Penn West Petroleum Ltd.
) plunged 14.8% over the last two trading sessions to close at
$7.85 on Jul 30. The fall was precipitated by the announcement on
Jul 29 of an internal review of financial results in 2014 and four
previous years. In the review, the historical numbers would be
examined by the board's audit committee and independent advisors.
This review process however would delay the release of
second-quarter financial results.
The review arises from accounting practices that came to the
attention of the company's new senior vice president and chief
financial officer, David Dyck, who assumed that position on May 1,
2014. The bone of contention in for the review includes certain
entries which appear to have been made to reduce operating costs
and increase the reported capital expenditures and royalty
This will result in the company restating its historical capital
expenditure plans, royalty expenses, cash flow and raise its
operating cost forecast for 2014. However the restatement may also
result in the company exceeding its debt agreements. To mitigate
this, management has already inititated discussion with its lenders
to revise the ongoing debt agreements.
The internal review came over the heels of the ongoing turnaround
attempt by the Chief Executive Officer Dave Roberts who came at the
helm only in Jun 2013. The incumbent management's effort for the
turnaround which included asset sales, slashing dividends and job
cuts, so far has not been successful. The Calgary-based company
reported number in the red in the last three out of four quarters.
Penn West Petroleum is an exploration and production company,
acquires, explores, develops, exploits, and holds interests in
petroleum and natural gas properties and related assets in western
Canada. Its properties are located in Alberta, British Columbia,
Saskatchewan, Manitoba, and the Northwest Territories, Canada; and
Wyoming in the U.S.
Penn West Petroleum currently carries a Zacks Rank #3 (Hold). Other
better-ranked stocks in the same sector include
Newfield Exploration Co.
Weatherford International plc
Cameron International Corp.
). All these stocks sport a Zacks Rank #1 (Strong Buy).
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