 | 3,847 | ||||||||||||
TRUST UNIT TRADING (Class B) |
||||||||||||||||
PGF.B (TSX) |
||||||||||||||||
High |
$ | 26.05 | $ | 19.01 | $ | 26.05 | $ | 19.90 | ||||||||
Low |
$ | 22.41 | $ | 16.37 | $ | 20.71 | $ | 16.10 | ||||||||
Close |
$ | 26.05 | $ | 18.40 | $ | 26.05 | $ | 18.40 | ||||||||
Value |
$ | 459,628 | $ | 342,470 | $ | 879,690 | $ | 886,171 | ||||||||
Volume (thousands of trust units) |
18,982 | 19,370 | 37,321 | 48,589 |
Three months ended | Six months ended | |||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Light crude oil (bbls) |
20,342 | 21,262 | 20,906 | 20,800 | 20,676 | |||||||||||||||
Heavy oil (bbls) |
4,869 | 5,018 | 5,641 | 4,943 | 5,842 | |||||||||||||||
Natural gas (mcf) |
150,976 | 157,876 | 153,423 | 154,407 | 155,446 | |||||||||||||||
Natural gas liquids (bbls) |
5,952 | 6,252 | 5,870 | 6,101 | 6,106 | |||||||||||||||
Total boe per day |
56,325 | 58,845 | 57,988 | 57,578 | 58,532 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
(Cdn$) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Light crude oil (per
bbl) |
75.67 | 65.06 | 62.22 | 70.27 | 60.16 | |||||||||||||||
after hedging |
72.67 | 63.31 | 56.44 | 67.91 | 55.45 | |||||||||||||||
Heavy oil (per bbl) |
50.07 | 29.18 | 30.32 | 39.52 | 27.27 | |||||||||||||||
Natural gas (per mcf) |
6.69 | 8.74 | 7.25 | 7.72 | 7.05 | |||||||||||||||
after hedging |
6.76 | 8.76 | 7.34 | 7.77 | 7.09 | |||||||||||||||
Natural gas liquids
(per bbl) |
58.92 | 58.23 | 50.03 | 58.57 | 50.26 | |||||||||||||||
Total per boe |
55.80 | 55.62 | 49.65 | 55.71 | 47.94 | |||||||||||||||
after hedging |
54.91 | 55.04 | 47.79 | 54.98 | 46.38 | |||||||||||||||
Benchmark prices |
||||||||||||||||||||
WTI oil (U.S.$ per
bbl) |
70.72 | 63.48 | 53.22 | 67.13 | 51.66 | |||||||||||||||
AECO spot gas (Cdn$
per gj) |
5.95 | 8.79 | 6.99 | 7.37 | 6.67 | |||||||||||||||
NYMEX gas (U.S.$ per
mmbtu) |
6.76 | 8.98 | 6.73 | 7.87 | 6.50 | |||||||||||||||
Currency (U.S. $/Cdn$) |
0.89 | 0.87 | 0.80 | 0.88 | 0.81 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Light crude oil ($ millions) |
5.6 | 3.3 | 11.0 | 8.9 | 17.6 | |||||||||||||||
Light crude oil ($ per bbl) |
3.00 | 1.75 | 5.78 | 2.36 | 4.71 | |||||||||||||||
Natural gas ($ millions) |
(1.0 | ) | (0.3 | ) | (1.2 | ) | (1.3 | ) | (1.1 | ) | ||||||||||
Natural gas ($ per mcf) |
(0.07 | ) | (0.02 | ) | (0.09 | ) | (0.05 | ) | (0.04 | ) | ||||||||||
Combined ($ millions) |
4.6 | 3.0 | 9.8 | 7.6 | 16.5 | |||||||||||||||
Combined ($ per boe) |
0.89 | 0.58 | 1.86 | 0.73 | 1.56 | |||||||||||||||
($ millions) | Three months ended | Six months ended | ||||||||||||||||||||||||||||||||||||||
Jun 30, | % of | Mar 31, | % of | Jun 30, | % of | Jun 30, | % of | Jun 30, | % of | |||||||||||||||||||||||||||||||
Sales Revenue | 2006 | total | 2006 | total | 2005 | total | 2006 | total | 2005 | total | ||||||||||||||||||||||||||||||
Light crude oil |
134.6 | 47 | 121.1 | 41 | 107.4 | 42 | 255.7 | 45 | 207.5 | 42 | ||||||||||||||||||||||||||||||
Natural gas |
92.8 | 33 | 124.4 | 43 | 102.6 | 41 | 217.2 | 38 | 199.5 | 41 | ||||||||||||||||||||||||||||||
Natural gas liquids |
31.9 | 11 | 32.8 | 11 | 26.7 | 11 | 64.7 | 11 | 55.5 | 11 | ||||||||||||||||||||||||||||||
Heavy oil |
22.2 | 8 | 13.2 | 5 | 15.5 | 6 | 35.4 | 6 | 28.8 | 6 | ||||||||||||||||||||||||||||||
Brokered sales/sulphur |
2.0 | 1 | 0.4 | | 1.0 | | 2.4 | | 1.8 | | ||||||||||||||||||||||||||||||
Total oil and gas sales |
283.5 | 291.9 | 253.2 | 575.4 | 493.1 |
($ millions) | Light oil | Natural gas | NGL | Heavy oil | Other | Total | ||||||||||||||||||
Quarter ended March 31, 2006 |
121.1 | 124.4 | 32.8 | 13.2 | 0.4 | 291.9 | ||||||||||||||||||
Effect of change in product prices |
19.6 | (28.2 | ) | 0.4 | 9.2 | | 1.0 | |||||||||||||||||
Effect of change in sales volumes |
(4.1 | ) | (4.1 | ) | (1.2 | ) | (0.2 | ) | | (9.6 | ) | |||||||||||||
Effect of change in hedging losses (gains) |
(2.3 | ) | 0.7 | | | | (1.6 | ) | ||||||||||||||||
Other |
0.3 | | (0.1 | ) | | 1.6 | 1.8 | |||||||||||||||||
Quarter ended June 30, 2006 |
134.6 | 92.8 | 31.9 | 22.2 | 2.0 | 283.5 | ||||||||||||||||||
($ millions) | Light oil | Natural gas | NGL | Heavy oil | Other | Total | ||||||||||||||||||
Year to date June 30, 2005 |
207.5 | 199.5 | 55.5 | 28.8 | 1.8 | 493.1 | ||||||||||||||||||
Effect of change in product prices |
38.1 | 18.7 | 9.2 | 11.0 | | 77.0 | ||||||||||||||||||
Effect of change in sales volumes |
1.3 | (1.3 | ) | | (4.4 | ) | | (4.4 | ) | |||||||||||||||
Effect of change in hedging losses |
8.7 | 0.2 | | | | 8.9 | ||||||||||||||||||
Other |
0.1 | 0.1 | | | 0.6 | 0.8 | ||||||||||||||||||
Year to date June 30, 2006 |
255.7 | 217.2 | 64.7 | 35.4 | 2.4 | 575.4 |
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Processing, interest & other income |
4.1 | 3.8 | 7.4 | 7.9 | 11.6 | |||||||||||||||
$ per boe |
0.80 | 0.71 | 1.39 | 0.76 | 1.09 |
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Royalty expense |
45.3 | 65.3 | 47.9 | 110.6 | 88.5 | |||||||||||||||
$ per boe |
8.84 | 12.34 | 9.08 | 10.61 | 8.35 | |||||||||||||||
Royalties as a percent of sales |
16.0 | % | 22.4 | % | 18.9 | % | 19.2 | % | 17.9 | % |
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Operating expenses |
58.0 | 54.0 | 50.4 | 112.0 | 99.5 | |||||||||||||||
$ per boe |
11.32 | 10.20 | 9.56 | 10.75 | 9.39 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Light oil transportation |
0.5 | 0.5 | 0.6 | 1.0 | 1.1 | |||||||||||||||
$ per bbl |
0.27 | 0.27 | 0.30 | 0.27 | 0.30 | |||||||||||||||
Natural gas transportation |
1.2 | 1.3 | 1.2 | 2.5 | 2.5 | |||||||||||||||
$ per mcf |
0.09 | 0.09 | 0.09 | 0.09 | 0.09 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Purchased and capitalized |
6.7 | 10.6 | 5.7 | 17.3 | 13.3 | |||||||||||||||
Amortization |
8.5 | 8.0 | 6.0 | 16.5 | 11.4 | |||||||||||||||
Combined Netbacks ($ per boe) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Sales price |
$ | 54.91 | $ | 55.04 | $ | 47.79 | $ | 54.98 | $ | 46.38 | ||||||||||
Other production income |
0.41 | 0.07 | 0.19 | 0.24 | 0.17 | |||||||||||||||
55.32 | 55.11 | 47.98 | 55.22 | 46.55 | ||||||||||||||||
Processing, interest and other income |
0.80 | 0.71 | 1.39 | 0.76 | 1.09 | |||||||||||||||
Royalties |
(8.84 | ) | (12.34 | ) | (9.08 | ) | (10.61 | ) | (8.35 | ) | ||||||||||
Operating expenses |
(11.32 | ) | (10.20 | ) | (9.56 | ) | (10.75 | ) | (9.39 | ) | ||||||||||
Transportation costs |
(0.35 | ) | (0.33 | ) | (0.34 | ) | (0.34 | ) | (0.34 | ) | ||||||||||
Amortization of injectants |
(1.67 | ) | (1.51 | ) | (1.13 | ) | (1.58 | ) | (1.07 | ) | ||||||||||
Operating netback |
$ | 33.94 | $ | 31.44 | $ | 29.26 | $ | 32.70 | $ | 28.49 | ||||||||||
Light Crude Netbacks ($ per bbl) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Sales price |
$ | 72.67 | $ | 63.31 | $ | 56.44 | $ | 67.91 | $ | 55.45 | ||||||||||
Other production income |
1.07 | 0.06 | 0.52 | 0.56 | 0.47 | |||||||||||||||
73.74 | 63.37 | 56.96 | 68.47 | 55.92 | ||||||||||||||||
Processing, interest and other income |
0.50 | 0.59 | 0.51 | 0.54 | 0.44 | |||||||||||||||
Royalties |
(11.27 | ) | (7.23 | ) | (9.96 | ) | (9.22 | ) | (8.56 | ) | ||||||||||
Operating expenses |
(12.17 | ) | (10.90 | ) | (11.14 | ) | (11.53 | ) | (10.94 | ) | ||||||||||
Transportation costs |
(0.27 | ) | (0.27 | ) | (0.30 | ) | (0.27 | ) | (0.30 | ) | ||||||||||
Amortization of injectants |
(4.61 | ) | (4.17 | ) | (3.13 | ) | (4.38 | ) | (3.03 | ) | ||||||||||
Operating netback |
$ | 45.92 | $ | 41.39 | $ | 32.94 | $ | 43.61 | $ | 33.53 | ||||||||||
Heavy Oil Netbacks ($ per bbl) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Sales price |
$ | 50.07 | $ | 29.18 | $ | 30.32 | $ | 39.52 | $ | 27.27 | ||||||||||
Processing, interest and other income |
0.16 | 0.38 | 0.49 | 0.27 | 0.75 | |||||||||||||||
Royalties |
(4.75 | ) | (1.55 | ) | (4.75 | ) | (3.14 | ) | (3.64 | ) | ||||||||||
Operating expenses |
(16.03 | ) | (14.16 | ) | (15.88 | ) | (15.09 | ) | (17.26 | ) | ||||||||||
Operating netback |
$ | 29.45 | $ | 13.85 | $ | 10.18 | $ | 21.56 | $ | 7.12 | ||||||||||
Natural Gas Netbacks ($ per mcf) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Sales price |
$ | 6.76 | $ | 8.76 | $ | 7.34 | $ | 7.77 | $ | 7.09 | ||||||||||
Other production income |
0.01 | 0.02 | | 0.01 | | |||||||||||||||
6.77 | 8.78 | 7.34 | 7.78 | 7.09 | ||||||||||||||||
Processing, interest and other income |
0.23 | 0.18 | 0.44 | 0.20 | 0.32 | |||||||||||||||
Royalties |
(0.93 | ) | (2.54 | ) | (1.34 | ) | (1.75 | ) | (1.30 | ) | ||||||||||
Operating expenses |
(1.66 | ) | (1.54 | ) | (1.16 | ) | (1.60 | ) | (1.12 | ) | ||||||||||
Transportation costs |
(0.09 | ) | (0.09 | ) | (0.09 | ) | (0.09 | ) | (0.09 | ) | ||||||||||
Operating netback |
$ | 4.32 | $ | 4.79 | $ | 5.19 | $ | 4.54 | $ | 4.90 | ||||||||||
NGLs Netbacks ($ per bbl) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Sales price |
$ | 58.92 | $ | 58.23 | $ | 50.03 | $ | 58.57 | $ | 50.26 | ||||||||||
Royalties |
(17.67 | ) | (26.10 | ) | (14.59 | ) | (21.97 | ) | (14.32 | ) | ||||||||||
Operating expenses |
(10.20 | ) | (8.65 | ) | (9.15 | ) | (9.41 | ) | (7.98 | ) | ||||||||||
Operating netback |
$ | 31.05 | $ | 23.48 | $ | 26.29 | $ | 27.19 | $ | 27.96 | ||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Cash G&A expense |
8.1 | 7.5 | 6.4 | 15.6 | 12.7 | |||||||||||||||
$ per boe |
1.59 | 1.41 | 1.22 | 1.50 | 1.20 | |||||||||||||||
Non-cash G&A expense |
0.6 | 1.3 | 0.7 | 1.9 | 1.5 | |||||||||||||||
$ per boe |
0.11 | 0.26 | 0.13 | 0.18 | 0.14 | |||||||||||||||
Total G&A ($ millions) |
8.7 | 8.8 | 7.1 | 17.5 | 14.2 | |||||||||||||||
Total G&A ($ per boe) |
1.70 | 1.67 | 1.35 | 1.68 | 1.34 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Management Fee |
2.1 | 3.2 | 2.0 | 5.3 | 5.2 | |||||||||||||||
Performance Fee |
1.3 | 1.0 | 2.3 | 2.3 | 2.9 | |||||||||||||||
Total ($ millions) |
3.4 | 4.2 | 4.3 | 7.6 | 8.1 | |||||||||||||||
Total ($ per boe) |
0.65 | 0.80 | 0.82 | 0.73 | 0.76 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Depletion and Depreciation |
67.8 | 71.1 | 70.9 | 138.9 | 140.1 | |||||||||||||||
$ per boe |
13.23 | 13.42 | 13.44 | 13.33 | 13.22 | |||||||||||||||
Accretion |
3.9 | 3.3 | 3.6 | 7.2 | 7.0 | |||||||||||||||
$ per boe |
0.76 | 0.63 | 0.67 | 0.69 | 0.66 | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||||||
($ millions) | Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | |||||||||||||||
Geological and geophysical |
1.1 | 1.2 | 0.6 | 2.3 | 1.2 | |||||||||||||||
Drilling and completions |
33.5 | 57.8 | 25.1 | 91.3 | 59.4 | |||||||||||||||
Plant and facilities |
7.5 | 13.4 | 3.3 | 20.9 | 13.9 | |||||||||||||||
Land purchases |
5.0 | 2.7 | 0.1 | 7.7 | 0.3 | |||||||||||||||
Development capital |
47.1 | 75.1 | 29.1 | 122.2 | 74.8 | |||||||||||||||
Acquisitions |
4.4 | 49.8 | 1.4 | 54.2 | 91.2 | |||||||||||||||
Total capital expenditures
and acquisitions |
51.5 | 124.9 | 30.5 | 176.4 | 166.0 | |||||||||||||||
($ thousands, except per trust unit amounts) | Three months ended | Six months ended | ||||||||||||||||||
Jun 30, 2006 | Mar 31, 2006 | Jun 30, 2005 | Jun 30, 2006 | Jun 30, 2005 | ||||||||||||||||
Cash generated from operations |
118,326 | 191,599 | 126,086 | 309,925 | 262,506 | |||||||||||||||
Change in non-cash operating working capital |
34,219 | (50,339 | ) | 8,962 | (16,120 | ) | (1,051 | ) | ||||||||||||
Funds generated from operations |
152,545 | 141,260 | 135,048 | 293,805 | 261,455 | |||||||||||||||
Change in deferred injectants |
(1,853 | ) | 2,643 | (217 | ) | 790 | 1,962 | |||||||||||||
Change in remediation trust funds |
(279 | ) | (391 | ) | (269 | ) | (670 | ) | (532 | ) | ||||||||||
Change in deferred charges |
(1,716 | ) | 788 | (395 | ) | (928 | ) | (790 | ) | |||||||||||
Other |
383 | (123 | ) | (120 | ) | 260 | (244 | ) | ||||||||||||
Distributable cash |
149,080 | 144,177 | 134,047 | 293,257 | 261,851 | |||||||||||||||
Allocation of Distributable cash |
||||||||||||||||||||
Cash withheld |
28,483 | 23,875 | 23,779 | 52,358 | 45,585 | |||||||||||||||
Distributions paid or declared |
120,597 | 120,302 | 110,268 | 240,899 | 216,266 | |||||||||||||||
Distributable cash |
149,080 | 144,177 | 134,047 | 293,257 | 261,851 | |||||||||||||||
Distributable cash per trust unit |
0.93 | 0.90 | 0.86 | 1.83 | 1.69 | |||||||||||||||
Distributions paid or declared per trust unit |
0.75 | 0.75 | 0.69 | 1.50 | 1.38 | |||||||||||||||
Payout ratio (1) |
81 | % | 83 | % | 82 | % | 82 | % | 83 | % | ||||||||||
(1) | Payout ratio is calculated as distributions paid or declared divided by distributable cash |
2006 | Q1 | Q2 | ||||||
Oil and gas sales ($000s) |
291,896 | 283,532 | ||||||
Net income ($000s) |
66,335 | 110,116 | ||||||
Net income per trust unit ($) |
0.41 | 0.69 | ||||||
Net income per trust unit diluted ($) |
0.41 | 0.68 | ||||||
Distributable cash ($000s) |
144,177 | 149,080 | ||||||
Actual distributions paid or declared per trust unit ($) |
0.75 | 0.75 | ||||||
Daily production (boe) |
58,845 | 56,325 | ||||||
Total production (mboe) |
5,296 | 5,126 | ||||||
Average realized price ($ per boe) |
55.04 | 54.91 | ||||||
Operating netback ($ per boe) |
31.44 | 33.94 |
2005 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
Oil and gas sales ($000s) |
239,913 | 253,189 | 304,484 | 353,923 | ||||||||||||
Net income ($000s) |
56,314 | 53,106 | 100,243 | 116,663 | ||||||||||||
Net income per trust unit ($) |
0.37 | 0.34 | 0.63 | 0.73 | ||||||||||||
Net income per trust unit diluted ($) |
0.37 | 0.34 | 0.63 | 0.73 | ||||||||||||
Distributable cash ($000s) |
127,804 | 134,047 | 162,009 | 195,879 | ||||||||||||
Actual distributions paid or declared per trust unit ($) |
0.69 | 0.69 | 0.69 | 0.75 | ||||||||||||
Daily production (boe) |
59,082 | 57,988 | 58,894 | 61,442 | ||||||||||||
Total production (mboe) |
5,317 | 5,277 | 5,418 | 5,653 | ||||||||||||
Average realized price ($ per boe) |
44.97 | 47.79 | 56.07 | 62.55 | ||||||||||||
Operating netback ($ per boe) |
27.70 | 29.26 | 33.94 | 38.81 |
2004 | Q1 | Q2 | Q3 | Q4 | ||||||||||||
Oil and gas sales ($000s) |
168,771 | 197,284 | 226,514 | 223,183 | ||||||||||||
Net income ($000s) |
38,652 | 32,684 | 51,271 | 31,138 | ||||||||||||
Net income per trust unit ($) |
0.31 | 0.24 | 0.38 | 0.23 | ||||||||||||
Net income per trust unit diluted ($) |
0.31 | 0.24 | 0.38 | 0.23 | ||||||||||||
Distributable cash ($000s) |
92,895 | 99,021 | 104,304 | 104,958 | ||||||||||||
Actual distributions paid or declared per trust unit ($) |
0.63 | 0.64 | 0.67 | 0.69 | ||||||||||||
Daily production (boe) |
45,668 | 51,451 | 60,151 | 57,425 | ||||||||||||
Total production (mboe) |
4,156 | 4,682 | 5,534 | 5,283 | ||||||||||||
Average realized price ($ per boe) |
40.37 | 41.83 | 40.90 | 42.08 | ||||||||||||
Operating netback ($ per boe) |
25.71 | 25.71 | 22.77 | 24.31 |
| At Gutah five of seven wells from the first quarter drilling program are on production. In addition, three of four previously drilled high interest wells have also come on production. The three remaining wells are to be tied-in during the first quarter of 2007. | ||
| The Prespatou compression facility expansion to 12 mmcf per day (gross) was completed. | ||
| At Rigel, an operated gas-cap producer was tied-in and is producing at 1 mmcf per day (gross). | ||
| A recompletion at Wildmint was tied-in and is on production. | ||
| At West Weasel a compression installation project was completed. | ||
| Two new wells were successfully recompleted at Beatton River. | ||
| There were no new wells drilled in NEBC during the second quarter and the summer drilling program is scheduled to commence in the third quarter. |
| Seven additional Weyburn wells were drilled and are on production. Wells drilled in 2006 now total 17 wells. This years drilling program has been expanded from 40 to 51 wells. | ||
| At Swan Hills, two additional wells were drilled in the second quarter. The fourth well of the 2006 program will be completed in the third quarter. | ||
| Tie-in work on three new West Pembina wells was underway at the end of the second quarter and they are scheduled to come on production during the third quarter. | ||
| A well drilled in the first quarter at Judy Creek began production at the end of the second quarter at a rate of 250 bbls of oil per day. | ||
| One new Judy Creek well was drilled and will be tied-in during the third quarter. | ||
| Production in the Central area was negatively impacted by approximately 200 boe per day due to well and facilities being temporarily shut-in for major planned maintenance. The maintenance outages occurred at the Hanlan, McLeod and Kaybob fields. |
| Completions on the 11 wells of phase one of the Coalbed Methane (CBM) program began at the end of the second quarter. Tie-ins are anticipated in the third quarter. | ||
| A 50 well CBM program (Phase 2) was approved and will begin drilling in the third quarter. | ||
| Three wells of the 11 well Princess drilling program were completed. The remainder of this program will be concluded in the third quarter. | ||
| Nine wells were drilled in the Three Hills area (six operated and three non-operated). Eight of the wells were cased and one was drilled and abandoned. Additional drilling will continue throughout the third quarter. | ||
| At Monogram, a 14 well re-frac program was completed with encouraging results. A larger 50 well re-frac program is planned for the third quarter. | ||
| Completion of the new Quirk Creek well has been delayed to the third quarter due to requirements for additional regulatory approvals. | ||
| Planned maintenance at Princess and generally wet weather conditions in Southern Alberta during spring break-up resulted in approximately 20 boe per day on average for the quarter being temporarily shut-in. |
| The polymer injection pilot began at East Bodo. The pilot is currently operating as anticipated with detailed monitoring to continue throughout 2006. | ||
| At East Bodo, three horizontal wells were drilled and cased. Tie-ins are expected early in the third quarter and additional horizontal drilling is planned. | ||
| An extremely wet spring break-up resulted in approximately 40 boe per day on average for the quarter being temporarily shut-in. |
| Second quarter gross raw gas production from the five SOEP fields, Thebaud, Venture, North Triumph, Alma and South Venture, averaged 330 mmcf per day (28 mmcf per day net). | ||
| Monthly raw production for April, May and June was 333 mmcf per day (28 mmcf per day net); 321 mmcf per day (27 mmcf per day net); and 337 mmcf per day (28 mmcf per day net), respectively. | ||
| Production was reduced in the second quarter due to ten days of shutdown time required to install the compression jacket and topsides. | ||
| Pengrowth shipped approximately 68,000 bbls of condensate in the second quarter. | ||
| Alma 3 was perforated on March 31, 2006 and started production on April 7, 2006. |
| The compression jacket arrived at the SOEP site on May 13, 2006 and was set in place on May 16, 2006 with pile driving completed on May 21, 2006. | ||
| The compression topsides arrived on location on May 22, 2006 and were placed on the jacket on May 28, 2006. | ||
| The drilling rig Galaxy II was moved to Thebaud to act as an accommodation vessel to support the compressor installation. | ||
| Cut-in work continued at the Thebaud facilities in preparation for the start-up of the compressor. | ||
| In-service for the compressor is scheduled for late 2006. |
As at | As at | |||||||
June 30 | December 31 | |||||||
2006 | 2005 | |||||||
(unaudited) | (audited) | |||||||
ASSETS |
||||||||
CURRENT ASSETS |
||||||||
Cash |
$ | 1,197 | $ | | ||||
Accounts receivable |
117,578 | 127,394 | ||||||
118,775 | 127,394 | |||||||
REMEDIATION TRUST FUNDS |
8,999 | 8,329 | ||||||
DEFERRED CHARGES (Note 7) |
6,539 | 4,886 | ||||||
LONG TERM INVESTMENTS (Note 3) |
26,990 | | ||||||
GOODWILL |
182,835 | 182,835 | ||||||
PROPERTY, PLANT AND EQUIPMENT
AND OTHER ASSETS |
2,081,403 | 2,067,988 | ||||||
$ | 2,425,541 | $ | 2,391,432 | |||||
LIABILITIES AND UNITHOLDERS EQUITY |
||||||||
CURRENT LIABILITIES |
||||||||
Bank indebtedness |
$ | | $ | 14,567 | ||||
Accounts payable and accrued liabilities |
103,866 | 111,493 | ||||||
Distributions payable to unitholders |
80,437 | 79,983 | ||||||
Due to Pengrowth Management Limited |
3,424 | 8,277 | ||||||
Note payable |
20,000 | 20,000 | ||||||
Other liabilities (Note 11) |
8,198 | 5,279 | ||||||
215,925 | 239,599 | |||||||
CONTRACT LIABILITIES |
10,767 | 12,937 | ||||||
LONG TERM DEBT (Note 2) |
488,310 | 368,089 | ||||||
ASSET RETIREMENT OBLIGATIONS (Note 6) |
187,925 | 184,699 | ||||||
FUTURE INCOME TAXES |
91,764 | 110,112 | ||||||
TRUST UNITHOLDERS EQUITY |
||||||||
Trust Unitholders capital (Note 4) |
2,533,040 | 2,514,997 | ||||||
Contributed surplus (Note 4) |
4,905 | 3,646 | ||||||
Deficit (Note 4) |
(1,107,095 | ) | (1,042,647 | ) | ||||
1,430,850 | 1,475,996 | |||||||
SUBSEQUENT EVENTS (Notes 4 and 12) |
||||||||
$ | 2,425,541 | $ | 2,391,432 | |||||
Three months ended | Six months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
REVENUES |
||||||||||||||||
Oil and gas sales |
$ | 283,532 | $ | 253,189 | $ | 575,428 | $ | 493,103 | ||||||||
Processing and other income |
3,986 | 5,614 | 7,205 | 9,732 | ||||||||||||
Royalties, net of incentives |
(45,290 | ) | (47,899 | ) | (110,625 | ) | (88,465 | ) | ||||||||
242,228 | 210,904 | 472,008 | 414,370 | |||||||||||||
Interest and other income |
131 | 1,730 | 696 | 1,842 | ||||||||||||
NET REVENUE |
242,359 | 212,634 | 472,704 | 416,212 | ||||||||||||
EXPENSES |
||||||||||||||||
Operating |
58,002 | 50,435 | 112,020 | 99,514 | ||||||||||||
Transportation |
1,781 | 1,808 | 3,539 | 3,615 | ||||||||||||
Amortization of injectants for miscible floods |
8,535 | 5,961 | 16,507 | 11,353 | ||||||||||||
Interest |
6,511 | 5,709 | 12,289 | 11,142 | ||||||||||||
General and administrative |
8,697 | 7,125 | 17,517 | 14,206 | ||||||||||||
Management fee |
3,317 | 4,343 | 7,558 | 8,051 | ||||||||||||
Foreign exchange (gain) loss (Note 8) |
(10,359 | ) | 2,425 | (9,120 | ) | 3,785 | ||||||||||
Depletion and depreciation |
67,827 | 70,904 | 138,883 | 140,053 | ||||||||||||
Accretion (Note 6) |
3,903 | 3,550 | 7,231 | 6,953 | ||||||||||||
Unrealized loss on commodity contracts (Notes 1 and 11) |
3,389 | | 3,389 | | ||||||||||||
Other expenses |
3,806 | 885 | 4,777 | 1,714 | ||||||||||||
155,409 | 153,145 | 314,590 | 300,386 | |||||||||||||
NET INCOME BEFORE TAXES |
86,950 | 59,489 | 158,114 | 115,826 | ||||||||||||
INCOME TAX EXPENSE (REDUCTION) |
||||||||||||||||
Capital |
(498 | ) | 424 | 11 | 892 | |||||||||||
Future |
(22,668 | ) | 5,959 | (18,348 | ) | 5,514 | ||||||||||
(23,166 | ) | 6,383 | (18,337 | ) | 6,406 | |||||||||||
NET INCOME |
$ | 110,116 | $ | 53,106 | $ | 176,451 | $ | 109,420 | ||||||||
Deficit, beginning of period |
(1,096,614 | ) | (972,680 | ) | (1,042,647 | ) | (922,996 | ) | ||||||||
Distributions paid or declared |
(120,597 | ) | (110,268 | ) | (240,899 | ) | (216,266 | ) | ||||||||
DEFICIT, END OF PERIOD |
$ | (1,107,095 | ) | $ | (1,029,842 | ) | $ | (1,107,095 | ) | $ | (1,029,842 | ) | ||||
NET INCOME PER TRUST UNIT (Note 4) |
Basic | $ | 0.69 | $ | 0.34 | $ | 1.10 | $ | 0.71 | |||||||
Diluted | $ | 0.68 | $ | 0.34 | $ | 1.10 | $ | 0.70 | ||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
CASH PROVIDED BY (USED FOR): |
||||||||||||||||
OPERATING |
||||||||||||||||
Net income |
$ | 110,116 | $ | 53,106 | $ | 176,451 | $ | 109,420 | ||||||||
Depletion, depreciation and accretion |
71,730 | 74,454 | 146,114 | 147,006 | ||||||||||||
Future income taxes |
(22,668 | ) | 5,959 | (18,348 | ) | 5,514 | ||||||||||
Contract liability amortization |
(1,320 | ) | (1,449 | ) | (2,640 | ) | (2,898 | ) | ||||||||
Amortization of injectants |
8,535 | 5,961 | 16,507 | 11,353 | ||||||||||||
Purchase of injectants |
(6,682 | ) | (5,744 | ) | (17,297 | ) | (13,315 | ) | ||||||||
Expenditures on remediation |
(2,470 | ) | (1,506 | ) | (3,850 | ) | (2,624 | ) | ||||||||
Unrealized foreign exchange (gain) loss (Note 8) |
(10,360 | ) | 3,160 | (9,360 | ) | 4,680 | ||||||||||
Unrealized loss on commodity contracts (Notes 1 and 11) |
3,389 | | 3,389 | | ||||||||||||
Trust unit based compensation (Note 5) |
559 | 712 | 1,911 | 1,529 | ||||||||||||
Deferred charges |
| | (2,364 | ) | | |||||||||||
Amortization of deferred charges |
1,716 | 395 | 3,292 | 790 | ||||||||||||
Changes in non-cash operating working capital (Note 9) |
(34,219 | ) | (8,962 | ) | 16,120 | 1,051 | ||||||||||
118,326 | 126,086 | 309,925 | 262,506 | |||||||||||||
FINANCING |
||||||||||||||||
Distributions |
(120,400 | ) | (108,040 | ) | (240,445 | ) | (213,797 | ) | ||||||||
Change in long term debt, net |
76,000 | (4,031 | ) | 127,000 | 90,969 | |||||||||||
Proceeds from issue of trust units |
7,948 | 6,647 | 17,391 | 16,530 | ||||||||||||
(36,452 | ) | (105,424 | ) | (96,054 | ) | (106,298 | ) | |||||||||
INVESTING |
||||||||||||||||
Expenditures on property and other acquisitions |
(4,377 | ) | (1,616 | ) | (54,162 | ) | (91,566 | ) | ||||||||
Expenditures on property, plant and equipment |
(47,176 | ) | (28,901 | ) | (122,254 | ) | (74,436 | ) | ||||||||
Proceeds on property dispositions |
1,051 | | 17,753 | | ||||||||||||
Change in remediation trust fund |
(279 | ) | (269 | ) | (670 | ) | (532 | ) | ||||||||
Purchase of marketable securities |
(19,990 | ) | | (19,990 | ) | | ||||||||||
Change in non-cash investing working capital (Note 9) |
(3,565 | ) | 3,192 | (18,784 | ) | | ||||||||||
(74,336 | ) | (27,594 | ) | (198,107 | ) | (166,534 | ) | |||||||||
CHANGE IN CASH AND BANK INDEBTEDNESS |
7,538 | (6,932 | ) | 15,764 | (10,326 | ) | ||||||||||
BANK INDEBTEDNESS AT BEGINNING OF PERIOD |
(6,341 | ) | (7,608 | ) | (14,567 | ) | (4,214 | ) | ||||||||
CASH (BANK INDEBTEDNESS) AT END OF PERIOD |
$ | 1,197 | $ | (14,540 | ) | $ | 1,197 | $ | (14,540 | ) | ||||||
1. | SIGNIFICANT ACCOUNTING POLICIES | |
The interim consolidated financial statements of Pengrowth Energy Trust include the accounts of Pengrowth Energy Trust (the Trust), Pengrowth Corporation (the Corporation) and its subsidiaries (collectively referred to as Pengrowth). The financial statements do not contain the accounts of Pengrowth Management Limited (the Manager). | ||
The financial statements have been prepared by management in accordance with generally accepted accounting principles in Canada. The interim consolidated financial statements have been prepared following the same accounting policies and methods of computation as the consolidated financial statements for the fiscal year ended December 31, 2005, except as discussed below. The disclosures provided below are incremental to those included with the annual consolidated financial statements. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto in Pengrowths annual report for the year ended December 31, 2005. | ||
FINANCIAL INSTRUMENTS | ||
Effective May 1, 2006, Pengrowth no longer designates new commodity contracts as hedges. Commodity contracts that do not qualify as hedges, or are not designated as hedges, are recorded using the mark-to-market method of accounting whereby instruments are recorded in the consolidated balance sheet as either an asset or liability with changes in fair value recognized in net earnings. Realized gains or losses from financial derivatives related to commodity prices are recognized in natural gas and crude oil revenues as the related sales occur. Unrealized gains and losses are recognized in other expenses at the end of each respective reporting period. The fair value of derivative instruments is based on quoted market prices or, in its absence, estimated using third party market indications and forecasts. | ||
Commodity contracts are used by Pengrowth to manage economic exposure to market risks relating to commodity prices. Pengrowths policy is not to utilize derivative financial instruments for speculative purposes. | ||
Financial derivative contracts previously designated as hedges continue to be designated as hedges and are accounted for as disclosed in the annual financial statements. | ||
2. | LONG TERM DEBT |
As at | As at | |||||||
June 30, | December 31, | |||||||
2006 | 2005 | |||||||
U.S. dollar denominated debt: |
||||||||
U.S. $150 million senior unsecured notes at 4.93 percent due
April 2010 |
$ | 167,430 | $ | 174,450 | ||||
U.S. $50 million senior unsecured notes at 5.47 percent due
April 2013 |
55,810 | 58,150 | ||||||
223,240 | 232,600 | |||||||
Pounds sterling denominated £50 million unsecured notes at
5.46 percent due December 2015 |
103,070 | 100,489 | ||||||
Canadian dollar revolving credit facility |
162,000 | 35,000 | ||||||
$ | 488,310 | $ | 368,089 | |||||
On June 16, 2006, Pengrowth entered into a new $500 million extendible revolving term credit facility syndicated among eight financial institutions. The facility is unsecured, covenant based and has a three year term. Pengrowth has the option to extend the facility each year, subject to the approval of the lenders, or repay the entire balance at the end of the three year term. Various borrowing options are available under the facility including prime rate based advances and bankers acceptance loans. This facility carries floating interest rates that are expected to range between 0.65 percent and 1.15 percent over bankers |
acceptance rates, depending on Pengrowths consolidated ratio of senior debt to earnings before interest, taxes and non-cash items. In addition, Pengrowth has a $35 million demand operating line of credit for working capital purposes. The facilities were reduced by drawings of $162 million and by outstanding letters of credit in the amount of approximately $17 million at June 30, 2006. | ||
3. | LONG TERM INVESTMENTS |
June 30, 2006 | December 31, 2005 | |||||||
Portfolio investments |
$ | 19,990 | | |||||
Equity investments |
7,000 | | ||||||
$ | 26,990 | | ||||||
PORTFOLIO INVESTMENTS | ||
On July 24, 2006, Pengrowth announced an agreement providing for the combination of Pengrowth and Esprit Energy Trust (Esprit) (See Note 12). As at June 30, 2006, Pengrowth held 1,489,000 Esprit trust units. The investment is accounted for at cost. Distributions are recorded in income as received. | ||
EQUITY INVESTMENTS | ||
On January 12, 2006 Pengrowth closed certain transactions with Monterey Exploration Ltd. (Monterey) under which Pengrowth has sold certain oil and gas properties for $22 million in cash, less closing adjustments, and 8,048,132 common shares of Monterey. As of June 30, 2006, Pengrowth held approximately 34 percent of the common shares of Monterey. | ||
Pengrowth utilizes the equity method of accounting for the investment in Monterey. The investment is initially recorded at cost and adjusted thereafter to include Pengrowths pro rata share of post-acquisition earnings of Monterey. Any dividends received or receivable from Monterey would reduce the carrying value of the investment. | ||
4. | TRUST UNITHOLDERS EQUITY | |
Trust Unitholders Capital | ||
The total authorized capital of Pengrowth is 500,000,000 trust units. | ||
Total Trust Units: |
Six months ended | Year ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Number | Number | |||||||||||||||
Trust units issued | of trust units | Amount | of trust units | Amount | ||||||||||||
Balance, beginning of period |
159,864,083 | $ | 2,514,997 | 152,972,555 | $ | 2,383,284 | ||||||||||
Issued for the Crispin acquisition (non-
cash) |
| | 4,225,313 | 87,960 | ||||||||||||
Issued for cash on exercise of trust unit
options and rights |
427,548 | 6,650 | 1,512,211 | 21,818 | ||||||||||||
Issued for cash under Distribution
Reinvestment Plan (DRIP) |
485,648 | 10,741 | 1,154,004 | 20,726 | ||||||||||||
Trust unit rights incentive plan (non-cash
exercised) |
| 652 | | 1,209 | ||||||||||||
Balance, end of period |
160,777,279 | $ | 2,533,040 | 159,864,083 | $ | 2,514,997 | ||||||||||
Six months ended | Year ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Number | Number | |||||||||||||||
Trust units issued | of trust units | Amount | of trust units | Amount | ||||||||||||
Balance, beginning of period |
77,524,673 | $ | 1,196,121 | 76,792,759 | $ | 1,176,427 | ||||||||||
Issued for the Crispin acquisition (non-
cash) |
| | 686,732 | 19,002 | ||||||||||||
Trust units converted |
2,760 | 43 | 45,182 | 692 | ||||||||||||
Balance, end of period |
77,527,433 | $ | 1,196,164 | 77,524,673 | $ | 1,196,121 | ||||||||||
Six months ended | Year ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Number | Number | |||||||||||||||
Trust units issued | of trust units | Amount | of trust units | Amount | ||||||||||||
Balance, beginning of period |
82,301,443 | $ | 1,318,294 | 76,106,471 | $ | 1,205,734 | ||||||||||
Trust units converted |
1,095 | 17 | (9,824 | ) | (151 | ) | ||||||||||
Issued for the Crispin acquisition (non-
cash) |
| | 3,538,581 | 68,958 | ||||||||||||
Issued for cash on exercise of trust unit
options and rights |
427,548 | 6,650 | 1,512,211 | 21,818 | ||||||||||||
Issued for cash under Distribution
Reinvestment Plan (DRIP) |
485,648 | 10,741 | 1,154,004 | 20,726 | ||||||||||||
Trust unit rights incentive plan (non-cash
exercised) |
| 652 | | 1,209 | ||||||||||||
Balance, end of period |
83,215,734 | $ | 1,336,354 | 82,301,443 | $ | 1,318,294 | ||||||||||
Six months ended | Year ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Number | Number | |||||||||||||||
Trust units issued | of trust units | Amount | of trust units | Amount | ||||||||||||
Balance, beginning of period |
37,967 | $ | 582 | 73,325 | $ | 1,123 | ||||||||||
Converted to Class A or Class B trust
units |
(3,855 | ) | (60 | ) | (35,358 | ) | (541 | ) | ||||||||
Balance, end of period |
34,112 | $ | 522 | 37,967 | $ | 582 | ||||||||||
| Effective as of 5:00 p.m. (MDT.) on June 27, 2006, the restrictions on the Class B trust units that provided that the Class B trust units may only be held by residents of Canada was eliminated. | ||
| Effective as of 5:00 p.m. (MDT) on July 27, 2006; |
| the Class A trust units were delisted from the Toronto Stock Exchange (effective as of the close of markets); | ||
| the Class B trust units were renamed consolidated trust units and the trading symbol of the consolidated trust units was changed from PGF.B to PGF.UN; | ||
| all of the issued and outstanding Class A trust units were converted into consolidated trust units on the basis of one consolidated trust unit for each whole Class A trust unit previously held (with the exception of Class A trust units held by residents of Canada who have provided a residency declaration to the Trustee); | ||
| the consolidated trust units were substitutionally listed in place of the Class A trust units on the New York Stock Exchange under the symbol PGH; and | ||
| the unclassified trust units were converted into consolidated trust units on the basis of one consolidated trust unit for each unclassified trust unit held. |
Per Trust Unit Amounts | ||
The per trust unit amounts of net income are based on the following weighted average trust units outstanding for the period. The weighted average trust units outstanding for the three months ended June 30, 2006 were 160,592,175 trust units (June 30, 2005 156,718,379 trust units) and for the six months ended June 30, 2006 were 160,371,752 trust units (June 30, 2005 155,062,147). In computing diluted net income per trust unit, 725,888 trust units were added to the weighted average number of trust units outstanding during the three months ended June 30, 2006 (June 30, 2005 425,749 trust units) and 636,185 trust units were added to the weighted average number of trust units outstanding during the six months ended June 30, 2006 (June 30, 2005 499,559) for the dilutive effect of trust unit options, rights and deferred entitlement trust units (DEUs). For the three months ended June 30, 2006, no anti-dilutive options, rights or DEUs (June 30, 2005 333,583) and for the six months ended June 30, 2006 no anti-dilutive options, rights or DEUs (June 30, 2005 823,325), were excluded from the diluted net income per trust unit calculation as their effect is anti-dilutive. | ||
Contributed Surplus |
Six months ended | Twelve months ended | |||||||
June 30, 2006 | December 31, 2005 | |||||||
Balance, beginning of period |
$ | 3,646 | $ | 1,923 | ||||
Trust unit rights incentive plan (non-cash expensed) |
763 | 1,740 | ||||||
Deferred entitlement trust units (non-cash expensed) |
1,148 | 1,192 | ||||||
Trust unit rights incentive plan (non-cash exercised) |
(652 | ) | (1,209 | ) | ||||
Balance, end of period |
$ | 4,905 | $ | 3,646 | ||||
Deficit |
As at | As at | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Accumulated earnings |
$ | 1,229,834 | $ | 1,053,383 | ||||||||||||
Accumulated distributions paid or declared |
(2,336,929 | ) | (2,096,030 | ) | ||||||||||||
$ | (1,107,095 | ) | $ | (1,042,647 | ) | |||||||||||
Pengrowth is obligated by virtue of its Royalty and Trust Indentures to distribute to unitholders a significant portion of its cash flow from operations. Cash flow from operations typically exceeds net income as a result of non cash expenses such as depletion, depreciation and accretion. These non-cash expenses result in a deficit being recorded despite Pengrowth distributing less than its cash flow from operations. | ||
5. | TRUST UNIT BASED COMPENSATION PLANS | |
Trust Unit Option Plan | ||
As at June 30, 2006, options to purchase 131,813 Class B trust units were outstanding (December 31, 2005 259,317) that expire at various dates to June 28, 2009. All outstanding trust unit options were fully expensed by December 31, 2004. |
Six months ended | Twelve months ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Trust unit options | Number | average | Number | average | ||||||||||||
of options | exercise price | of options | exercise price | |||||||||||||
Outstanding at beginning of period |
259,317 | $ | 17.28 | 845,374 | $ | 16.97 | ||||||||||
Exercised |
(127,504 | ) | $ | 18.07 | (558,307 | ) | $ | 16.74 | ||||||||
Expired |
| | (27,750 | ) | $ | 18.63 | ||||||||||
Outstanding and exercisable at period-end |
131,813 | $ | 16.52 | 259,317 | $ | 17.28 | ||||||||||
Trust Unit Rights Incentive Plan | ||
As at June 30, 2006, rights to purchase 1,558,050 Class B trust units were outstanding (December 31, 2005 1,441,737) that expire at various dates to February 27, 2011. | ||
Compensation expense associated with the trust unit rights granted during 2006 was based on the estimated fair value of $1.86 per trust unit right. The fair value of trust unit rights granted during the six months ended June 30, 2006 was estimated at 8 percent of the exercise price at the date of grant using a binomial lattice option pricing model with the following assumptions: risk-free rate of 4.1 percent, volatility of 19 percent and reductions in the exercise price over the life of the trust unit rights. For |
the six months ended June 30, 2006, compensation expense of $763,000 (June 30, 2005 $1,058,000) related to the trust unit rights was recorded. |
Six months ended | Twelve months ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
Weighted | Weighted | |||||||||||||||
Trust unit rights | Number | average | Number | average | ||||||||||||
of rights | exercise price | of rights | exercise price | |||||||||||||
Outstanding at beginning of period |
1,441,737 | $ | 14.85 | 2,011,451 | $ | 14.23 | ||||||||||
Granted (1) |
444,909 | $ | 23.20 | 606,575 | $ | 18.34 | ||||||||||
Exercised |
(300,044 | ) | $ | 14.48 | (953,904 | ) | $ | 12.81 | ||||||||
Cancelled |
(28,552 | ) | $ | 16.03 | (222,385 | ) | $ | 16.19 | ||||||||
Outstanding at period-end |
1,558,050 | $ | 16.46 | 1,441,737 | $ | 14.85 | ||||||||||
Exercisable at period-end |
826,456 | $ | 14.46 | 668,473 | $ | 13.73 | ||||||||||
(1) | Weighted average exercise price of rights granted is based on the exercise price at the date of grant. |
Long Term Incentive Program | ||
As at June 30, 2006, 341,923 DEUs were outstanding (December 31, 2005 185,591), including accrued distributions re-invested to June 30, 2006. The DEUs vest on various dates to February 27, 2009. For the six months ended June 30, 2006, Pengrowth recorded compensation expense of $1,148,000 (June 30, 2005 $471,000) associated with the DEUs based on the weighted average estimated fair value of $20.69 (2005 $18.14) per DEU. |
Six months ended | Twelve months ended | |||||||
Number of DEUs | June 30, 2006 | December 31, 2005 | ||||||
Outstanding, beginning of period |
185,591 | | ||||||
Granted |
152,930 | 194,229 | ||||||
Cancelled |
(19,648 | ) | (26,258 | ) | ||||
Deemed DRIP |
23,050 | 17,620 | ||||||
Outstanding, end of period |
341,923 | 185,591 | ||||||
Trust Unit Award Plans | ||
Effective February 27, 2006, Pengrowth established a new incentive plan to reward and retain employees whereby Class B trust units and cash will be awarded to eligible employees. Employees will receive the trust units and cash on or about July 1, 2007. Pengrowth acquired the Class B trust units to be awarded on the open market for $2.4 million and placed them in a trust account established for the benefit of the eligible employees. The cost to acquire the trust units has been recorded as deferred compensation expense and is being charged to net income on a straight line basis over 16 months. In addition, the cash portion of the incentive plan of approximately $1.1 million is being accrued over 16 months. | ||
During the three months ended June 30, 2006, $1.9 million has been charged to net income and during the six months ended June 30, 2006, $3.5 million has been charged to net income for the February 27, 2006 and July 13, 2005 plans. |
6. | ASSET RETIREMENT OBLIGATIONS |
Six months ended | Twelve months ended | |||||||
June 30, 2006 | December 31, 2005 | |||||||
Asset retirement obligations, beginning of period |
$ | 184,699 | $ | 171,866 | ||||
Increase (decrease) in liabilities related to: |
||||||||
Acquisitions |
362 | 6,347 | ||||||
Additions |
983 | 1,972 | ||||||
Disposals |
(1,500 | ) | (3,844 | ) | ||||
Revisions |
| 1,549 | ||||||
Accretion expense |
7,231 | 14,162 | ||||||
Liabilities settled during the period |
(3,850 | ) | (7,353 | ) | ||||
Asset retirement obligations, end of period |
$ | 187,925 | $ | 184,699 | ||||
7. | DEFERRED CHARGES |
As at | As at | |||||||
June 30, 2006 | December 31,2005 | |||||||
Imputed interest on note payable net of accumulated
amortization of $3,233 (2005 $2,859) |
$ | 374 | $ | 748 | ||||
U.S. debt issue costs net of accumulated amortization of
$968 (2005 $816) |
1,173 | 1,325 | ||||||
Deferred compensation expense net of accumulated
amortization of $4,874 (2005 $2,143) |
1,770 | 2,141 | ||||||
U.K. debt issue costs net of accumulated amortization of
$40 (2005 $5) |
641 | 672 | ||||||
Deferred foreign exchange loss on revaluation of U.K. debt
hedge |
2,581 | | ||||||
$ | 6,539 | $ | 4,886 | |||||
8. | FOREIGN EXCHANGE (GAIN) LOSS |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Unrealized foreign exchange (gain) loss on translation
of U.S. dollar denominated debt |
$ | (10,360 | ) | $ | 3,160 | $ | (9,360 | ) | $ | 4,680 | ||||||
Realized foreign exchange (gain) loss |
1 | (735 | ) | 240 | (895 | ) | ||||||||||
$ | (10,359 | ) | $ | 2,425 | $ | (9,120 | ) | $ | 3,785 | |||||||
The U.S. dollar and U.K. pound sterling denominated debt are translated into Canadian dollars at the Bank of Canada exchange rate in effect at the close of business on the balance sheet date. Foreign exchange gains and losses on the U.S. dollar denominated debt are included in income. Foreign exchange gains and losses on translating the U.K pound sterling denominated debt and the associated gains and losses on the U.K. pound sterling denominated exchange swap are deferred and included in deferred charges. |
9. | OTHER CASH FLOW DISCLOSURES |
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Accounts receivable |
$ | (22,906 | ) | $ | 3,636 | $ | 9,816 | $ | 2,544 | |||||||
Inventory |
| | | 439 | ||||||||||||
Accounts payable and accrued liabilities |
(7,048 | ) | (11,311 | ) | 11,157 | 1,254 | ||||||||||
Due to Pengrowth Management Limited |
(4,265 | ) | (1,287 | ) | (4,853 | ) | (3,186 | ) | ||||||||
$ | (34,219 | ) | $ | (8,962 | ) | $ | 16,120 | $ | 1,051 | |||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Accounts payable for capital accruals |
$ | (3,565 | ) | $ | 3,192 | $ | (18,784 | ) | $ | | ||||||
Three months ended | Six months ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Cash payments made (refund received) for taxes |
$ | (341 | ) | $ | 424 | $ | 167 | $ | 892 | |||||||
Cash payments made for interest |
$ | 11,350 | $ | 8,314 | $ | 12,443 | $ | 10,189 | ||||||||
10. | FINANCIAL INSTRUMENTS | |
Pengrowth has a price risk management program whereby the commodity price associated with a portion of its future production is fixed. Pengrowth sells forward a portion of its future production through a combination of fixed price sales contracts with customers and commodity swap agreements with financial counterparties. The forward and futures contracts are subject to market risk from fluctuating commodity prices and exchange rates. | ||
As at June 30, 2006, Pengrowth had fixed the price and applied hedge accounting to future production as follows: | ||
Crude Oil: |
Volume | Reference | Price | ||||||||||
Remaining Term | (bbl per day) | Point | per bbl | |||||||||
Financial: |
||||||||||||
Jul 1, 2006 Dec 31, 2006 |
4,000 | WTI (1) | $64.08 Cdn | |||||||||
Natural Gas: |
Volume | Reference | Price | ||||||||||
Remaining Term | (mmbtu per day) | Point | per mmbtu | |||||||||
Financial: |
||||||||||||
Jul 1, 2006 Dec 31, 2006 |
2,500 | Transco Z6 (1) | $10.63 Cdn | |||||||||
Jul 1, 2006 Dec 31, 2006 |
2,370 | AECO | $ 8.03 Cdn | |||||||||
(1) | Associated Cdn $ / U.S. $ foreign exchange rate has been fixed. |
The estimated fair value of the financial crude oil and natural gas contracts has been determined based on the amounts Pengrowth would receive or pay to terminate the contracts at period-end. At June 30, 2006, the amount Pengrowth would pay (receive) to terminate the financial crude oil and natural gas contracts would be $14.5 million and $(1.4) million, respectively. | ||
As at June 30, 2006, Pengrowth had fixed the price and recognized the mark-to-market loss on future production as follows: | ||
Crude Oil: |
Volume | Reference | Price | ||||||||||
Remaining Term | (bbl per day) | Point | per bbl | |||||||||
Financial: |
||||||||||||
Jan 1, 2007 Dec 31, 2007 |
2,000 | WTI (1) | $79.50 Cdn | |||||||||
Natural Gas: |
Volume | Reference | Price | ||||||||||
Remaining Term | (mmbtu per day) | Point | per mmbtu | |||||||||
Financial: |
||||||||||||
Nov 1, 2006 Oct 1, 2007 |
5,000 | Transco Z6(1) | $10.62 Cdn | |||||||||
Nov 1, 2006 Oct 1, 2007 |
5,000 | Chicago MI(1) | $ 9.69 Cdn | |||||||||
(1) | Associated Cdn $ / U.S. $ foreign exchange rate has been fixed. |
The estimated fair value of the financial crude oil and natural gas contracts has been determined based on the amounts Pengrowth would receive or pay to terminate the contracts at period-end. At June 30, 2006, the amount Pengrowth would pay to terminate the financial crude oil and natural gas contracts would be $3.3 million and $0.1 million, respectively. | ||
Natural Gas Fixed Price Sales Contract: | ||
Pengrowth also has a natural gas fixed price physical sales contract outstanding which was assumed in the 2004 Murphy acquisition, the details of which are provided below: |
Volume | Price | |||||||
Remaining Term | (mmbtu per day) | per mmbtu (2) | ||||||
2006 to 2009 |
||||||||
Jul 1, 2006 Oct 31, 2006 |
3,886 | $2.23 Cdn | ||||||
Nov 1, 2006 Oct 31, 2007 |
3,886 | $2.29 Cdn | ||||||
Nov 1, 2007 Oct 31, 2008 |
3,886 | $2.34 Cdn | ||||||
Nov 1, 2008 Apr 30, 2009 |
3,886 | $2.40 Cdn | ||||||
(2) | Reference price based on AECO |
As at June 30, 2006, the amount Pengrowth would pay to terminate the natural gas fixed price sales contract would be $22.5 million. | ||
Fair Value of Financial Instruments | ||
The carrying value of financial instruments included in the balance sheet, other than long term debt, the note payable, long term investments and remediation trust funds approximate their fair value due to their short maturity. The fair value of the other financial instruments is as follows: |
As at June 30, 2006 | As at December 31, 2005 | |||||||||||||||
Net Book | Net Book | |||||||||||||||
Fair Value | Value | Fair Value | Value | |||||||||||||
Remediation Funds |
$ | 9,450 | $ | 8,999 | $ | 9,071 | $ | 8,329 | ||||||||
U.S. dollar denominated debt |
210,510 | 223,240 | 220,187 | 232,600 | ||||||||||||
£ denominated debt |
99,283 | 103,070 | 101,257 | 100,489 | ||||||||||||
11. | OTHER LIABILITIES |
As at | As at | |||||||
June 30, 2006 | December 31,2005 | |||||||
Current portion of contract liabilities |
$ | 4,809 | $ | 5,279 | ||||
Unrealized mark-to-market loss on commodity contracts |
3,389 | | ||||||
$ | 8,198 | $ | 5,279 | |||||
12. | SUBSEQUENT EVENT | |
On July 24, 2006, Pengrowth and Esprit Energy Trust (Esprit) announced that they have entered into an agreement (the Agreement) providing for the combination of Pengrowth and Esprit (the Combination). Under the terms of the Agreement, each Esprit trust unit will be exchanged for 0.53 of a Pengrowth trust unit (the new trust units from the consolidation of Pengrowths Class A and Class B trust units effective on July 27, 2006). The Esprit Board of Directors has the authority to grant Esprit unitholders a one time special distribution of up to $0.30 per Esprit trust unit, payable prior to closing the Combination. The Esprit Board of Directors have advised that they intend to make that declaration. The transaction is subject to regulatory and Esprit unitholder approval and is anticipated to close in the third quarter. |