Topic: How To Invest

PENGROWTH ENERGY TRUST $19.26 – Toronto symbol PGF.B

PENGROWTH ENERGY TRUST $19.26 (Toronto symbol PGF.B; SI Rating: Average) produces oil and gas in western Canada, as well as offshore Nova Scotia.

In the three months ended December 31, 2006, Pengrowth’s revenue fell slightly, to $350.9 million from $353.9 million. However, cash flow per unit fell 45.8%, to $0.64 from $1.18.

Pengrowth’s average daily production of 77,614 barrels of oil equivalent is weighted 50% toward oil and liquids and 50% natural gas. In the latest quarter, the company’s average realized price for oil was $60.35 U.S. and $7.12 U.S. for natural gas.

Pengrowth recently acquired several properties in Western Canada from U.S.-based ConocoPhillips for $1.04 billion. Late last year, Pengrowth merged with Esprit Energy in an all-stock transaction. Together, these purchases increased Pengrowth’s reserves by 60%, and its production by 70%.

Pengrowth’s long-term debt is low at 22% of shareholders’ equity. The trust has a current yield of 15.6%. It distributed 132% of its cash flow as distributions in the latest quarter, but that was largely due to the timing of its acquisitions. The company’s payout ratio this year should average around 87%.

Pengrowth is still a buy.

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