At Pengrowth, we believe it makes more sense to focus on the things we’re great at, rather than exhaust our efforts on a number of things we might do well. As part of our value creation strategy, we have streamlined our teams to focus on our operated, low cost, low risk, high return projects that exist right here in our own backyard. Although the WCSB is maturing, we will become the very best at extracting the resources it still contains by utilizing advancing technologies and our superior technical skills. 

Not only have we shifted our criteria toward developing our existing suite of assets, we have also redefined our acquisitions strategy. Pengrowth will continue to identify and execute on acquisitions that fit into our defined project model, which means we will be looking for additional WCSB properties which are operated, low cost, low risk and able to provide a high return on our reinvestment.  

You can expect to see us seek out potential acquisitions that possess qualities such as low decline rates, long reserve life indexes, low operating costs and have a large inventory of drilling opportunities that prove profitable even at depressed commodity price levels. We will be picky, patient and persistent in regards to any purchases we make in order to ensure we are absorbing assets where we are confident can create value. By taking a focused control over the aspects of our business that are within our realm, we will lessen the influence of market instabilities. 

As we have seen throughout the past couple years, a company’s financial position is of utmost importance in ensuring its sustainability. At Pengrowth, we have taken proactive steps to enhance our financial strength, ensuring we have the flexibility we may require should the right opportunity present itself in the marketplace. We have a strong balance sheet and ample access to credit and debt markets to draw upon if necessary to support our development program.

As part of our value creation strategy, we have committed to reinvesting a higher portion of our cash flow toward our capital expenditures than ever before in our history. We have committed to a sustainable business model where distributions plus capital expenditures do not exceed cash flow. We have also hedged a portion of our production for 2011 and 2012 in order to add an additional measure of stability to our balance sheet, by ensuring cash flow certainty for our capital and dividend programs.

We have ample available credit capacity and there are no immediate capital strains on our balance sheet. Our 2011 capital program was also created with sustainability in mind, as it is designed to be flexible, scalable and responsive to uncertain commodity prices and market conditions. 

To Pengrowth, being an efficient operator not only means possessing the lowest total cost structure and finding and development costs, but having the ability to focus on being an everyday low cost operator. Pengrowth’s strategic review of the best opportunities for value creation on our existing asset base, coupled with Pengrowth’s historically low finding and development costs, support our decision to increase our level of capital reinvestment as part of our value creation strategy.

By focusing on repeatable, predictable unconventional resource plays, our knowledge base will become specialized and we will become better at what we do.