Pengrowth cuts capital spending due to declining oil prices

The recent “rapid” decline in world oil prices is the main reason given by Pengrowth Energy Corp., Calgary, for setting its 2015 capital budget at $200 million, 74% below its $770 million budget for 2014.

Pengrowth said $75 million is allocated to the Lindbergh thermal project in the Cold Lake area of eastern Alberta (OGJ Online, Dec. 16, 2014).

A revised two-phase development plan for Lindbergh delays the second phase by a year. Steaming operations at the 12,500-b/d Phase 1 have begun on 15 well pairs on two well pads, and steaming on remaining well pairs is expected in early February.

Previous capital spending at Lindbergh established a “low decline production base” that Pengrowth expects to maintain with a lower level of investment through 2016. Pengrowth said Lindbergh would provide positive cash flow even at $40/bbl.

In Pengrowth’s conventional category, $65 million is targeted on maintenance to support operations. The company said it “does not contemplate an active drilling program.”

Pengrowth does not expect a decrease in production from 2014’s average of 73,000 boe/d. That’s because of expected new production from Lindbergh.

Pengrowth also said there will be “a strong emphasis” in 2015 on reducing debt. Senior unsecured debt at yearend 2014 totaled $1.73 billion.

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