Pengrowth Energy Corp. rose the most in more than four years after the Calgary-based oil producer said it will press ahead with the Lindbergh oil-sands project after reaching an asset-sales target.
The shares gained 8.3 percent to C$5.88 at the close in Toronto, the most since March 2009. The stock has advanced 19 percent this year.
Pengrowth yesterday said it has reached agreements to sell C$700 million ($673 million) of non-core assets that will be used to fund the first phase of the Lindbergh project. The asset sales will help reduce debt and expand production, said Dirk Lever, an analyst at AltaCorp Capital Inc. in Calgary.
“Concerns about Pengrowth’s debt levels should now be put to rest,” he said in a note to clients today. “With added financial flexibility, we are further confident in Pengrowth’s ability to execute the ramp up” of production at Lindbergh.
Lever raised his one-year target price for Pengrowth to C$10 a share from C$9, and maintained an outperform rating on the stock.
Pengrowth said it sold assets in southeast Saskatchewan to an unidentified oil producer and expects to close the deal by September. The company has C$1.42 billion worth of outstanding notes, according to data compiled by Bloomberg.