Pengrowth Energy (C$7.17, down 3.9%) swung to an adjusted loss of $37.3 million in the fourth quarter from a profit of $24.1 million a year earlier. The oil and gas company also said cash flow fell 44% and average production was down 18%.
How can an oil and gas company LOSE money with oil and gas going up and STAYING up for prolonged periods?
If PGH can't make money NOW, or over the past year....why and how CAN they make money? From a steam operation off in the future?
What is wrong with these idiots?
Whats wrong in a nut shell is #$%$ poor management___ Having said that, PGH is not alone in that situation...
Take a look at Pennwest, Lightstream plus quite a few other small cap Canadian E and P names and you will see the same dilemma there as well... When or I should say if I ever get slick on my original investment capital, I will put these small cap Canadian equities I will put them in my rear view mirror...
U.S. MLPs are the way to go___
You really need to understand the company your investing in. Pengrowth management is transforming the company from a conventional oil and gas producer to a long life, low decline, high margin heavy oil producer.
Pengrowth lost money in the 4th quarter because of divestitures and the $136 million dollars it invested for development of the Lindberg project which won't provide a return until the first quarter of 2015 when bitumen begins to flow from those 23 well pairs.
However the company did generated enough funds from operations to pay the dividend using only 60% of cash flow which makes the dividend sustainable.
Management has a plan and is executing it very well indeed.
Sentiment: Strong Buy
...keep in mind....I'm LONG PGH. Painfully LONG PGH - from back in the days when it was above 20, back in the days when $12 seemed like the rock bottom. I've had between 20,000 and 10,000 shares at various times.
Seriously, how on earth does an oil and gas company fail to turn a profit given the price of oil and gas?