EX-99.2 3 q32015notes.htm INTERIM FINANCIAL STATEMENTS Exhibit
PENGROWTH ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Stated in millions of Canadian dollars)
(Unaudited)
 
 
 
As at

As at

 
Note

September 30, 2015

December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Accounts receivable
 
$
145.8

$
148.1

Fair value of risk management contracts
12

251.1

299.6

 
 
396.9

447.7

Fair value of risk management contracts
12

139.5

182.6

Other assets
 
74.8

60.4

Property, plant and equipment
2

4,143.7

4,786.8

Exploration and evaluation assets
3

495.0

490.1

Goodwill
4

126.0

202.2

TOTAL ASSETS
 
$
5,375.9

$
6,169.8

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current Liabilities
 
 
 
Bank indebtedness
5

$
15.0

$
10.7

Accounts payable
 
204.7

352.9

Dividends payable
 
—

21.3

Fair value of risk management contracts
12

4.1

12.8

Current portion of long term debt
5

100.9

173.2

Current portion of provisions
6

15.3

27.3

 
 
340.0

598.2

Fair value of risk management contracts
12

0.7

0.4

Convertible debentures
 
137.1

137.2

Long term debt
5

1,816.1

1,548.8

Provisions
6

761.8

760.7

Deferred income taxes
7

83.4

197.7

 
 
3,139.1

3,243.0

Shareholders' Equity
 
 
 
Shareholders' capital
8

4,797.0

4,759.7

Contributed surplus
 
25.0

32.3

Deficit
 
(2,585.2
)
(1,865.2
)
 
 
2,236.8

2,926.8

 
 
 
 
Subsequent events
14

 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
 
$
5,375.9

$
6,169.8

See accompanying notes to the Consolidated Financial Statements.



PENGROWTH Third Quarter 2015 Financial Results
1

PENGROWTH ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Stated in millions of Canadian dollars, except per share amounts)
(Unaudited)

 
 
 
Three months ended September 30
Nine months ended September 30
  
Note

2015

2014

2015

2014

REVENUES
 
 
 
 
 
     Oil and gas sales
 
$
211.9

$
369.1

$
661.7

$
1,205.4

     Royalties, net of incentives
 
(19.1
)
(65.5
)
(70.4
)
(217.4
)
 
 
192.8

303.6

591.3

988.0

     Realized gain (loss) on commodity risk management
12

84.5

(28.6
)
229.3

(117.8
)
     Change in fair value of commodity risk management contracts
12

120.5

121.6

(85.9
)
(4.2
)
 
 
397.8

396.6

734.7

866.0

EXPENSES
 
 
 
 
 
     Operating
 
91.0

102.4

290.7

320.9

     Transportation
 
12.3

6.5

35.9

22.1

     General and administrative
 
25.6

25.6

81.6

76.5

     Depletion, depreciation and amortization
2

120.8

128.5

350.4

389.3

     Impairment
2,4

482.0

—

482.0

—

 
 
731.7

263.0

1,240.6

808.8

OPERATING INCOME (LOSS)
 
(333.9
)
133.6

(505.9
)
57.2

 
 
 
 
 
 
Other (income) expense items
 
 
 
 
 
     Unrealized loss on investment
 
—

5.0

—

5.0

     (Gain) loss on disposition of properties
 
(0.1
)
(19.7
)
26.4

(1.9
)
     Unrealized foreign exchange loss
13

41.3

42.7

210.2

49.2

     Realized foreign exchange (gain) loss
12,13

0.6

(0.8
)
(91.2
)
0.7

     Interest and financing charges
 
28.5

17.2

76.0

56.9

     Accretion
6

4.4

4.5

13.2

14.4

     Other (income) expense
 
(0.5
)
(0.1
)
(1.7
)
11.7

INCOME (LOSS) BEFORE TAXES
 
(408.1
)
84.8

(738.8
)
(78.8
)
Deferred income tax (recovery) expense
7

(78.5
)
32.6

(114.3
)
(6.0
)
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
 
$
(329.6
)
$
52.2

$
(624.5
)
$
(72.8
)
NET INCOME (LOSS) PER SHARE
11

 
 
 
 
     Basic
 
$
(0.61
)
$
0.10

$
(1.16
)
$
(0.14
)
     Diluted
 
$
(0.61
)
$
0.10

$
(1.16
)
$
(0.14
)
See accompanying notes to the Consolidated Financial Statements.


PENGROWTH Third Quarter 2015 Financial Results
2

PENGROWTH ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(Stated in millions of Canadian dollars)
(Unaudited)
 
 
Three months ended September 30
Nine months ended September 30
  
Note

2015

2014

2015

2014

CASH PROVIDED BY (USED FOR):
 
 
 
 
 
OPERATING
 
 
 
 
 
Net income (loss) and comprehensive income (loss)
 
$
(329.6
)
$
52.2

$
(624.5
)
$
(72.8
)
Non-cash items
 
 
 
 
 
Depletion, depreciation, amortization and accretion
 
125.2

133.0

363.6

403.7

Impairment
2,4

482.0

—

482.0

—

Deferred income tax (recovery) expense
7

(78.5
)
32.6

(114.3
)
(6.0
)
Unrealized foreign exchange loss
13

41.3

42.7

210.2

49.2

     Change in fair value of commodity risk management contracts
12

(120.5
)
(121.6
)
85.9

4.2

Share based compensation
9

1.4

5.0

10.4

13.4

(Gain) loss on disposition of properties
 
(0.1
)
(19.7
)
26.4

(1.9
)
Other items
 
(0.6
)
4.8

(0.7
)
0.1

Foreign exchange derivative settlements
12

—

—

(93.9
)
—

Funds flow from operations
 
120.6

129.0

345.1

389.9

Interest and financing charges
 
28.5

17.2

76.0

56.9

Expenditures on remediation
6

(5.1
)
(4.9
)
(12.1
)
(17.4
)
Change in non-cash operating working capital
10

(12.3
)
24.9

(77.5
)
29.3

 
 
131.7

166.2

331.5

458.7

FINANCING
 
 
 
 
 
Dividends paid
 
(32.6
)
(63.5
)
(116.8
)
(189.4
)
Bank indebtedness
5

(12.2
)
—

4.3

—

Long term debt repayment
5

(20.0
)
—

(17.6
)
—

Foreign exchange derivative settlements
12

—

—

93.9

—

Interest and financing charges paid
 
(36.3
)
(30.9
)
(94.4
)
(82.4
)
Proceeds from DRIP and stock option exercises
 
4.1

13.1

18.7

41.1

 
 
(97.0
)
(81.3
)
(111.9
)
(230.7
)
INVESTING
 
 
 
 
 
Capital expenditures
 
(15.5
)
(191.9
)
(164.7
)
(645.2
)
Property acquisitions
 
(0.9
)
(13.7
)
(0.9
)
(15.8
)
Proceeds on property dispositions
 
3.1

43.0

27.1

63.5

Contributions to remediation trust funds and other items
 
(4.4
)
(1.5
)
(17.5
)
(6.6
)
Change in non-cash investing working capital
10

(17.0
)
(12.0
)
(63.6
)
(30.4
)
 
 
(34.7
)
(176.1
)
(219.6
)
(634.5
)
CHANGE IN CASH AND CASH EQUIVALENTS
 
—

(91.2
)
—

(406.5
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
—

133.2

—

448.5

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
—

$
42.0

$
—

$
42.0

See accompanying notes to the Consolidated Financial Statements.


PENGROWTH Third Quarter 2015 Financial Results
3

PENGROWTH ENERGY CORPORATION
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(Stated in millions of Canadian dollars)
(Unaudited)

 
 
Three months ended September 30
Nine months ended September 30
  
Note

2015

2014

2015

2014

SHAREHOLDERS' CAPITAL
8

 
 
 
 
Balance, beginning of period
 
$
4,792.8

$
4,734.3

$
4,759.7

$
4,693.1

Share based compensation
 
0.1

—

18.6

14.8

Issued under DRIP
 
4.1

13.1

18.7

39.5

Balance, end of period
 
4,797.0

4,747.4

4,797.0

4,747.4

 
 
 
 
 
 
CONTRIBUTED SURPLUS
 
 
 
 
 
Balance, beginning of period
 
23.5

24.0

32.3

28.0

Share based compensation
9

1.6

5.4

11.3

14.6

Exercise of share based compensation awards
 
(0.1
)
—

(18.6
)
(13.2
)
Balance, end of period
 
25.0

29.4

25.0

29.4

 
 
 
 
 
 
DEFICIT
 
 
 
 
 
Balance, beginning of period
 
(2,233.8
)
(1,283.9
)
(1,865.2
)
(1,032.8
)
Net income (loss)
 
(329.6
)
52.2

(624.5
)
(72.8
)
Dividends declared
 
(21.8
)
(63.6
)
(95.5
)
(189.7
)
Balance, end of period
 
(2,585.2
)
(1,295.3
)
(2,585.2
)
(1,295.3
)
 
 
 
 
 
 
TOTAL SHAREHOLDERS' EQUITY
 
$
2,236.8

$
3,481.5

$
2,236.8

$
3,481.5

See accompanying notes to the Consolidated Financial Statements.


PENGROWTH Third Quarter 2015 Financial Results
4

PENGROWTH ENERGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE PERIOD ENDED SEPTEMBER 30, 2015 (Unaudited)
(Tabular amounts are stated in millions of Canadian dollars except per share amounts and as otherwise stated)

1.
BUSINESS OF THE CORPORATION
Pengrowth Energy Corporation ("Pengrowth" or the "Corporation") is a Canadian resource company that is engaged in the production, development, exploration and acquisition of oil and natural gas assets. The Consolidated Financial Statements include the accounts of the Corporation, and its subsidiary, collectively referred to as Pengrowth. All inter-entity transactions have been eliminated.
The Consolidated Financial Statements for the three and nine months ended September 30, 2015 are unaudited and have been prepared in accordance with IAS 34 Interim Financial Reporting ("IAS 34") using accounting policies consistent with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and International Financial Reporting Interpretations Committee ("IFRIC"). The disclosures provided below are incremental to those included with the December 31, 2014 annual Consolidated Financial Statements. All accounting policies and methods of computation followed in the preparation of these Consolidated Financial Statements are consistent with the December 31, 2014 annual Consolidated Financial Statements.
The Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto in Pengrowth’s annual report for the year ended December 31, 2014.
The Consolidated Financial Statements were authorized for release by the Audit and Risk Committee of the Board of Directors on November 3, 2015.






PENGROWTH Third Quarter 2015 Financial Results
5

2.
PROPERTY, PLANT AND EQUIPMENT ("PP&E")
Cost or deemed cost
Oil and natural
gas assets

Other
equipment

Total

Balance, December 31, 2013
$
6,587.7

$
78.8

$
6,666.5

Additions to PP&E
812.7

6.1

818.8

Property acquisitions
17.0

—

17.0

Change in asset retirement obligations
245.2

—

245.2

Divestitures
(164.8
)
—

(164.8
)
Balance, December 31, 2014
$
7,497.8

$
84.9

$
7,582.7

Additions to PP&E
172.4

3.5

175.9

Property acquisitions
0.9

—

0.9

Change in asset retirement obligations
1.9

—

1.9

Divestitures
(100.9
)
—

(100.9
)
Balance, September 30, 2015
$
7,572.1

$
88.4

$
7,660.5

 
 
 
 
Accumulated depletion, amortization and impairment losses
Oil and natural
gas assets

Other
equipment

Total

Balance, December 31, 2013
$
1,785.4

$
63.5

$
1,848.9

Depletion and amortization for the period
510.2

6.8

517.0

Impairment
486.3

—

486.3

Divestitures
(56.3
)
—

(56.3
)
Balance, December 31, 2014
$
2,725.6

$
70.3

$
2,795.9

Depletion and amortization for the period
346.0

4.4

350.4

Impairment
409.0

—

409.0

Divestitures
(38.5
)
—

(38.5
)
Balance, September 30, 2015
$
3,442.1

$
74.7

$
3,516.8

 
 
 
 
Net book value
Oil and natural
gas assets

Other
equipment

Total

As at September 30, 2015
$
4,130.0

$
13.7

$
4,143.7

As at December 31, 2014
$
4,772.2

$
14.6

$
4,786.8

During the nine months ended September 30, 2015, $7.5 million (September 30, 2014 – $11.7 million) of directly attributable general and administrative costs were capitalized to PP&E.
At September 30, 2015, certain capital related to Phase 2 of the Lindbergh thermal project ("Lindbergh Project") of $5.7 million (September 30, 2014 – $788.3 million) was excluded from the calculation of depletion.
Pengrowth capitalizes interest for qualifying assets in the construction phase based on costs incurred on the project and the average cost of borrowing. During the nine months ended September 30, 2015, $11.8 million (September 30, 2014 – $21.1 million) of interest was capitalized on the Lindbergh Project to PP&E using Pengrowth's weighted average cost of debt of 5.4 percent (September 30, 2014 – 5.7 percent).


PENGROWTH Third Quarter 2015 Financial Results
6

IMPAIRMENT TESTING
In light of a significant and sustained decline in both oil and natural gas benchmark prices in the third quarter of 2015, impairment tests were carried out on six CGUs, resulting in a $409.0 million PP&E impairment at September 30, 2015. The recoverable amount of each CGU was determined using fair value less costs to sell, with the assumptions noted below.
Impairments were recorded in the following CGUs:
•
Central CGU, located in Central Alberta, composed of primarily oil producing assets, recorded a $112.0 million PP&E impairment. The Central CGU had an estimated recoverable amount of $0.9 billion at September 30, 2015.
•
Eastern CGU, located primarily in Eastern Alberta, composed of primarily heavy oil producing assets, recorded an $18.0 million PP&E impairment. The Eastern CGU had an estimated recoverable amount of $0.3 billion at September 30, 2015.
•
Olds CGU, located in the Olds region of Alberta, primarily composed of natural gas and liquids producing assets, recorded a $63.0 million PP&E impairment. The Olds CGU had an estimated recoverable amount of $0.4 billion at September 30, 2015.
•
WCU Light Oil CGU, located in the Garrington/Lochend area of Alberta, composed of light oil producing assets, recorded a $128.0 million PP&E impairment. The WCU Light Oil CGU had an estimated recoverable amount of $0.4 billion at September 30, 2015.
•
Southern CGU, located primarily in Southern Alberta, composed of both natural gas and light oil producing assets, recorded a $45.0 million PP&E impairment. The Southern CGU had an estimated recoverable amount of $0.3 billion at September 30, 2015.
•
Northern CGU, located primarily in Northern Alberta, mainly composed of natural gas producing assets, recorded a $43.0 million PP&E impairment. The Northern CGU had an estimated recoverable amount of $0.2 billion at September 30, 2015.
The impairments noted above were recorded on the Consolidated Statements of Income (Loss) at September 30, 2015 and may be reversed, if and when the fair values of the impaired CGUs increase in the future periods. However, the impairment test is sensitive to lower commodity prices, which have been under significant downward pressure recently. Further declines in commodity prices could result in additional impairment charges if the recoverable values are further eroded by price decreases.
Recoverable Amount Calculation
The estimates of the above recoverable amounts were determined based on the following information, as applicable:
(a)     The net present value of the CGUs oil and gas reserves using:
i.
Proved plus probable reserves as estimated by Pengrowth’s independent reserves evaluator at December 31, 2014 adjusted to September 30, 2015 for price related economic revisions, 2015 divestments, year to date production and 15 percent cost reductions;
ii.
The October 1, 2015 commodity price forecast of Pengrowth’s independent reserves evaluator as noted below;
iii.
10 percent pre-tax discount rate representing an estimated market rate;
(b)    The fair value of undeveloped land estimated by management.
(c)    The fair value of infrastructure estimated by management.

Key input estimates used in the determination of cash flows from oil and gas reserves include the following:
(a)
Reserves. Assumptions that are valid at the time of reserve estimation may change significantly when new information becomes available. Changes in forward price estimates, production costs or recovery rates may change the economic status of reserves and may ultimately result in reserves being restated.
(b)
Oil and natural gas prices. Forward price estimates for oil and natural gas are used in the cash flow model.
Commodity prices have fluctuated widely in recent years due to global and regional factors including supply and demand fundamentals, inventory levels, exchange rates, weather, economic and geopolitical factors.
(c)
Discount rate. The discount rate used to calculate the net present value of cash flows is based on estimates of an approximate industry peer group weighted average cost of capital and the risks specific to the assets. Changes in the general economic environment could result in significant changes to this estimate.
(d)
Undeveloped land. The undeveloped land value is based on Pengrowth’s undeveloped land acreage and the current market prices for undeveloped land.

PENGROWTH Third Quarter 2015 Financial Results
7

(e)
Infrastructure. Assumptions that are valid at the time of infrastructure estimation may change significantly when new information becomes available.

For additional information see Note 2 to the December 31, 2014 audited Consolidated Financial Statements which contains a description of Pengrowth's accounting policies for impairments.

Below are the forward commodity price estimates used in the September 30, 2015 impairment test:
 
WTI oil (1)

Foreign exchange rate

Edmonton light crude oil (1)

AECO gas (1)

Year
(U.S.$/bbl)

(U.S.$/Cdn$)

(Cdn$/bbl)

(Cdn$/MMBtu)

2015 (Q4)
45.00

0.75

56.00

2.97

2016
50.00

0.75

61.33

3.43

2017
55.00

0.78

64.52

3.62

2018
60.00

0.80

68.75

3.72

2019
65.00

0.83

72.73

3.81

2020
70.00

0.85

76.47

3.90

2021
75.00

0.85

82.35

4.10

2022
80.00

0.85

88.24

4.30

2023
85.00

0.85

94.12

4.50

2024
89.63

0.85

98.41

4.78

Thereafter
+ 2.0 percent/yr

0.85

+ 2.0 percent/yr

+ 2.0 percent/yr

(1) 
Prices represent forecast amounts as at October 1, 2015 by Pengrowth's independent reserves evaluator.
At December 31, 2014, impairment tests were carried out on all CGUs in light of significant and rapid declines in benchmark prices at that time. This resulted in a $486.3 million impairment recorded at December 31, 2014. See Note 5 to the December 31, 2014 audited Consolidated Financial Statements for more information.

3.
EXPLORATION AND EVALUATION ASSETS ("E&E")
Cost or deemed cost
  
Balance, December 31, 2013
$
419.3

Additions
127.8

Impairment
(57.0
)
Balance, December 31, 2014
$
490.1

Additions
4.9

Balance, September 30, 2015
$
495.0



PENGROWTH Third Quarter 2015 Financial Results
8

4.
GOODWILL
Cost or deemed cost
  
Balance, December 31, 2013
$
672.7

Divestitures
(19.2
)
Impairment
(451.3
)
Balance, December 31, 2014
$
202.2

Divestitures
(3.2
)
Impairment
(73.0
)
Balance, September 30, 2015
$
126.0

In 2015, Pengrowth had goodwill allocated to groups of CGUs resulting from several prior years' acquisitions. As Pengrowth disposes of certain properties, associated goodwill is included in the carrying amount of the properties when determining the gain or loss on disposal. This amount is measured on the basis of the relative value of the properties disposed of and the portion of the CGUs retained. This resulted in $3.2 million of goodwill removed as at September 30, 2015 (December 31, 2014 - $19.2 million).

IMPAIRMENT TESTING
Goodwill is stated at cost less accumulated impairment and divestitures. Goodwill is assessed for impairment at each year end, or when there is an indication of impairment, in conjunction with an assessment for impairment of PP&E and E&E. Pengrowth has been negatively impacted by a downturn in the forward benchmark prices and as a result, goodwill impairment tests were performed at September 30, 2015. This resulted in a $73.0 million impairment of goodwill for the nine months ended September 30, 2015 (September 30, 2014 - $nil). Similarly, goodwill was tested in the fourth quarter of 2014 resulting in a $451.3 million impairment.
The impairments noted above have been recorded on the Consolidated Statements of Income (Loss) and are not reversible in future periods. The remaining carrying value of goodwill at September 30, 2015 is $126.0 million and is not attributed to any specific CGU, thus this value is supported by the excess recoverable amount over the carrying value of a number of Pengrowth's CGUs.
An increase in the discount rate of two percent would result in approximately $33 million of additional goodwill impairment. A 10 percent decrease to the commodity prices forecast by Pengrowth’s independent reserves evaluator would result in approximately $56 million of additional goodwill impairment. The goodwill impairment testing is classified under level 3 of the fair value measurement hierarchy. See Note 2 to the December 31, 2014 audited Consolidated Financial Statements which contains a description of Pengrowth's accounting policies for impairments.

PENGROWTH Third Quarter 2015 Financial Results
9

5.
LONG TERM DEBT AND BANK INDEBTEDNESS

LONG TERM DEBT
 
As at
  
September 30, 2015

December 31, 2014

U.S. dollar denominated senior unsecured notes:
 
 
71.5 million at 4.67 percent due May 2015
$
—

$
82.9

400 million at 6.35 percent due July 2017
533.4

463.4

265 million at 6.98 percent due August 2018
353.2

306.8

35 million at 3.49 percent due October 2019
46.6

40.5

115.5 million at 5.98 percent due May 2020
153.8

133.6

105 million at 4.07 percent due October 2022
139.7

121.3

195 million at 4.17 percent due October 2024
259.3

225.3

 
$
1,486.0

$
1,373.8

U.K. pound sterling denominated unsecured notes:
 
 
50 million at 5.46 percent due December 2015
$
100.9

$
90.3

15 million at 3.45 percent due October 2019
30.2

27.0

 
$
131.1

$
117.3

Canadian dollar senior unsecured notes:
 
 
15 million at 6.61 percent due August 2018
$
15.0

$
15.0

25 million at 4.74 percent due October 2022
24.9

24.9

 
$
39.9

$
39.9

Canadian dollar term credit facility borrowings
$
260.0

$
191.0

Total long term debt
$
1,917.0

$
1,722.0

 
 
 
Current portion of long term debt
$
100.9

$
173.2

Non-current portion of long term debt
1,816.1

1,548.8

 
$
1,917.0

$
1,722.0

Pengrowth’s unsecured covenant based term credit facility includes a committed value of $1 billion and a $250 million expansion feature, providing $1.25 billion of notional credit capacity from a syndicate of seven Canadian and four foreign banks. The facility can be extended at Pengrowth’s discretion any time prior to maturity, subject to syndicate approval. In the event that the lenders do not agree to a renewal, the outstanding balance is due upon maturity. The facility was renewed on March 30, 2015 and has a maturity date of March 30, 2019.
This facility carries floating interest rates that are expected to range between 1.6 percent and 3.25 percent over bankers’ acceptance rates, depending on Pengrowth’s ratio of senior debt to earnings before interest, taxes and non-cash items. At September 30, 2015, the available facility was reduced by drawings of $260.0 million (December 31, 2014 – $191.0 million) and letters of credit in the amount of $21.8 million (December 31, 2014 – $25.0 million) were outstanding.
BANK INDEBTEDNESS
Pengrowth also maintains a $50 million demand operating facility with one Canadian bank. At September 30, 2015, this facility was reduced by drawings of $14.0 million (December 31, 2014 – $9.0 million) and reduced by $1.1 million of outstanding letters of credit (December 31, 2014 – $0.9 million). When utilized together with any overdraft amounts, this facility appears on the Consolidated Balance Sheets as a current liability in bank indebtedness, as applicable.
FINANCIAL COVENANTS
Pengrowth’s senior unsecured notes and credit facilities are subject to a number of covenants, all of which were met at all times during the preceding twelve months, and at September 30, 2015. The covenants are substantially similar between the credit facilities and the senior unsecured notes.

PENGROWTH Third Quarter 2015 Financial Results
10

6.
PROVISIONS
Provisions are composed of Asset Retirement Obligations ("ARO") and contract & other liabilities. The following provides a continuity of the balances for the following periods:
 
Asset retirement
obligations

Contract & Other
liabilities

                      Total
Balance, December 31, 2013
$
606.2

$
5.3

$
611.5

Incurred during the period
6.8

4.4

11.2

Property acquisitions
3.5

—

3.5

Property dispositions
(66.5
)
—

(66.5
)
Revisions due to discount rate changes (1)
211.5

—

211.5

Expenditures on remediation/provisions settled
(22.9
)
(0.5
)
(23.4
)
Other revisions
23.4

(0.4
)
23.0

Accretion (amortization)
18.8

(1.6
)
17.2

Balance, December 31, 2014
$
780.8

$
7.2

$
788.0

Incurred during the period
0.4

1.0

1.4

Property dispositions
(12.0
)
—

(12.0
)
Expenditures on remediation/provisions settled
(12.1
)
(0.6
)
(12.7
)
Other revisions
1.4

(1.1
)
0.3

Accretion (amortization)
13.2

(1.1
)
12.1

Balance, September 30, 2015
$
771.7

$
5.4

$
777.1

(1) 
Relates to the change in the risk free discount rate from 3.25 percent to 2.3 percent. The offset is recorded in PP&E.
As at September 30, 2015
  
  
  
Current 
$
14.0

$
1.3

$
15.3

Long term
757.7

4.1

761.8

 
$
771.7

$
5.4

$
777.1

 
As at December 31, 2014
  
  
  
Current
$
24.9

$
2.4

$
27.3

Long term
755.9

4.8

760.7

 
$
780.8

$
7.2

$
788.0


The following assumptions were used to estimate the ARO liability:
 
As at
  
September 30, 2015

December 31, 2014

Total escalated future costs
$
1,965.0

$
2,007.0

Discount rate, per annum
2.3
%
2.3
%
Inflation rate, per annum
1.5
%
1.5
%
The majority of the costs are expected to be incurred between 2038 and 2079.

PENGROWTH Third Quarter 2015 Financial Results
11

7.
DEFERRED INCOME TAXES
A reconciliation of the deferred income tax recovery calculated based on the loss before taxes at the statutory tax rate to the actual provision for deferred income taxes is as follows: 
 
Nine months ended
  
September 30, 2015

September 30, 2014

Loss before taxes
$
(738.8
)
$
(78.8
)
Combined federal and provincial tax rate
26.13
%
25.30
%
Expected income tax recovery
$
(193.0
)
$
(19.9
)
Foreign exchange loss (1)
17.0

4.7

Effect of change in corporate tax rate
8.1

—

Change in unrecognized deferred tax asset
31.0

—

Goodwill impairment
19.9

—

Other including share based compensation
2.7

9.2

Deferred income tax recovery
$
(114.3
)
$
(6.0
)
(1) 
Reflects the 50% non-taxable portion of foreign exchange gains and losses and related risk management contracts.

8.
SHAREHOLDERS’ CAPITAL
Pengrowth is authorized to issue an unlimited number of common shares and up to 10 million preferred shares. No preferred shares have been issued.
 
Nine months ended
Year ended
 
September 30, 2015
December 31, 2014
(Common shares in 000's)
Number of
common shares

Amount

Number of
common shares

Amount

Balance, beginning of period
533,438

$
4,759.7

522,031

$
4,693.1

Share based compensation (cash exercised)
—

—

257

1.6

Share based compensation (non-cash exercised)
3,188

18.6

1,985

13.2

Issued for cash under Dividend Reinvestment Plan ("DRIP")
6,407

18.7

9,165

51.8

Balance, end of period
543,033

$
4,797.0

533,438

$
4,759.7


9.
SHARE BASED COMPENSATION PLANS
A rolling and reloading plan with a maximum of 3.2 percent of the issued and outstanding common shares may be reserved for issuance under all share based compensation plans in the aggregate, as approved by shareholders. As at September 30, 2015, the number of shares issuable under the share based compensation plans, in aggregate, represents 2.2 percent of the issued and outstanding common shares, which is within the limit.
Share based compensation expense is composed of the following:
 
Nine months ended
  
September 30, 2015

September 30, 2014

Non-cash share based compensation
$
11.3

$
14.6

Amounts capitalized in the period
(0.9
)
(1.2
)
Non-cash share based compensation expense
$
10.4

$
13.4

Cash-settled phantom deferred share unit (recovery) expense
(0.1
)
0.7

Total share based compensation expense
$
10.3

$
14.1

 

PENGROWTH Third Quarter 2015 Financial Results
12

LONG TERM INCENTIVE PLAN ("LTIP")
The following provides a continuity of the share settled LTIP:
(number of share units - 000's)
PSUs

RSUs

DSUs

Outstanding, December 31, 2013
4,034

4,413

284

Granted
1,916

2,361

—

Forfeited
(259
)
(285
)
—

Exercised
(275
)
(1,706
)
—

Performance adjustment
108

—

—

Deemed dividends
421

385

24

Outstanding, December 31, 2014
5,945

5,168

308

Granted
2,769

3,532

—

Forfeited
(1,624
)
(1,414
)
—

Exercised
(871
)
(2,285
)
(31
)
Performance adjustment
(968
)
—

—

Deemed dividends
496

451

23

Outstanding, September 30, 2015
5,747

5,452

300

For the 2015 grants, Pengrowth may determine, at its sole discretion, that any shares issuable pursuant to the 2015 grants could be paid in cash equal to the fair market value of the shares otherwise issuable.
PREVIOUS LONG TERM INCENTIVE PLAN
As at September 30, 2015, 318,542 common shares (December 31, 2014 - 295,374 common shares) were reserved for issuance under the Deferred Entitlement Share Unit Plan ("DESU"). The DESUs are entitled to deemed dividends.
CASH-SETTLED PHANTOM DEFERRED SHARE UNITS ("PHANTOM DSUs")
As at September 30, 2015, Phantom DSUs, awarded to Directors, outstanding were 393,973 units (December 31, 2014 - 133,621 units) with a corresponding liability of $0.4 million (December 31, 2014 - $0.5 million). For the nine months ended September 30, 2015, Pengrowth recorded a $0.1 million compensation recovery related to the Phantom DSUs (September 30, 2014 - $0.7 million). Each Phantom DSU entitles the holder to a cash payment equivalent to the value of a number of Common Shares (including deemed dividends) to be paid upon the individual ceasing to be a Director for any reason.









PENGROWTH Third Quarter 2015 Financial Results
13


10.
OTHER CASH FLOW DISCLOSURES
CHANGE IN NON-CASH OPERATING WORKING CAPITAL
 
Three months ended
Nine months ended
 
September 30
September 30
Cash provided by (used for):
2015

2014

2015

2014

Accounts receivable
$
21.8

$
47.5

$
2.3

$
31.1

Accounts payable
(34.1
)
(22.6
)
(79.8
)
(1.8
)
 
$
(12.3
)
$
24.9

$
(77.5
)
$
29.3

CHANGE IN NON-CASH INVESTING WORKING CAPITAL 
 
Three months ended
Nine months ended
 
September 30
September 30
Cash used for:
2015

2014

2015

2014

Accounts payable, including capital accruals
$
(17.0
)
$
(12.0
)
$
(63.6
)
$
(30.4
)

11.
AMOUNTS PER SHARE
The following reconciles the weighted average number of shares used in the basic and diluted net loss per share calculations:
 
Three months ended
Nine months ended
 
September 30
September 30
(000's)
2015

2014

2015

2014

Weighted average number of shares - basic
541,739

529,105

538,913

526,570

Dilutive effect of share based compensation plans
—

7,651

—

—

Weighted average number of shares – diluted
541,739

536,756

538,913

526,570

For the three and nine months ended September 30, 2015, 9.5 million shares and 5.0 million shares, respectively, (0.1 million and 7.4 million shares for the three and nine months ended September 30, 2014) that are issuable on exercise of the share based compensation plans were excluded from the diluted net loss per share calculation as their effect is anti-dilutive.

Further, for the three and nine months ended September 30, 2015, 16.1 million shares (23.0 million shares for the three and nine months ended September 30, 2014) that are issuable on potential conversion of the convertible debentures were excluded from the diluted net loss per share calculation as their effect is anti-dilutive.

PENGROWTH Third Quarter 2015 Financial Results
14

12.
FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
COMMODITY PRICE CONTRACTS
As at September 30, 2015, Pengrowth had the following contracts outstanding:
Financial Crude Oil Contracts:
 
 
Swaps
  
  
  
 
Differentials
 
 
 
 
Reference point
Term
Volume (bbl/d)

Price per bbl (Cdn)

 
Western Canada Select
Q4 2015
13,000

Cdn WTI less $18.61

 
Edmonton Light Sweet
Q4 2015
6,000

Cdn WTI less $7.63

 
Edmonton Light Sweet
Q1 2016
7,000

Cdn WTI less $7.52

 
Edmonton Light Sweet
Q2 2016
7,000

Cdn WTI less $6.85

 
Edmonton Light Sweet
Q3 2016
7,000

Cdn WTI less $6.85

 
Edmonton Light Sweet
Q4 2016
7,000

Cdn WTI less $6.85

 
Western Canada Select
2016
8,000

Cdn WTI less $18.32

 
Commodity
 
 
 
 
Reference point
Term
Volume (bbl/d)

Cdn$/bbl unless otherwise noted

 
WTI
Q4 2015
26,000


$93.68

 
WTI
Q1 2016
23,000


$91.58

 
WTI - $U.S.
Q1 2016
500


$63.29

$U.S.
WTI
Q2 2016
20,500


$88.97

 
WTI - $U.S.
Q2 2016
500


$63.29

$U.S.
WTI
Q3 2016
18,500


$88.53

 
WTI - $U.S.
Q3 2016
500


$63.29

$U.S.
WTI
Q4 2016
18,000


$88.25

 
WTI - $U.S.
Q4 2016
500


$63.29

$U.S.
WTI
2017
3,500


$79.85

 
WTI - $U.S.
2017
500


$55.15

$U.S.
WTI
2018
5,500


$80.49

 
Puts
 
 
 
 
Reference point
Term
Volume (bbl/d)

Price per bbl (Cdn)

Premium payable per bbl (Cdn)

WTI
Q1 2016
4,000


$90.00


$3.30

Financial Natural Gas Contracts:
 
 
Swaps
  
  
  
 
Reference point
Term
Volume (MMBtu/d)

Price per MMBtu (Cdn)

 
AECO
Q4 2015
94,782


$3.63

 
NGI Chicago Index
Q4 2015
10,815


$4.20

 
AECO
Q1 2016
113,738


$3.43

 
AECO
Q2 2016
111,368


$3.25

 
AECO
Q3 2016
111,368


$3.25

 
AECO
Q4 2016
118,477


$3.34

 
AECO
Q1 2017
94,782


$3.55

 
AECO
Q2 2017
82,934


$3.48

 
AECO
Q3 2017
82,934


$3.48

 
AECO
Q4 2017
82,934


$3.48

 
AECO
2018
66,347


$3.59

 
AECO
2019
2,370


$3.52

 

PENGROWTH Third Quarter 2015 Financial Results
15

Puts
 
 
 
 
Reference point
Term
Volume (MMBtu/d)

Price per MMBtu (Cdn)

Premium payable per MMBtu (Cdn)

AECO
Q1 2016
2,370


$3.48


$0.21

AECO
Q1 2016
2,370


$3.69


$0.29

AECO
Q1 2016
2,370


$3.94


$0.44

AECO
Q1 2016
2,370


$3.92


$0.41

AECO
Q2 2016
2,370


$3.48


$0.21

AECO
Q2 2016
2,370


$3.69


$0.29


Commodity Price Sensitivity on Risk Management Contracts as at September 30, 2015
Oil swaps and puts
Cdn$1/bbl increase in future oil prices

Cdn$1/bbl decrease in future oil prices

Increase (decrease) to fair value of oil risk management contracts

($13.9
)

$13.9

Oil differentials
Cdn$1 decrease in future oil differential

Cdn$1 increase in future oil differential

Increase (decrease) to fair value of financial differential risk management contracts

($7.2
)

$7.2

Natural gas swaps and puts
Cdn$0.25/MMBtu increase in future natural gas prices

Cdn$0.25/MMBtu decrease in future natural gas prices

Increase (decrease) to fair value of natural gas risk management contracts

($27.0
)

$27.0

As at close September 30, 2015, the AECO gas spot price was $2.79/MMBtu (September 30, 2014 – $4.12/MMBtu). The WTI prompt monthly price was Cdn$60.17/bbl (September 30, 2014 – Cdn$102.10/bbl).

Physical Delivery Contracts
As at September 30, 2015, the following physical delivery contracts were held for the purpose of delivery of non-financial items in accordance with Pengrowth's expected sales requirements. Physical delivery contracts are not considered financial instruments and therefore, no asset or liability has been recognized in the Consolidated Financial Statements.
Physical Crude Oil Contracts:
 
 
 
Reference point
Term
Volume (bbl/d)

Price per bbl (Cdn)
Edmonton Light Sweet
Q4 2015
5,119

Cdn WTI less $7.78

POWER PRICE CONTRACTS
As at September 30, 2015, Pengrowth had fixed the price applicable to future power costs as follows: 
Financial Power Contracts:
  
  
  
Reference point
Term
Volume (MW)

Price per MWh (Cdn)

AESO
Q4 2015
40


$49.53

AESO
2016
20


$44.13

As at close September 30, 2015, the Alberta power pool spot price was $23.64/MWh (September 30, 2014 – $25.05/MWh). The average Alberta power pool price was $26.09/MWh for the three months ended September 30, 2015 (September 30, 2014 – $64.34/MWh).
Power Price Sensitivity on Risk Management Contracts as at September 30, 2015
Each $1/MWh change in future power prices would result in a pre-tax change in the unrealized gain (loss) on power risk management contracts outstanding as at September 30, 2015 of approximately $0.3 million.


PENGROWTH Third Quarter 2015 Financial Results
16

FOREIGN EXCHANGE CONTRACTS
U.K. pound sterling Denominated Term Debt
Pengrowth entered into foreign exchange risk management contracts when it issued the U.K. pound sterling term notes. These contracts fix the Canadian dollar to the U.K. pound sterling exchange rate on the interest and principal of the U.K. pound sterling denominated debt as follows: 
Amount (U.K. pound sterling millions)
Settlement date
Fixed rate
($1Cdn = U.K. pound sterling)

50.0
December 2015
0.50

15.0
October 2019
0.63

U.S. Denominated Term Debt
A series of swap contracts were transacted in order to fix the foreign exchange rate on a portion of Pengrowth’s U.S. dollar denominated term debt. Each swap requires Pengrowth to buy U.S. dollars at a predetermined rate and time based upon the maturity dates of the U.S. denominated term debt. 
Contract type
Settlement date
Principal amount  (U.S.$ millions)

Swapped amount  (U.S.$ millions)

     % of principal swapped

Fixed rate
($1Cdn = $U.S.)

Swap
July 2017
400.0

400.0

100
%
0.79

Swap
August 2018
265.0

265.0

100
%
0.78

Swap
October 2019
35.0

35.0

100
%
0.78

Swap
May 2020
115.5

115.0

100
%
0.78

Swap
October 2022
105.0

105.0

100
%
0.77

No contracts
October 2024
195.0

—

—

—

 
 
1,115.5

920.0

82
%
 
During the first quarter of 2015, Pengrowth monetized all of its U.S. swap contracts that fixed the foreign exchange rate on Pengrowth’s U.S. dollar denominated term debt, except for contracts related to the May 2015 term debt settlement. This resulted in a Cdn$84.1 million realized foreign exchange gain in the first quarter of 2015 and the cash proceeds were used to pay down a portion of the credit facilities. Subsequent to the monetization, Pengrowth has entered into a series of new foreign exchange swap contracts as outlined in the table above. The foreign exchange swap contracts associated with the May 2015 term debt series settled in tandem with its maturity, resulting in a Cdn$9.8 million realized foreign exchange gain in the second quarter of 2015. Together, these transactions brought year to date 2015 realized foreign exchange gains from settlement of swap contracts to Cdn$93.9 million. At September 30, 2015, Pengrowth held a total of U.S.$920.0 million in foreign exchange swap contracts compared to U.S.$460 million at December 31, 2014.

Foreign Exchange Rate Sensitivity
Foreign Exchange on Foreign Denominated Term Debt
The following summarizes the sensitivity on a pre-tax basis, of a change in the foreign exchange rate related to the translation of the foreign denominated term debt and the offsetting change in the fair value of the foreign exchange risk management contracts relating to that debt, holding all other variables constant:
 
Cdn$0.01 Exchange rate change
Foreign exchange sensitivity as at September 30, 2015
Cdn - U.S.

Cdn - U.K.

Unrealized foreign exchange gain or loss on foreign denominated debt
$
11.2

$
0.7

Unrealized foreign exchange risk management gain or loss
9.3

0.7

Net pre-tax impact on Consolidated Statements of Income (Loss)
$
1.9

$
—

 
 
 
 
Cdn$0.01 Exchange rate change
Foreign exchange sensitivity as at September 30, 2014
Cdn - U.S.

Cdn - U.K.

Unrealized foreign exchange gain or loss on foreign denominated debt
$
11.9

$
0.7

Unrealized foreign exchange risk management gain or loss
4.6

0.7

Net pre-tax impact on Consolidated Statements of Income (Loss)
$
7.3

$
—


PENGROWTH Third Quarter 2015 Financial Results
17

Interest Rate Sensitivity
Bank Interest Cost
As at September 30, 2015, Pengrowth had approximately $1.9 billion of current and non-current long term debt outstanding (December 31, 2014 - $1.7 billion) of which $260.0 million was based on floating interest rates (December 31, 2014 - $191.0 million). A 1 percent increase in interest rates would increase pre-tax interest expense by approximately $2.0 million for the nine months ended September 30, 2015 (September 30, 2014 - $nil), assuming the amount was outstanding for the entire period.

Summary of Gains and Losses on Risk Management Contracts
The following tables provide details of the fair value of risk management contracts that appear on the Consolidated Balance Sheets and the unrealized and realized gains and losses on risk management recorded in the Consolidated Statements of Income (Loss).
As at and for the nine month period ended September 30, 2015
Commodity
contracts (1)

Power contracts (2)

Foreign exchange
contracts (3)

Total

Current portion of risk management assets
$
250.7

$
—

$
0.4

$
251.1

Non-current portion of risk management assets
87.3

0.1

52.1

139.5

Current portion of risk management liabilities
(2.4
)
(1.7
)
—

(4.1
)
Non-current portion of risk management liabilities
(0.4
)
(0.3
)
—

(0.7
)
Risk management assets (liabilities), end of period
$
335.2

$
(1.9
)
$
52.5

$
385.8

Less: Risk management assets (liabilities) at beginning of period
421.1

(2.9
)
50.8

469.0

Unrealized gain (loss) on risk management contracts for the period
$
(85.9
)
$
1.0

$
1.7

$
(83.2
)
Realized gain (loss) on risk management contracts for the period
229.3

(3.2
)
93.9

320.0

Total unrealized and realized gain (loss) on risk management contracts for the period
$
143.4

$
(2.2
)
$
95.6

$
236.8

 
 
 
 
 
As at and for the nine month period ended September 30, 2014
Commodity
contracts (1)

Power and Interest contracts (4)

Foreign exchange
contracts (3)

Total

Current portion of risk management assets
$
—

$
1.1

$
5.4

$
6.5

Non-current portion of risk management assets
—

—

35.3

35.3

Current portion of risk management liabilities
(60.4
)
—

(0.7
)
(61.1
)
Non-current portion of risk management liabilities
(23.8
)
—

(6.8
)
(30.6
)
Risk management assets (liabilities), end of period
$
(84.2
)
$
1.1

$
33.2

$
(49.9
)
Less: Risk management assets (liabilities) at beginning of period
(80.0
)
(1.4
)
12.0

(69.4
)
Unrealized gain (loss) on risk management contracts for the period
$
(4.2
)
$
2.5

$
21.2

$
19.5

Realized loss on risk management contracts for the period
(117.8
)
0.1

(0.9
)
(118.6
)
Total unrealized and realized gain (loss) on risk management contracts for the period
$
(122.0
)
$
2.6

$
20.3

$
(99.1
)
(1) 
Unrealized and realized gains and losses are presented as separate line items in the Consolidated Statements of Income (Loss).
(2) 
Unrealized gains and losses are included in other (income) expense. Realized gains and losses are included in operating expense.
(3) 
Unrealized and realized gains and losses are included as part of separate line items in the Consolidated Statements of Income (Loss).
(4) 
Unrealized gains and losses are included in other (income) expense and interest expense, respectively. Realized gains and losses are included in operating expense and interest expense, respectively.














PENGROWTH Third Quarter 2015 Financial Results
18

FAIR VALUE
The fair value of cash and cash equivalents, accounts receivable, accounts payable, bank indebtedness and dividends payable approximate their carrying amount due to the short-term nature of those instruments. The fair value of the Canadian dollar term credit facility is equal to its carrying amount as the facility bears interest at floating rates and credit spreads within the facility are indicative of market rates. The fair value of the remediation trust funds are equal to their carrying amount as these assets are carried at their estimated fair value. The following tables provide fair value measurement information for financial assets and liabilities.
 
 
 
Fair value measurements using:
As at September 30, 2015
Carrying amount

Fair value

Quoted prices in
active markets
(Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Financial Assets
 
 
 
 
 
Remediation trust funds
$
74.8

$
74.8

$
74.8

$
—

$
—

Fair value of risk management contracts
390.6

390.6

—

390.6

—

 
 
 
 
 
 
Financial Liabilities
 
 
 
 
 
Convertible debentures
137.1

102.6

102.6

—

—

U.S. dollar denominated senior unsecured notes
1,486.0

1,575.4

—

1,575.4

—

Cdn dollar senior unsecured notes
39.9

42.2

—

42.2

—

U.K. pound sterling denominated unsecured notes
131.1

132.0

—

132.0

—

Fair value of risk management contracts
4.8

4.8

—

4.8

—

 
 
 
 
 
 
 
 
 
Fair value measurements using:
As at December 31, 2014
Carrying amount

Fair value

Quoted prices in
active markets
(Level 1)

Significant other
observable inputs
(Level 2)

Significant unobservable inputs (Level 3)

Financial Assets
 
 
 
 
 
Remediation trust funds
$
60.4

$
60.4

$
60.4

$
—

$
—

Fair value of risk management contracts
482.2

482.2

—

482.2

—

 
 
 
 
 
 
Financial Liabilities
 
 
 
 
 
Convertible debentures
137.2

135.3

135.3

—

—

U.S. dollar denominated senior unsecured notes
1,373.8

1,457.7

—

1,457.7

—

Cdn dollar senior unsecured notes
39.9

41.5

—

41.5

—

U.K. pound sterling denominated unsecured notes
117.3

120.6

—

120.6

—

Fair value of risk management contracts
13.2

13.2

—

13.2

—


PENGROWTH Third Quarter 2015 Financial Results
19

13.
FOREIGN EXCHANGE (GAIN) LOSS
 
Three months ended
Nine months ended
 
September 30
September 30
  
2015

2014

2015

2014

Currency exchange rate ($1Cdn = $U.S.) at period end
$
0.75

$
0.89

$
0.75

$
0.89

Unrealized foreign exchange loss on U.S. dollar denominated debt
$
95.8

$
63.9

$
198.1

$
67.0

Unrealized foreign exchange (gain) loss on U.K. pound sterling denominated debt
3.7

(0.7
)
13.8

3.4

Total unrealized foreign exchange loss from translation of foreign denominated debt
$
99.5

$
63.2

$
211.9

$
70.4

Unrealized (gain) loss on U.S. foreign exchange risk management contracts
$
(54.1
)
$
(20.8
)
$
11.8

$
(17.6
)
Unrealized (gain) loss on U.K. foreign exchange risk management contracts
(4.1
)
0.3

(13.5
)
(3.6
)
Total unrealized gain on foreign exchange risk management contracts
$
(58.2
)
$
(20.5
)
$
(1.7
)
$
(21.2
)
Total unrealized foreign exchange loss
$
41.3

$
42.7

$
210.2

$
49.2

Total realized foreign exchange (gain) loss
$
0.6

$
(0.8
)
$
(91.2
)
$
0.7

14.
SUBSEQUENT EVENTS
On October 22, 2015, Pengrowth entered into a Purchase and Sale agreement for the disposition of its non-core Jenner area properties in south eastern Alberta for cash consideration of $80 million, prior to closing adjustments. The sale is expected to close prior to year end and result in an after tax loss of approximately $38 million.
On October 29, 2015, Pengrowth received notification from the New York Stock Exchange ("NYSE") that it was no longer in compliance with one of the NYSE’s listing standards, as the closing price of Pengrowth’s common stock was less than US$1.00 per share over a consecutive 30 trading-day period. Pengrowth has 6 months from the date of notification to regain compliance with the NYSE’s price listing standard to avoid delisting.
On October 30, 2015, Pengrowth closed the sale of its non-core Bodo property in eastern Alberta and western Saskatchewan for cash consideration of $95 million, prior to closing adjustments. It is not expected that a material gain or loss on this transaction will be recorded.

PENGROWTH Third Quarter 2015 Financial Results
20