New projects support their high yields

Article Excerpt

PENGROWTH ENERGY CORP. $9.21 (Toronto symbol PGF; Shares outstanding: 303.2 million; Market cap: $3.0 billion; TSINetwork Rating: Average; Dividend yield : 9.1 %; www.pengrowth.com) produces oil and natural gas in western Canada and off the Nova Scotia coast. Its production is weighted 50% to oil and 50% to gas. Even with higher oil prices, Pengrowth’s cash flow per share fell 23.3% in the three months ended June 30, 2011, to $0.46 from $0.60 a year earlier. However, that was mainly because wet weather, pipeline outages and forest fires in northern Alberta cut its average daily production by 4.3%, to 72,288 barrels of oil equivalent (including natural gas) from 75,572 barrels. Pengrowth is using some of the cash from its conventional properties to expand into more risky areas, such as oil sands and shale gas. Still, these projects have strong long-term potential, and their cash flows will help Pengrowth maintain its high 9.1% dividend yield. The company’s debt of $1.1 billion is a..