Pengrowth Energy Corp (USA)(NYSE:PGH) Could This Be The Bottom?

To any business, the crippling stranglehold of excess out of control debt is like a malignant cancer that inhibits the efficiency of all business activities, and curtails the potential for future growth. While there are many legitimate reasons for a business to take on debt in a responsible manner, excess debt can destroy a company’s balance sheet, and the company itself. One such energy company that has adopted a strategy of significantly paying down its debt is Pengrowth Energy Corp (USA)(NYSE: PGH).Pengrowth Energy Corporation is an intermediate Canadian producer of oil and natural gas, headquartered in Calgary, Alberta. Pengrowth's assets include the Lindbergh thermal oil, Cardium light oil, Swan Hills light oil and the Groundbirch Montney gas projects. Pengrowth's shares trade on both the Toronto Stock Exchange under the symbol "PGF" and on the New York Stock Exchange under the symbol "PGH".On May 2, 2017, Pengrowth Energy Corporation announced its first quarter 2017 operating results included a substantial reduction in outstanding debt, significant asset sales and further reductions in its cost structures. As of the beginning of 2017, Pengrowth had closed, or expects to close $707 million of asset sales. The company also reported $287 million of cash on hand at year end 2016. When combined, this represents a net debt reduction of nearly $1.0 billion or approximately 60 percent of December 31, 2016 debt. All the while, only reducing the company's proven and probable reserves as of December 31, 2016 by approximately 11 percent. This significant level of debt reduction should enable Pengrowth to restructure its debt to pursue the expansion of the Lindbergh thermal project.The assets that the company sold included its non-producing Montney lands at Bernadet in northeast British Columbia for cash consideration of $92 million, with the transaction closing on April 11, 2017.The company also entered into an agreement for the sale of the remaining portion of its Swan Hills assets in North Central Alberta for total cash consideration of $185 million, subject to customary closing conditions and adjustments. The effective date of the sale is January 1, 2017, and closing is expected to occur on May 31, 2017. Derek Evans, President and Chief Executive Officer of Pengrowth commented:

"We are delighted by the progress that we have made on reducing our debt and strengthening our balance sheet. Our efforts and results to date have been transformational for Pengrowth and have put us on a path to either renegotiate or refinance our remaining term debt into a new structure that should allow for the flexibility to develop the second phase of our world class Lindbergh thermal asset."

A key focus for Pengrowth in 2017 continues to be on improving the health and strength of its balance sheet. The Company reduced its total debt by $535 million through the prepayment of US $300 million of its 6.35 percent Notes and the redemption of $126.6 million of convertible debentures at maturity. Following these payments, Pengrowth's total debt at March 31, 2017 amounted to $1.15 billion compared to $1.68 billion at December 31, 2016.

PGH stock hit a low of $.50 in January of 2016. The stock has bounced off the low and is currently trading at $.92. Current market capitalization stands at $517.24 million, on 547.71 million shares outstanding as of May 2, 2017. The first quarter 2017 financial report also indicated additional expense reductions in the quarter with operating and general and administrative expenses down $9.5 million and $3.1 million, respectively, from the first quarter of 2016. In spite of all the financial turmoil that the company is currently experiencing, the company will still have consistent revenues, and a stronger balance sheet when all is said and done. It could then refocus on growth. This may be the bottom, and a decent buying opportunity. We will be updating our subscribers as soon as we know more. For the latest updates on PGH, sign up below!Disclosure: We have no position in PGH and have not been compensated for this article.