UPDATE 2-Pengrowth Energy Trust to buy Monterey for C$336 mln

* Purchase price of C$8.30/shr

* Offer at premium of 94 pct to Monterey’s Friday close

* Pengrowth to assume C$30 mln in Monterey debt

* Deal to add to Pengrowth’s production by 2012

* Pengrowth units fall as much as 9 pct
(Adds details, analyst comments, updates share movement)

By Bhaswati Mukhopadhyay

BANGALORE, July 12 (BestGrowthStock) – Canada’s Pengrowth Energy
Trust (PGF_u.TO: ) said it agreed to buy the 82 percent it does
not already own in Monterey Exploration Ltd (MXL.TO: ) for about
C$336 million ($325.6 million), to get access to gas reserves
in northeast British Columbia.

Units of Pengrowth, which expects the deal to add to its
production, reserves and cash flow on a per unit basis by 2012,
fell as much as 9 percent to C$9.40 Monday morning on the
Toronto Stock Exchange.

“The transaction will have a negative contribution to its
earnings in the next couple of years and that is why the stock
is trading down,” analyst Kyle Preston of Canaccord Genuity

Monterey, a junior oil and natural gas company, is a
developer of gas reserves from the Montney formation in the
Groundbirch area of northeast British Columbia.

Monterey’s expected 2010 and 2011 exit production is 6,000
barrels of oil equivalent per day (boe/d) and 10,000 boe/d,
respectively, driven by development of the Montney area.

“Pengrowth has talked about having good short-term
prospects and some very good long-term prospects. This deal
gives it some mid-term prospects that it needed,” analyst Menal
Patel of National Bank Financial said.

Pengrowth expects to spend an additional C$65 million
through 2010 to drill six net wells in Monterey’s lands,
bringing its 2010 capital program to C$350 million.

“The transaction gives us exposure to a large financially
strong entity with significant liquidity,” Monterey Chief
Executive Patrick Manuel said.

Pengrowth said it will also assume C$30 million of
Monterey’s net debt as at June 30.


The deal, expected to close in mid-September, values
Monterey at C$8.30 per share, representing a premium of 94
percent to the stock’s Friday close of C$4.28.

Pengrowth said including its existing 18 percent stake in
Monterey, which it acquired for C$9 million, the total
transaction is valued at about C$375 million.

Under the deal, each Monterey shareholder may choose to
receive either 0.8298 of a Pengrowth Energy Trust unit or
0.8298 of an exchangeable share of Pengrowth Corp, the
administrator of Pengrowth Energy Trust.

Each exchangeable share of Pengrowth Corp can be exchanged
for one Pengrowth Energy Trust unit.

Pengrowth units were down 79 Canadian cents at C$9.49 in
afternoon trade. Monterey shares were up 78 percent at C$7.63.

($1=1.032 Canadian Dollar)
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by
Anne Pallivathuckal)

UPDATE 2-Pengrowth Energy Trust to buy Monterey for C$336 mln