Penn West Petroleum reports third-quarter loss, sales down from year ago

CALGARY – A drop in crude oil prices hit the bottom line of Penn West Petroleum Ltd. (TSX:PWT) in the third quarter, but for now it’s not expected to have an impact on spending plans or the company’s dividend.

The Calgary-based company said Wednesday it lost $15 million in its latest quarter, hit by lower oil prices and production. The loss amounted to three cents per sharer, compared with a profit of $34 million or seven cents per share a year ago.

Oil and natural gas sales totalled $590 million, down from $779 million in the same quarter last year.

The drop came as total production averaged 100,839 barrels of oil equivalent per day, down from 133,712 boe a year ago.

In its outlook, the company maintained guidance for 2014 production at an average 101,000 to 106,000 boe a day.

For 2015, Penn West said its board has approved a capital budget of approximately $840 million and the company expected production to average between 95,000 and 105,000 boe per day.

The company said based on the operation’s performance and testing of its business model at the $70 per barrel level, it believes it can hold the course into next year. But it may have to re-evaluate spending plans later in the year, depending on market conditions.

Chief financial officer David Dyck said he’s been hearing concerns from investors and analysts.

“I can reiterate that the company remains confident in its ability to fund its capital expenditure programs and continue to pay a dividend,” he told a conference call.

“We have modelled and assessed our business plan at commodity price levels well below our budget assumptions.”

Penn West’s quarterly dividend is staying steady at 14 cents. Last year, it was slashed from 27 cents during a tumultuous time that saw job cuts and a management shakeup.

The current dividend obligation of $225 million represents about a quarter of forecast funds flow next year — a “reasonable and manageable” amount, said Dyck.

Last month, Penn West announced a deal to sell some of its Alberta non-core assets for about $355 million to an unidentified private company. The assets in south-central Alberta currently produce the equivalent of 7,500 barrels of oil per day, mostly in the form of natural gas and natural gas liquids.

Earlier this year, Penn West’s new management team discovered accounting errors that forced it to restate its financial reports for 2012, 2013 and the first quarter of 2014.

Several class action lawsuits are in the works on behalf of shareholders, who saw the value of their investment plummet by 20 per cent in the week after the problems were revealed.

Penn West shares closed up more than two per cent at $4.74 on the Toronto Stock Exchange on Wednesday.

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