Pengrowth Energy: Stock Continues To Provide Good Value At Current Levels, Says Canaccord

In a research report published today, Canaccord analyst Steve Toth reiterated coverage with a “Buy” rating on Pengrowth Energy Corporation (PGH), and a price target of c$8.75 following yesterday’s news that GLJ Petroleum Consultants has provided an update of bitumen reserves and contingent resources for PGH’s Lindbergh project.

“Given largely non-material changes to our DCF valuation estimates, we have not made any changes to our forecasts at this time. We continue to be supporters of Pengrowth’s strategic shift to thermal production, which despite a higher capital cost provides a longer RLI and stable production base relative to growth from its conventional assets. Near-term catalysts for the stock remain: 1) first steam of its Phase 1 commercial development in Q4/14 with ramp-up of production through 2015, and 2) the potential to produce above “nameplate” capacity by ~50% (or by ~6,000 bbl/d) given the significant flexibility built into PGF’s plans (based on an assumed productive capacity of ~18,400 bbl/d built into Phase 1 with 23 well pairs)”, Toth wrote.

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