Pengrowth Targets $285MM for 2010 Capital Spending

Pengrowth has announced its capital spending and operational guidance for 2010.

Pengrowth's $285 million capital program for 2010 focuses on balancing opportunities between delivering results from its existing asset base, and the acquisition of assets in existing and new core areas. Pengrowth plans on maintaining financial flexibility and a prudent debt level in an uncertain commodity price environment by structuring its 2010 capital program to live within cashflow at or below current strip prices. Pengrowth will target a total (distributions plus capital expenditures) payout ratio of less than 100 percent with excess cash flow being made available, along with its $1.1 billion of committed credit capacity, to take advantage of the unique acquisition environment in the Western Canadian Sedimentary Basin ("WCSB").

Pengrowth's 2010 capital program is designed to be flexible, scalable, and responsive to uncertain commodity prices and market conditions. The capital program of $285 million represents an increase of approximately 33 percent compared with anticipated 2009 full year capital expenditures of $220 million. Capital amounts are prior to any drilling credits or incentive programs and may fluctuate somewhat dependant upon commodity prices. Should natural gas prices remain low or decline further, Pengrowth may choose to re-allocate capital to more oil weighted projects or deploy available cash flow to acquisition opportunities. Pengrowth will continue to monitor and adjust capital investment ensuring that it optimizes value and continues to live within its cash flow.

Over $500 million of viable projects on Pengrowth's existing asset base were considered for the 2010 capital budget. Capital was allocated using strip prices while ensuring positive economics at a U.S. $60 per bbl West Texas Intermediate ("WTI") oil price, and Cdn $3 per mcf AECO natural gas price. Full year production is forecast to be between 74,000 and 76,000 boe per day, following the anticipated sale of approximately 1,000 boe per day of production in late 2009.

The 2010 capital program is focused 70 percent on oil development and liquids rich gas projects, with the biggest portion directed toward tight carbonate and heavy oil projects. The $192 million drilling and completions budget is expected to result in the drilling of 232 gross wells (153 net) in 2010.

In 2010, $82 million will be spent on operated tight carbonate plays including $27 million at Carson Creek and $21 million at Judy Creek. Pengrowth also plans to spend $15.5 million on its operated heavy oil projects, in addition to an expenditure of $15 million for its pilot Steam Assisted Gravity Drainage ("SAGD") oil project at Lindbergh. At Horn River, Pengrowth's shale gas property, $12 million has been budgeted to drill three wells this winter.

Pengrowth's 2010 capital program is forecast to deliver average daily production volumes of between 74,000 and 76,000 boe per day and remain balanced at approximately 50 percent natural gas and 50 percent crude oil and liquids. Production volume guidance for 2010 reflects the sale of approximately 1,000 boe per day in late 2009. The 2010 capital program is designed to replace a portion of production while retaining cash flow for production additions through acquisitions. The 2010 production estimate makes no adjustment for acquisitions or dispositions that may occur during the year or increased capital spending that may occur as a result of favorable changes in the outlook on commodity prices.

Operating Costs

2010 operating costs of approximately $395 million are not expected to change on a year-over-year basis. Although Pengrowth anticipates an increase in power and labour costs, it is expected that the remainder of its other operating costs will remain essentially flat. The anticipated increases in power and labour costs combined with an anticipated lower average production rate for 2010 has resulted in an estimated $14.40 per boe operating cost for 2010, a six percent increase when compared to the 2009 full year forecast of $13.50 per boe. Pengrowth will continue to actively manage its power usage, the single largest component of its operating costs, through its power shedding and hedging programs. Updated detail on Pengrowth's power hedges is included in the hedging section of this release.

"We are picky, patient and persistent and we intend to spend every cent of our shareholders money as if it were our own" said Derek Evans, Pengrowth's President and Chief Executive Officer. "We are excited about the opportunities that 2010 presents and look forward to delivering exceptional shareholder value in the coming months."