Friday, November 28th0.1°C
22246
23488

Penn West Petroleum shares dive after accounting review finds faults

CALGARY - Shares in Penn West Petroleum Ltd. (TSX:PWT) fell sharply Wednesday after the company announced it's reviewing its accounting practices going back several years and will have to restate some of its past financial reports.

Its shares plunged 13.78 per cent or $1.37 to close at $8.57. They had traded as slow as $8.18 earlier in the day on the Toronto Stock Exchange.

Late Tuesday, the Calgary-based oil and gas producer said chief financial officer David Dyck, who started in the role on May 1, found inadequate documentation to support how some of its expenses were classified in the past.

The review will result in a restatement of previous financial reports for at least 2012 and 2013, as well as for the first quarter of 2014, and may delay completion of its full second-quarter report.

The review covers 2014 so far and the four previous fiscal years.

"We have acted quickly and effectively to review our accounting practices. We will take the steps necessary to correct our historical financial statements and we will take appropriate steps to ensure that we avoid a similar situation in the future," board chairman Rick George, the former CEO of Suncor Energy Inc. (TSX:SU), said in a statement.

Among other things, the board's audit committee and its independent advisers have identified $111 million of operating expenses that were classified without adequate support as capital expenditures in property, plant and equipment in 2012 and a further $70 million in 2013.

They also found about $100 million in operating expenses that were incorrectly reclassified as royalty expenses.

Penn West said the review may require it to reduce its 2014 capital spending and royalty expense assumptions, as well as increase operating cost assumptions. That would result in lower funds flow this year than anticipated.

However, its cash and debt balances, production guidance and operations are unaffected.

Separately, Penn said its 2014 production guidance remains between the equivalent of 101,000 and 106,000 barrels per day of crude, gas and liquids.

In the quarter ended June 30, Penn West says it produced the equivalent of about 108,130 barrels per day.

"If you read that release, you will find that our asset quality and execution capability remain strong, our long-term plan for the company remains intact, and importantly today, we are on target to deliver on our promises to our stakeholders," said CEO Dave Roberts.

"As a result of the improvements we have made to the business in the past year, we are a more resilient organization today."

Desjardins analyst Kristopher Zack said the production figures were positive, but the accounting review is just "another distraction" for a company that has been trying to turn itself around.

"Although the company has continued to make solid progress by improving operating efficiencies in its key focus areas, we believe the accounting review will provide another overhang on the stock," he said in a note to clients.

Analysts at Dundee Capital Markets said the financial restatements shouldn't have a material impact. They said the Penn West ship is "heading in the right direction," but it's "not at full steam (yet)."

Penn West has had a tumultuous ride over the past year or so, replacing its CEO, slashing its dividend, cutting its workforce and selling assets.

Follow @LaurenKrugel on Twitter

The Canadian Press


Read more Business News

23643


Recent Trending




Today's Market
S&P TSX14839.39-83.051
S&P CDNX744.92-10.48
DJIA17881.5553.80
Nasdaq4801.741+14.424
S&P 5002071.42-1.41
CDN Dollar0.8751-0.0066
Gold1177.20-19.40
Oil68.85-4.84
Lumber328.50+0.50
Natural Gas4.295+0.144

 
Okanagan Companies
Pacific Safety0.15-0.01
Knighthawk0.01-0.005
QHR Technologies Inc1.30-0.04
Cantex0.04-0.005
Anavex Life Sciences0.20+0.029
Metalex Ventures0.04+0.005
Russel Metals30.00-0.70
Copper Mountain Mining1.98-0.14
Colorado Resources0.130.00
ReliaBrand Inc0.0134-0.0001
Sunrise Resources Ltd0.045-0.005
Mission Ready Services0.320.00

 
23744




FEATURED Property
20874294110 Gallaghers Fairway S.
3 bedrooms 2 baths
$1,290,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Don't stop dreaming!

On Wednesday evening I drove through the Bow Valley in Alberta. It is my old home town... the first place Jackie and I moved to in 1988 when we emigrated. We ended up setting up home there and living...


Second marriage issues

It is not unusual that one or both of the parties planning to marry are approaching marriage for the second time. There are pluses and minuses to this new situation. On the plus side, individuals ente...


The last great Canadian tax shelter

A guide to how flow-through fund limited partnerships can mightily aid your tax planning!The end of the year will raise concerns among many professionals, self-employed persons, business owners and ev...

_



24160

24185


Member of BC Press Council


23370