Great fit for Pengrowth

Article Excerpt

PENGROWTH ENERGY $9.12 (Toronto symbol PGF; Shares outstanding: 329.3 million; Market cap: $3.0 billion; TSINetwork Rating: Average; Dividend yield: 9.2%; is buying rival oil producer NAL Energy Corp. (Toronto symbol NAE) in an all-stock transaction. NAL shareholders and regulators must still approve the plan, but the companies aim to complete the merger by May 31, 2012. Adding NAL’s properties in Alberta and B.C. (54% natural gas and 46% oil) will increase Pengrowth’s projected 2012 production to between 86,000 and 89,000 barrels of oil equivalent a day from its earlier range of 74,500 to 76,500 barrels. Following the merger, the combined company plans to sell some of its less-profitable properties and invest the cash in its Lindbergh oil sands project. The combined company will also have $4.3 billion in tax pools that it can use to offset income taxes until 2015. That should let Pengrowth keep paying monthly dividends of $0.07 a share, for an annualized yield of 9.2%. Pengrowth is a buy. buy…

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