Pengrowth Reports Solid Second Quarter Production and Significant Progress on Thermal Strategy

Pengrowth Reports Solid Second Quarter Production and Significant Progress on 
Thermal Strategy 
CALGARY, ALBERTA -- (Marketwired) -- 08/01/13 -- Pengrowth Energy
Corporation (TSX:PGF) (NYSE:PGH) today announced financial and
operating results for the second quarter of 2013.  
"We have been highlighting Pengrowth's differentiated strategy of
moving to a sustainable, lower decline production mix, bolstered by
thermal bitumen production," said Derek Evans, Pengrowth's President
and CEO. "During and subsequent to the second quarter of 2013, we
have demonstrated our ability to execute that strategy by delivering
on what we committed to. We achieved solid operational results,
realized significant value from our disposition program in a
competitive market, generated meaningful Lindbergh reserve increases
as a result of strong pilot performance and received regulatory
approval for the first (12,500 bbl/d) phase of Lindbergh development,
which is now fully funded."  
Highlights: 


 
--  Average daily production for the second quarter was 87,909 barrels of
    oil equivalent per day (boe/d), which exceeded expectations due to
    successful drilling at Lochend/ Garrington, higher than expected
    Lindbergh production and strong performance from Pengrowth's
    conventional assets. 
    
--  Funds Flow from Operations for the quarter equaled $146 million ($0.28
    per share). Higher Alberta power prices in the quarter resulted in an
    increase of $11 million ($0.02 per share) to operating costs compared to
    the first quarter, while one time prior period royalty adjustments
    totaling $3 million ($0.01 per share) also reduced funds flow. 
    
--  Lindbergh pilot performance continues to show strong results, with
    volumes from the two well pairs averaging approximately 2,000 barrels
    per day (bbl/d) of bitumen during the quarter, with flush rates reaching
    2,500 bbl/d following the April turnaround. Production is expected to
    stabilize around 2,000 bbl/d at an Instantaneous Steam Oil Ratio (ISOR)
    of 1.7x. 
    
--  Pengrowth obtained Environmental Protection and Enhancement Act (EPEA)
    approval for the 12,500 bbl/d first commercial phase of the Lindbergh
    project on July 15, 2013. Pengrowth expects construction of the first
    commercial phase to commence during the third quarter of 2013, with
    first steam in the fourth quarter of 2014. 
    
--  GLJ Petroleum Consultants Ltd. (GLJ) completed a full evaluation and
    provided an update of reserves and resources at Lindbergh, which
    resulted in an increase in proved reserves of 69.2 million barrels
    (MMbbls) to 82.0 MMbbls and an increase in proved plus probable (2P)
    reserves of 48.1 MMbbls to 142.9 MMbbls compared to estimates at
    December 31, 2012. This change in 2P reserves represents a 51 percent
    increase for Lindbergh and 9.4 percent of Pengrowth's total corporate 2P
    reserves reported at December 31, 2012. 
    
--  Subsequent to the end of the quarter, Pengrowth entered into an
    agreement to sell its interests in its non-core SE Saskatchewan
    properties for $510 million. Closing of the sale is subject to a vote by
    shareholders of the acquiring company and other standard conditions and
    is expected to occur in mid-September.  
    
--  Pengrowth achieved the sale, or entered into letters of intent for the
    sale, of an additional $203 million worth of non-core assets. Upon
    closing, these sales will complete Pengrowth's $700 million planned 2013
    disposition goal, post the $316 million sale of the Weyburn asset
    announced in December 2012 and which closed in March of 2013. Combined
    with the Weyburn disposition, total 2013 realized disposition proceeds
    are expected to be approximately $1.0 billion. 
    
--  Following closing of these planned dispositions, Pengrowth expects to
    have $575 million of cash on hand at September 30, 2013. 
    
--  Pengrowth remains committed to a dividend of 4 cents per share per month
    and expects being able to fund the capital requirements of its
    conventional drilling program, as well as the first phase (12,500 bbl/d)
    of Lindbergh through 2014, without taking on additional debt. 
    
--  Also, subsequent to the end of the quarter, Pengrowth completed the
    renewal of its $1.0 billion bank facility for a four year term. The
    facility now has a maturity date of July 26, 2017 with all other
    material terms and conditions remaining unchanged. 
    
--  Second quarter 2013 Adjusted Net Loss of $37.2 million, compared to an
    Adjusted Net Loss of $1.1 million in the first quarter, primarily due to
    losses associated with dispositions.

 
Summary of Financial & Operating Results  


 
                             Three months ended            Six months ended 
(monetary amounts in                                                        
 millions, except                                                           
 per share and per                                                          
 boe amounts or as   June 30,  June 30,       %  June 30,  June 30,       % 
 otherwise stated)       2013      2012  Change      2013      2012  Change 
----------------------------------------------------------------------------
PRODUCTION                                                                  
Average daily                                                               
 production (boe/d)    87,909    78,870      11    88,801    77,243      15 
----------------------------------------------------------------------------
FINANCIAL                                                                   
Funds flow from                                                             
 operations          $  146.0  $   94.4      55  $  293.5  $  208.0      41 
Funds flow from                                                             
 operations per                                                             
 share               $   0.28  $   0.23      22  $   0.57  $   0.54       6 
                                                                            
Oil and gas sales                                                           
 (1)                 $  405.4  $  328.4      23  $  796.2  $  656.8      21 
Oil and gas sales                                                           
 per boe             $  50.67  $  45.75      11  $  49.54  $  46.72       6 
                                                                            
Operating expense                                                           
 (2)                 $  129.8  $  104.7      24  $  247.7  $  194.9      27 
Operating expense                                                           
 per boe             $  16.22  $  14.59      11  $  15.41  $  13.86      11 
                                                                            
Royalty expense      $   72.8  $   62.6      16  $  139.7  $  140.5      (1)
Royalty expense per                                                         
 boe                 $   9.09  $   8.72       4  $   8.69  $   9.99     (13)
Royalty expense as a                                                        
 percent of sales        17.9%     19.1%             17.6%     21.4%        
                                                                            
Operating netback                                                           
 per boe (2)         $  24.45  $  21.49      14  $  24.62  $  21.97      12 
                                                   
                         
Cash G&A expense (2) $   22.2  $   21.4       4  $   46.1  $   43.2       7 
Cash G&A expense per                                                        
 boe                 $   2.77  $   2.98      (7) $   2.87  $   3.07      (7)
                                                                            
Capital expenditures $  113.9  $  109.2       4  $  279.9  $  262.9       6 
Capital expenditures                                                        
 per share           $   0.22  $   0.27     (19) $   0.54  $   0.68     (21)
                                                                            
Net cash                                                                    
 acquisitions                                                               
 (dispositions)      $   (9.3) $   15.1       -  $ (325.1) $   40.1       - 
Net cash                                                                    
 acquisitions                                                               
 (dispositions) per                                                         
 share               $  (0.02) $   0.04       -  $  (0.63) $   0.10       - 
                                                                            
Dividends paid       $   61.9  $   76.8     (19) $  123.4  $  152.7     (19)
Dividends paid per                                                          
 share               $   0.12  $   0.21     (43) $   0.24  $   0.42     (43)
                                                                            
Number of shares                                                            
 outstanding at                                                             
 period end (000's)   517,679   500,447       3   517,679   500,447       3 
Weighted average                                                            
 number of shares                                                           
 outstanding (000's)  516,506   411,408      26   514,832   386,687      33 
----------------------------------------------------------------------------
STATEMENT OF INCOME                                                         
 (LOSS)                                                                     
Adjusted net loss    $  (37.2) $  (89.6)      -  $  (38.3) $  (95.0)      - 
Net income (loss)    $  (53.5) $   36.8       -  $ (118.5) $   37.5       - 
Net income (loss)                                                           
 per share           $  (0.10) $   0.09       -  $  (0.23) $   0.10       - 
----------------------------------------------------------------------------
DEBT (3)                                                                    
Long term debt       $1,387.7  $1,483.7      (6) $1,387.7  $1,483.7      (6)
Convertible                                                                 
 debentures          $  236.5  $  297.5     (21) $  236.5  $  297.5     (21)
Total debt excluding                                                        
 working capital     $1,624.2  $1,781.2      (9) $1,624.2  $1,781.2      (9)
----------------------------------------------------------------------------
CONTRIBUTION BASED                                                          
 ON OPERATING                                                               
 NETBACKS (2)                                                               
Light oil                  66%       72%               66%       67%        
Heavy oil                  15%       14%               12%       15%        
Natural gas liquids         9%       14%               11%       18%        
Natural gas                10%        -                11%        -         
----------------------------------------------------------------------------
                                                                            
(1)  Includes the impact of realized commodity risk management contracts.   
(2) Prior periods restated to conform to presentation in the current period.
(3) Debt includes the current and long term portions.                       

 
Production 
Second quarter 2013 average daily production of 87,909 boe/d
decreased two percent compared to the first quarter of 2013
production of 89,702 boe/d. The majority of this decline was due to
the absence of production volumes associated with the Weyburn
disposition and reduced volumes due to planned maintenance
activities.  
Average daily production for the second quarter of 2013 increased 11
percent compared to the same period last year, primarily due to
additional volumes from the NAL Energy Corporation (NAL) acquisition,
new production from the drilling program at Lochend/Garrington, as
well as the inclusion of production from the Lindbergh thermal pilot,
offset by lost volumes due to the Weyburn disposition.  
Flooding in southern Alberta in late June had very little impact on
second quarter production, as most of the Company's production
facilities are not in the flood-affected areas.  
Oil and Gas Sales  
Oil and gas sales for the second quarter of 2013 were $405 million, a
four percent increase from the first quarter 2013 sales of $391
million. Higher realized commodity prices for light and heavy oil and
natural gas, partially offset by lower realized prices for natural
gas liquids and lower production volumes, were the primary reasons
for the increase in sales.  
Oil and gas sales in the second quarter of 2013 were 23 percent
higher than sales of $328 million experienced in the second quarter
of 2012. Increased production volumes associated with the NAL
acquisition, coupled with higher realized prices for oil and natural
gas were the main drivers of higher year-over-year sales.   
Funds Flow from Operations  
Second quarter 2013 Funds Flow from Operations was $146 million
($0.28 per share), a one percent decrease compared to first quarter
2013 funds flow of $148 million ($0.29 per share). The decrease was
primarily due to lower sales volumes, higher operating and royalty
expenses and realized losses on commodity risk management activities,
offset by higher realized commodity prices.  
Compared to the second quarter 2012 funds flow of $94 million ($0.23
per share), second quarter 2013 funds flow was up by 55 percent. This
increase in funds flow resulted primarily from higher production
volumes from the NAL acquisition, higher realized commodity prices,
offset by higher operating expenses and realized losses on commodity
risk management activities.  
Adjusted Net Income and Loss  
Pengrowth recorded an Adjusted Net Loss of $37.2 million in the
second quarter of 2013, compared to an Adjusted Net Loss of $1.1
million in the first quarter, primarily due to losses associated with
dispositions.  
Pengrowth recorded a $52.4 million improvement in the second quarter
2013 Adjusted Net Loss compared to the second quarter 2012 Adjusted
Net Loss of $89.6 million, primarily due to the absence of impairment
charges and an increase in Funds Flow from Operations, partly offset
by disposition losses and an increase in the depletion, depreciation
and amortization expense.   
Operating Expenses  
Second quarter 2013 operating expenses were $130 million, an increase
of $11.9 million or 10 percent compared to the prior quarter, mainly
due to a significant increase in electrical power costs. Second
quarter Alberta power prices 
were the highest quarterly prices in
over 10 years as a result of several coal-fired power plants being
offline. Total power costs in the second quarter represented 27
percent of total operating costs. Scheduled maintenance costs for the
Sable Offshore Energy Project (SOEP), Quirk Creek and other minor
properties were mostly offset by reduced subsurface activity in the
quarter.  
On a per boe basis, operating costs of $16.22/boe increased $1.62/boe
compared to the prior quarter as a result of the significantly
increased power costs, the production impact of maintenance outages
at SOEP and Quirk Creek and the sale of the Weyburn property, which
was a lower operating cost property.  
Compared to the second quarter of 2012, when operating expenses were
$105 million ($14.59 per boe), second quarter 2013 expenses increased
24 percent (11 percent on a boe basis), primarily due to additional
volumes and operating expenses associated with the acquired NAL
properties, coupled with higher power costs and inclusion of the
Lindbergh operating expenses, which as a pilot project, are higher.  
Development Capital  
Capital expenditures in the second quarter of 2013 were $113.9
million, with $75.2 million spent on conventional activities and
$38.7 million directed to development activities at Lindbergh.
Capital expenditures in the quarter followed Pengrowth's strategy of
selecting and executing on projects that maximize cash flow and
provide the highest rates of return, while continuing to invest in
the first commercial phase of the Lindbergh thermal project.
Approximately 85 percent of the capital expenditures in the quarter
were invested in drilling, completions and facilities, with Pengrowth
participating in the drilling of 20 (12.7 net) wells.   
Operations  
Conventional  
Pengrowth's conventional oil and gas assets include many large,
contiguous properties. The Greater Olds/Garrington area comprises
over 500 gross sections of Cardium rights, with extensive
infrastructure and significant operatorship. The Swan Hills trend is
a significant conventional oil resource, providing long-term, low
decline production and strong funds flow for the Company. Strong cash
flow from these assets is integral to funding Pengrowth's sustainable
growth model into the future.   
In the second quarter, Pengrowth continued to achieve strong drilling
and completion results, with 11 (6.1 net) wells being drilled in the
Cardium formation with 100 percent success. Based on initial test
data and early production results, the Cardium wells appear to be
meeting or exceeding type curve expectations. In addition, the
Lochend battery expansion was completed and the increased capacity
was online in May, allowing additional Cardium wells to be tied into
the facility.  
The remainder of the conventional operated and non-operated
development program in the quarter was focused on oil opportunities,
as Pengrowth drilled nine (6.6 net) wells in Jenner, South East
Saskatchewan and other areas.  
Lindbergh  
Pengrowth's 100 percent owned and operated Lindbergh thermal project
is located in the Cold Lake area of Alberta and encompasses 42.5
sections of land. Cost advantages of this region, bitumen oil quality
and flow characteristics, result in higher netbacks than are typical
in other thermal projects. Based on positive pilot results during
2012, the 12,500 bbl/d first commercial phase of Lindbergh was
sanctioned by Pengrowth's Board of Directors in January 2013 and
subsequent EPEA approval was granted in July 2013. With the recently
announced asset dispositions, the first commercial phase of Lindbergh
is notionally fully funded.  
In the second quarter, $38.7 million was spent on procurement and
engineering costs. Pengrowth has ordered all major equipment and over
60 percent of the minor equipment required for the first commercial
phase of Lindbergh. Process design is 90 percent complete and
mechanical design is 40 percent complete. Vendor packages have been
ordered and skid fabrication has commenced. Engineering and
procurement work is on track and Pengrowth plans to commence civil
construction activities in August. Mechanical construction of the
central processing facility and drilling of 23 additional well pairs
to supplement the two well pairs currently producing at the Lindbergh
pilot will commence in September 2013. The $590 million project is on
time and on budget with first steam expected in the fourth quarter of
2014.  
Operations at the pilot project continued to show strong results
during the quarter with combined field production from the two well
pairs averaging approximately 2,000 bbl/d of bitumen, with flush
rates reaching 2,500 bbl/d in May, following the April turnaround.
The average ISOR for the quarter was 1.5x. Since steaming commenced
in February 2012, cumulative production from the two well pairs is
approximately 640,000 bbls of bitumen to June 30, 2013, at a
Cumulative Steam Oil Ratio of 2.0x.  
Lindbergh is expected to provide Pengrowth with the potential to
develop production of up to 50,000 bbl/d of bitumen over three
phases. This is expected to be low cost, low decline, stable
production.  
Financial Flexibility  
Pengrowth remains committed to ensuring its financial health and
flexibility as it makes its transition to becoming a long term
sustainable, dividend paying energy producer. The Company has taken
several measures intended to safeguard its dividend, maintain its
financial and balance sheet strength and provide additional
flexibility to ensure that it has the financial means and discipline
to develop the Lindbergh thermal bitumen project. These measures
include: 


 
--  Selling non-core properties 
--  Expanding commodity hedging 
--  Managing interest costs through term debt markets 

 
Subsequent to the end of the quarter, Pengrowth announced that it had
entered into agreements for the sale of assets, which upon closing,
will result in the completion of its $700 million non-core asset
disposition program previously announced on January 11, 2013. The net
proceeds from the disposition program will be used to fund ongoing
capital expenditures, including fully funding the remaining budgeted
capital expenditures associated with the 12,500 bbl/d first
commercial phase of the Lindbergh thermal project, which received
regulatory approval on July 15, 2013.  
Following closing of the announced dispositions, Pengrowth expects to
have $575 million of cash on hand at September 30, 2013.  
The expected proceeds from these non-core asset dispositions, in
addition to the $316 million proceeds received from the previously
announced Weyburn non-core asset divestiture in March of this year,
will bring the total 2013 non-core disposition proceeds to
approximately $1.0 billion.  
Pengrowth has expanded its hedging activities to mitigate commodity
price risk and provide a measure of stability and predictability to
cash flows. Pengrowth has 65 percent of its expected 2013 oil
production hedged at Cdn$93.92 per barrel and 65 percent of 2014
expected production hedged at Cdn$94.51 per barrel. Natural gas
hedges account for 64 percent of expected 2013 gas production at
Cdn$3.33 per Mcf and 43 percent of 2014 expected production hedged at
Cdn$3.84 per Mcf.   
Additional details of Pengrowth's risk management contracts in place
for 2013, 2014 and 2015 are outlined in the Management's Discussion
and Analysis and accompanying Notes to the June 30, 2013 unaudited
Financial Statements.  
Pengrowth's total long-term debt was approximately $1.6 billion as at
June 30, 2013, comprising $1.4 billion of fixed rate term notes and
$237 million of convertible debentures. At June 30, 2013, Pengrowth
was undrawn on its bank facility.  
Subsequent to the end of the quarter, Pengrowth completed the renewal
of its $1.0 billion bank facility for a four year term. The facility
now has a maturity date of July 26, 2017 with all other material
terms and conditions remaining unchanged. Pengrowth has the ability
to expand this facility as
 needed, up to a total of $1.25 billion.  
Outlook  
The second quarter marked another solid quarter of financial and
operating performance for Pengrowth. The regulatory approval of the
first 12,500 bbl/d commercial phase of Lindbergh, coupled with the
successful completion of the disposition program, have allowed
Pengrowth to make significant progress on its long term goal of
becoming a sustainable, dividend paying energy producer.  
The pilot performance at Lindbergh continues to exceed expectations,
with production expected to stabilize around 2,000 bbl/d at an ISOR
of 1.7x. With regulatory approval in hand, construction and
development work on the first commercial phase is scheduled to
commence in September of 2013. The $590 million first commercial
phase remains on time and on budget, with first steam expected in the
fourth quarter of 2014.   
With the successful completion of the planned disposition program for
2013 and taking into consideration the timing of the dispositions,
Pengrowth now estimates full year 2013 average production to be in
the range of 82,000 to 84,000 boe/d and fourth quarter average
production to be in the range of 75,000 to 77,000 boe/d. The updated
guidance estimates for 2013, as previously released, are provided
below:   
2013 Updated Guidance Summary 


 
                                    Original Guidance    Updated Guidance(5)
----------------------------------------------------------------------------
Average daily production                                                    
 volume (boe/d)                      85,000 to 87,000       82,000 to 84,000
Total capital expenditures                                                  
 ($millions)(1)                                   770                    770
EBITDA ($millions)(2,3)                           680                    650
Net operating costs ($ per                                                  
 boe)                                  14.00 to 14.50                  14.75
G & A expense (cash and non-                                                
 cash) ($ per boe)(4)                            3.30                   3.50
                                                                            
(1) Includes $300 million at Lindbergh.                                     
(2) Earnings Before Interest, Taxes, Depletion, Depreciation, Accretion and 
    Amortization.                                                           
(3) Assumes WTI USD$90/bbl, 9% discount for light oil, 23% discount for     
    heavy oil and AECO Cdn$3.50/Mcf.                                        
(4) Includes $0.47/boe of non-cash G&A.                                     
(5) Assumes all intended dispositions close when expected.                  

 
Pengrowth's unaudited Financial Statements for the three and six
months ended June 30, 2013 and related Management's Discussion and
Analysis can be viewed on Pengrowth's website at www.pengrowth.com.
They have been filed on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.  
Conference call:  
Pengrowth will host a conference call beginning at 3:30 PM Mountain
Time on Thursday, August 1, 2013. To participate, callers may dial in
via telephone or participate online via the webcast. To ensure timely
participation in the teleconference, callers are encouraged to dial
in 10 minutes prior to commencement of the call to register.  
Dial-in numbers: (866) 225-0198 or Toronto local (416) 340-8061  
Live audio webcast: http://www.gowebcasting.com/4481  
About Pengrowth:  
Pengrowth Energy Corporation is a dividend-paying, intermediate
Canadian producer of oil and natural gas, headquartered in Calgary,
Alberta. Pengrowth's assets include the Swan Hills light oil, Cardium
light oil and Lindbergh thermal bitumen projects. Pengrowth's shares
trade on both the Toronto Stock Exchange under the symbol "PGF" and
on the New York Stock Exchange under the symbol "PGH".  
PENGROWTH ENERGY CORPORATION  
Derek Evans, President and Chief Executive Officer  
Advisory:  
All amounts are stated in Canadian dollars unless otherwise
specified.  
Advisory Regarding Reserves, Resources and Production Information  
All amounts are stated in Canadian dollars unless otherwise
specified. All reserves, resources, reserve life index, and
production information herein is based upon Pengrowth's company
interest working interest share of reserves or production plus
Pengrowth's royalty interest, being Pengrowth's interest in
production and payment that is based on the gross production at the
wellhead, before royalties and using GLJ's July 1, 2013 forecast
prices and costs in respect of the July 15, 2013 Lindbergh reserve
and resource update and using GLJ's January 1, 2013 forecast prices
and costs in respect of the December 31, 2012 reserve and resource
estimates. Numbers presented may not add due to rounding.  
Caution Regarding Engineering Terms:  
When used herein, the term "boe" means barrels of oil equivalent on
the basis of one boe being equal to one barrel of oil or NGLs or
6,000 cubic feet of natural gas (6 Mcf: 1 bbl). Barrels of oil
equivalent may be misleading, particularly if used in isolation. A
conversion ratio of six Mcf of natural gas to one boe is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. All production figures stated are based on Company Interest
before the deduction of royalties.  
Initial production results and steam oil ratio  
This press release references pilot production results and steam oil
ratios for the Lindbergh pilot project. These results are not
necessarily reflective of long term production results, production
profiles, steam oil ratios or ultimate performance of these wells or
the Lindbergh project.  
Caution Regarding Forward Looking Information:  
This press release contains forward-looking statements within the
meaning of securities laws, including the "safe harbour" provisions
of the Canadian securities legislation and the United States Private
Securities Litigation Reform Act of 1995. Forward-looking information
is often, but not always, identified by the use of words such as
"anticipate", "believe", "expect", "plan", "intend", "forecast",
"target", "project", "guidance", "may", "will", "should", "could",
"estimate", "predict" or similar words suggesting future outcomes or
language suggesting an outlook. Forward-looking statements in this
press release include, but are not limited to, statements with
respect to Pengrowth's strategy; plans and objectives; maintaining
dividend levels; future dividends; 2013 capital expenditures; the
allocation thereof and the source of funding; anticipated Lindbergh
pilot production and ISOR rates; overall Lindbergh project production
potential; the sources of funding for the first commercial phase of
the Lindbergh project and the timing associated; the timing and plans
relating to the second and third phases of Lindbergh; potential asset
sales, the closing of and proceeds from the sales and the use of such
proceeds; anticipated cash in hand at September 30, 2013; financing
plans; future production, debt levels, operating expenses, G&A and
EBITDA. Statements relating to "reserves" and "resources" are deemed
to be forward-looking statements, as they involve the implied
assessment, based on certain estimates and assumptions that the
reserves and resources described exist in the quantities predicted or
estimated and can profitably be produced in the future.  
Forward-looking statements and information are based on current
beliefs as well as assumptions made by and information currently
available to Pengrowth concerning anticipated financial performance,
business prospects, strategies and regulatory developments. Although
management considers these assumptions to be reasonable based on
information currently available to it, they may prove to be
incorrect.  
By their very nature, forward-looking statements involve in
herent
risks and uncertainties, both general and specific, and risks that
predictions, forecasts, projections and other forward-looking
statements will not be achieved. We caution readers not to place
undue reliance on these statements as a number of important factors
could cause the actual results to differ materially from the beliefs,
plans, objectives, expectations and anticipations, estimates and
intentions expressed in such forward-looking statements. These
factors include, but are not limited to: changes in general economic,
market and business conditions; the volatility of oil and gas prices;
fluctuations in production and development costs and capital
expenditures; the imprecision of reserve estimates and estimates of
recoverable quantities of oil, natural gas and liquids; Pengrowth's
ability to replace and expand oil and gas reserves; geological,
technical, drilling and processing problems and other difficulties in
producing reserves; environmental claims and liabilities; incorrect
assessments of value when making acquisitions; increases in debt
service charges; the loss of key personnel; the marketability of
production; defaults by third party operators; unforeseen title
defects; fluctuations in foreign currency and exchange rates;
fluctuations in interest rates; inadequate insurance coverage;
compliance with environmental laws and regulations; inability to
receive regulatory and other third party approvals; actions by
governmental or regulatory agencies, including changes in tax laws;
Pengrowth's ability to access external sources of debt and equity
capital; the impact of foreign and domestic government programs and
the occurrence of unexpected events involved in the operation and
development of oil and gas properties. Although the Corporation
currently intends to maintain its monthly dividend, dividends can and
may fluctuate in the future. Actual future cash dividends, if any,
will be subject to the discretion of our Board of Directors and may
vary depending on a variety of factors and conditions existing from
time to time, including fluctuations in commodity prices, production
levels, capital expenditure requirements, debt service requirements,
operating costs, royalty burdens, foreign exchange rates and the
satisfaction of the liquidity and solvency tests imposed by the ABCA
for the declaration and payment of dividends.  
Further information regarding these factors may be found under the
heading "Business Risks" in our most recent management's discussion
and analysis and under "Risk Factors" in our Annual Information Form
dated February 28, 2013.  
The foregoing list of factors that may affect future results is not
exhaustive. When relying on our forward-looking statements to make
decisions, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events.
Furthermore, the forward-looking statements contained in this press
release are made as of the date of this press release, and Pengrowth
does not undertake any obligation to update publicly or to revise any
of the included forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by
applicable laws.  
The forward-looking statements contained in this press release are
expressly qualified by this cautionary statement.  
Additional Information - Supplemental and Additional Non-IFRS
Measures  
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), Pengrowth
presents supplemental and additional non-IFRS measures, Adjusted Net
Loss, operating netbacks and Funds Flow from Operations. These
measures do not have any standardized meaning prescribed by IFRS and
therefore are unlikely to be comparable to similar measures presented
by other companies. These supplemental non-IFRS measures are provided
to assist readers in determining Pengrowth's ability to generate cash
from operations. Pengrowth believes these measures are useful in
assessing operating performance and liquidity of Pengrowth's ongoing
business on an overall basis.  
These measures should be considered in addition to, and not as a
substitute for, net income (loss), cash provided by operations and
other measures of financial performance and liquidity reported in
accordance with IFRS. Further information with respect to these
additional and non-IFRS measures can be found in Pengrowth's most
recent management's discussion and analysis.  
Note to US Readers  
Current SEC reporting requirements permit oil and gas companies, in
their filings with the SEC, to disclose probable and possible
reserves, in addition to the required disclosure of proved reserves.
Under current SEC requirements, net quantities of reserves are
required to be disclosed, which requires disclosure on an after
royalties basis and does not include reserves relating to the
interests of others. Because we are permitted to prepare our reserves
information in accordance with Canadian disclosure requirements, we
have included contingent resources, disclosed reserves before the
deduction of royalties and interests of others and determined and
disclosed our reserves and the estimated future net cash therefrom
using forecast prices and costs. See "Presentation of our Reserve
Information" in our most recent Annual Information Form or Form 40-F
for more information.  
We report our production and reserve quantities in accordance with
Canadian practices and specifically in accordance with NI 51-101.
These practices are different from the practices used to report
production and to estimate reserves in reports and other materials
filed with the SEC by companies in the United States.  
We incorporate additional information with respect to production and
reserves which is either not generally included or prohibited under
rules of the SEC and practices in the United States. We follow the
Canadian practice of reporting gross production and reserve volumes;
however, we also follow the United States practice of separately
reporting these volumes on a net basis (after the deduction of
royalties and similar payments). We also follow the Canadian practice
of using forecast prices and costs when we estimate our reserves. The
SEC permits, but does not require, the disclosure of reserves based
on forecast prices and costs.
Contacts:
Pengrowth Energy Corporation
Investor Relations
(403) 233-0224 or Toll Free: 855-336-8814
investorrelations@pengrowth.com
www.pengrowth.com