Pengrowth Energy Earnings: An Early Look

Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Pengrowth Energy (NYSE: PGH  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Canada is a resource giant, and Pengrowth Energy is one of many small companies seeking to cash in on the energy boom in the Great White North. Let's take an early look at what's been happening with Pengrowth Energy over the past quarter and what we're likely to see in its quarterly report on Friday.

Stats on Pengrowth Energy

Analyst EPS Estimate

$0.02

Year-Ago EPS

($0.04)

Revenue Estimate

$413 million

Year-Ago Revenue

$389.2 million*

Source: S&P Capital IQ. * Reflects reported oil and gas sales.

Will Pengrowth get more energetic this quarter?
Pengrowth has had up-and-down results in recent years, with net income remaining close to the flat line with occasional bursts of significant profits and losses. Lately, though, investors have soured on the company, as shares have dropped more than 20% since late November.

The Canadian province of Alberta has emerged as a huge potential energy supplier for the coming century, and industry players large and small have made moves to capitalize. U.S. oil giant ExxonMobil (NYSE: XOM  ) bought into the Montney and Duvernay shale plays in the region by buying out Celtic Exploration, and Enerplus Resources (NYSE: ERF  ) made a strategic decision to divest assets elsewhere to focus its efforts on core properties in Alberta. Pengrowth has staked a greater claim in the region with its $366 million acquisition of Monterey Exploration last year.

But Pengrowth's big bet is on its Lindbergh thermal bitumen project. Bitumen is a petroleum product and doesn't have price swings as wide as natural gas, potentially giving Pengrowth more stable cash flow and earnings going forward than some of its nat-gas producing peers. The company has had to deal with higher costs and reduced production, but decisions to sell off non-core assets should give it the capital it needs to get Lindbergh moving forward.

Investors will notice that Pengrowth has reduced its dividend in recent years. That move came in part because of its forced conversion from royalty-trust status, which the Canadian government revoked. Former royalty trusts Penn West Petroleum (NYSE: PWE  ) , Enerplus, and several others have had to make similar cuts, with Penn West's payout having dropped by more than a third from its levels in early 2010.

In Pengrowth's report, look for the latest update on Lindbergh and how the future looks for the project. With so much riding on it, Pengrowth needs to stay on its new target of bringing the project to fully operational status by mid-2015 in order to keep investors happy.

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