Shares of Pengrowth Energy Corp. (NYSE: PGH) slumped last month, falling by nearly 11% even though oil ended the month up 5.6%. Weighing the Canadian oil stock down was another lackluster earnings report.
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Pengrowth Energy stumbled into March, reporting its fourth-quarter results after the market's close at the end of February. The company posted a net loss of 210.4 million Canadian dollars ($164.9 million) during the quarter, which was deeper than its year-ago loss of CA$92.4 million ($72.4 million) and much worse than analysts expected. Several factors drove the poor showing, including an asset writedown, foreign exchange losses, and debt restructuring costs.
Also weighing on the company is the fact that it sold about CA$1 billion ($780 million) in assets over the past year. While those sales helped shore up its balance sheet, it also parted with 61% of its production as well as the associated cash flow in the process.
However, with those sales now in the rearview mirror, the company can now grow from its reset base this year. It aims to increase output at a double-digit rate while continuing to reduce costs. This strategy should eventually return Pengrowth Energy to profitability as long as oil prices don't take another tumble.
Pengrowth Energy gutted its portfolio last year to get its balance sheet back on solid ground, which has weighed heavily on its stock. With that process now behind it, the company hopes to return to profitable growth in the coming years. Shares, however, will likely remain quite volatile while it works its way back, making this stock best suited only for investors with iron stomachs and unabashedly bullish views on oil prices.
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