Pengrowth Energy Corp. is the latest energy company to tap a hot energy market for more money, selling $300-million of common shares on Monday morning.
The offering comes on the heels of Pengrowth’s solid earnings last week, in which the company reported that it produced about 75,000 barrels of oil equivalent a day. That figure was better than expected, and Pengrowth also confirmed its full year production guidance, which has given investors and analysts more confidence.
Energy names are hot right now, but Pengrowth is a unique play because it offers a substantial dividend. In early morning trading the yield is just shy of 8 per cent. Analysts are always worried that production cuts or poor management could hurt the company’s ability to keep paying this cash out, but the latest earnings put those fears to rest.
Last week the company also announced that it increased its 2011 capital expenditure budget by $60-million to $610-million, so it needed some additional funds.
Pengrowth has issued into a strong market. Over the past month, the price of oil has risen from $75.67 per barrel to north of $95, and as of last week, the TSX’s energy sub-index was up 19 per cent over the previous month. Within that rally, Pengrowth was up about 28 per cent.
The offering is led by BMO Nesbitt Burns, which was also behind Paramount Resource’s $156-million deal in late October, as well as Gibson Energy’s first secondary offering a few weeks back.
Pengrowth is an oil and gas producer, and its major assets are located in the Swan Hills carbonates and Montney formation.