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Pengrowth Energy Corporation Message Board

  • venturadeb venturadeb Oct 17, 2007 7:42 PM Flag

    A note from the horses mouth part 1

    Here is part one of an email chain I sent to management recently. It is telling, and shows a bit of arrogance. I will post any responses I get back...

    From:
    To:
    Sent: Wednesday, October 3, 2007 12:55:47 PM
    Subject: management is asleep at the wheel!
    Oil is at an all time high, and this pig stock is lower than it was when oil was at $70. I own a large position in PGH and I keep wondering why management is so quiet about itself? With oil at these prices, the hype machine should be working overtime to get the word out.

    Why doesn't management tout the stock more?
    I really would like a reasonable explanation as to why the company doesn't make a stronger effort to protect shareholder value?

    I own 15,000 units of PGH, and I am stumped as to your actions...
    Would it be possible to talk to MR Kinnear?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • When will dividends be paid?

    • In June I sold a Condo, and had some extra cash to invest.

      I felt like the oil market was a good place to be, so I went back to one of my old standbys. PGH

      Oil got hit in late july-early August. Shame on me, my timing was bad.

      I did lots more research, and decided that rather than take my losses, I would buy more on dips. To do so, I ended building a sizable margin balance. since the margin interest is lower than the dividend payment, it seemed like a resonable gamble. Now that PGH is climbing, I have been selling my margin position, and cut my margin balance by 2/3.

      Looking at it, it seems to have come out "ok". BUT, something is not quite right with the performance recently, and I feel like the company should take a more proactive role in helping maintain shareholder value.

      The first thing I see (hear) is a loud silence from the Canadian trust sector. Why so quiet about the wonderful activities that they have been doing recently? Things like CO2 injection, Coal Bed methane production, Oil sand production experiments, successful drilling program. There are LOTS of things to get excited about, but they don't talk about them...

      That in the face of large drops the day before the dividend cut was announced smacks of insider corruption...

    • all the trust seem to be dragging there feet as though they have losed confidence in themselves.wad

    • mastermindstocktrader mastermindstocktrader Oct 18, 2007 10:39 AM Flag

      In my opinion, if the reply was real, suggests they know ver little about what they're talking about.

      How can a 5% move in currency equal a 20% rise in oil prices? Don't they sell some oil in long term contracts and the rest on the spot market? If oil averages $80+ for the next quarter, the light sweet they drill for should get $85+ and this should mean a 20% more revenue plus the added production of around 3 million a day by the end of 2007.

      As far as the natural gas answer that's way off mark too.

      The real issue as why the reply was almost boarding on law suit time is "if the rise in oil has nothing to due share price or revenue, then why are SU, XOM and COP and every other oil company hitting all time highs why PGH can't even get to it's yearly high of 19.75."

      Last time I checked the employees work for the shareholders and if they are telling you revenues don't go up when oil goes up, or a 5% decline in currency equals a 20 to 30% rise in oil, you have to ask who's side are they on?

      • 1 Reply to mastermindstocktrader
      • Thanks, I was feeling a bit beat up...

        I don't doubt that they have good assets, but why are they defending bad market situations instead of trying to get a positive "spin" on the company position.

        Again, my biggest gripe is that they make almost NO press releases. And, they don't seem to care what the investor community thinks about the stock. This hurts share value and makes me angry...AND, as a shareholder, I'm entitled to my opinion.

        I'm not trying to be a wanker, I'm just trying to make sense of why the share price can't perform in the face of screaming oil and gas prices. Although the price right now seems to be picking up, it is still a couple points below where it should be just to match the rest of the industry.

    • The management forgot who the main reason they have stockholders. I am finding that in canada that the liberals think that they have all interest in mind,which is nothing from the turth. That's why they told you to go fly a kite

    • IMHO, it will be difficult for PGH not to increase in price as oil and natural gas prices increase. I'm looking for a pop-up into the low $20 as PGH appears significantly undervalued. It has gotten too far out of sync relative to certain other Canroy peers. As there appears more upside potential than downside, I've been buying recently.

      I also applaud management's responding to an individual investor's ( i.e., "owner" ) concerns.

    • I think that the tone of the response you received was more than appropriate and quite gentle.

      You essentially harped on management for no good reason and on issues they cannot control such as the exchange rate.

      Maybe if you demonstrated some humility and asked meaningful questions you might not only get better answers but also have a reason not to feel you made a fool of yourself for posting your angry investor gibberish.

    • I will post the rest, and comments from the peanut gallery would be apreciated....

    • This was the response from investor relations:

      First, I think you need to get your facts straight before making a generalized statement.PGH is not trading lower than where it was when oil was trading at $70. If you look back to the end of August, crude was trading around the $70 dollar mark and PGH was trading at $17.35 per unit. Since then, oil has traded higher and is currently trading at the $86 mark. Similarly, PGH has moved up and is currently trading at $18.70 per unit. However, there are several factors that you seem to be ignoring in your questions regarding the stock's performance.
      1. Our production is made up of approximately 50% oil and 50% natural gas and though natural gas prices have strengthened over the last week or so, natural gas prices have been down over the last 16 months plus.
      2. Short-term spikes in crude prices do not necessarily translate into immediate increased cash flows. Prices must be sustained for a significant period in order for companies to realize the higher prices.
      3. Over the past few months, there has been a disconnect between commodities and commodity based equities. This is not solely limited to the energy sector but is evident in other commodity markets (gold, uranium, etc). So as we see spikes in oil prices, gold prices, etc, we are not seeing the same movement in the commodity based stocks and hence we are not seeing the movement in stock prices that would be expected in these markets. I have attached a graphical piece that shows the price movements of crude versus those of Harvest Energy Trust, Pengrowth Energy Trust and Canetic Energy Trust and highlights the disconnect between crude price movements and stock prices of the related stocks.
      4. There have been several external factors that are beyond the control of the company and have impacted our stock value and that of our peers. Namely the Federal Government's Tax Bill, the sub-prime meltdown in late July and August and recently, the Alberta Government's decision to review the current royalty schedule. These are all external events that the company has no control over but have resulted in a draw down in share value and continue to create an environment of uncertainty within the equity markets.
      5. The Canadian dollar's rise to and beyond parity with the U.S. dollar has offset the gains that we have witnessed in crude prices. The substantial gap between the U..S. dollar price and the Canadian dollar equivalent price has closed and as a result, Canadian producers have hardly realized any of the increase in the price of oil. Additionally, the impact of lower gas prices and a stronger Canadian dollar have also made it difficult for Canadian producers. There have been a couple of analyst reports that highlight this and I would suggest that you try to get a copy of one of these reports.

      As to your concerns over the activities of the management team, let me reassure you that we have been very active over the past few months in relaying our story to the investment community and will continue to do so going forward. In recent months, we have been taken part in several investor symposiums that not only exhibited Pengrowth to the investment community but has given both retail and institutional investors an opportunity to engage the management team with their particular questions ad concerns. In addition, we have a scheduled a number of road shows in Canada and the United States to provide the equity markets with an update of our progress and operations. This management team has taken every initiative to protect shareholder value and will continue to do so going forward.

      • 1 Reply to venturadeb
      • the rest of his response:

        I am not sure of your investment horizon and your investment objectives, however to classify a stock as a "pig" based on a short-term horizon does not make logical sense. Even though we have had to endure several externalities within the equities market, PGH continues to deliver a solid return to investors (currently yielding approximately 15%). In any market there are bound to be short-term bumps in the road as no stock can increase infinitely without having some sort of correction take place.

        Please let me know if my answers are insufficient and I will do my best to get you the response that would satisfy your concerns.

        Regards,

 
PGH
4.99-0.21(-4.04%)Oct 1 4:07 PMEDT

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