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Cona would assume Pengrowth’s debt of approximately $740 million.

Pengrowth blamed extreme volatility in the price of Western Canadian oil in the fall of 2018, coupled with an uncertain political and regulatory environment for the fire sale. The company produces around 18,000 barrels per day from its Lindbergh thermal property, located in the Cold Lake area of East Central Alberta, and 24.6 million cubic feet per day from its Montney assets in northeast British Columbia.



“As a result of the significant decline in oil prices in 2014, which followed on the heels of the largest capital project in Pengrowth’s history at Lindbergh, the Company took immediate steps to shore up the Company’s balance sheet by selling assets to pay down $1.2 billion of debt,” said Pengrowth’s Board of Directors, Chairman Kel Johnston in a statement.

“Further efforts were undertaken in 2018 to market an additional overriding royalty on the Lindbergh asset and to secure high yield debt to replace the current outstanding Secured Debt. Both funding initiatives proved unsuccessful.”

Johnston also blamed extreme volatility in the price of Western Canadian oil in the fall of 2018, coupled with an uncertain political and regulatory environment, “has led to a severe funding crisis in the Canadian energy capital markets which impeded the company’s ability to achieve a funding solution.”

Pete Sametz, President and CEO of Pengrowth said the board had determined it was the best available alternative for the company.

“Despite the discount this transaction represents to Pengrowth’s recent trading price, we strongly recommend our stakeholders support the Arrangement Agreement as it represents the most attractive alternative for all stakeholders given the current environment where there is essentially no access to capital for the cCompany or participants in the Canadian oil and gas industry, in general,” Sametz said in a statement.

With files from Thomson Reuters