Penn West cleans up debt
Penn West released two press releases in May,2015.They announced their quarterly results and the sale of some land.They reported a net loss of $248 million or $.49 per share compared to a net loss of only $89 million or $.18 per share for Q1 2014.The loss of 2015 was almost 3 times as large as in 2014.Revenues fell dramatically also;they were $693 million in Q1 2014 and $355 million in 2015.But Penn West adds another very interesting statistic;total assets fell only from $9.85billion to $9.77 billion in Q1 2015.Penn West has already sold off quite a few assets but because of reevaluations and the quality of land they have, the total value fell by only $80 million(by their estimate).This is very encouraging to shareholders.Penn West also adds that they have 4.5 million acres of land.Most is in Alberta and Saskatchewan.
Royalty Production Lands
In May, Penn West announced that they sold royalty lands for $318 million and applied much of it to debt. But Penn West has also managed to keep their development capital expenditures fairly steady.Capital expenditures were $191million compared to $195 million in 2014.This has helped to enhance the value of their existing acreage.However production has fallen;it was 112,000 boe/day in Q1 2014 and now it is only 95,000 boe/day.But of course the big difference from Q1 2014 is the price of oil.As would be expected funds flow has dropped also from $269 million in Q1 2014 to $112 million in Q1 2015.There is no doubt that Penn West must take on more debt or sell non-core assets to maintain their capital expenditure program.However the second positive factor is that Penn West(like all Canadian producers) is working hard on reducing the cost of producing a barrel of oil.This does help to increase their netback slightly.
Penn West's strategy
Penn West has an unique strategy.It knows that their funds flow has fallen dramatically but they are barely reducing capital expenditures.They are enhancing their capital expenditures by selling non -core assets.The drilling increases the value of their non-producing assets and so total assets has not fallen by much at all.However they are reducing total debt and their cost of production.Penn West has about one of the largest acreages in the Canadaian oil patch;it still has 4.5 million acres(mostly in the Cardium and Viking oil plays).Penn West only has a small dividend but it does have huge potential in it's resources.Buy Penn West for only a slight drop in production and huge oil assets.
Royalty Production Lands
In May, Penn West announced that they sold royalty lands for $318 million and applied much of it to debt. But Penn West has also managed to keep their development capital expenditures fairly steady.Capital expenditures were $191million compared to $195 million in 2014.This has helped to enhance the value of their existing acreage.However production has fallen;it was 112,000 boe/day in Q1 2014 and now it is only 95,000 boe/day.But of course the big difference from Q1 2014 is the price of oil.As would be expected funds flow has dropped also from $269 million in Q1 2014 to $112 million in Q1 2015.There is no doubt that Penn West must take on more debt or sell non-core assets to maintain their capital expenditure program.However the second positive factor is that Penn West(like all Canadian producers) is working hard on reducing the cost of producing a barrel of oil.This does help to increase their netback slightly.
Penn West's strategy
Penn West has an unique strategy.It knows that their funds flow has fallen dramatically but they are barely reducing capital expenditures.They are enhancing their capital expenditures by selling non -core assets.The drilling increases the value of their non-producing assets and so total assets has not fallen by much at all.However they are reducing total debt and their cost of production.Penn West has about one of the largest acreages in the Canadaian oil patch;it still has 4.5 million acres(mostly in the Cardium and Viking oil plays).Penn West only has a small dividend but it does have huge potential in it's resources.Buy Penn West for only a slight drop in production and huge oil assets.
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