Penn West loses $728M on disposal of natural gas assets
Calgary company says improved commodity prices helped it boost earnings
Penn West Petroleum Ltd. of Calgary had a $728-million net loss in the fourth quarter, mostly due to non-cash asset impairment charges related to the company's disposal of natural gas assets late last year as it focuses on light oil production in Western Canada.
The loss amounted to $1.49 per share and compared with a year-earlier net loss of 16 cents per share, when the overall loss was $78 million.
"To date in 2014, we have benefited from stronger than planned commodity prices and a favourable currency climate; however, we remain conservative in our commodity outlook for the remainder of the year," Penn West said in a statement.
The company said it will pay a quarterly dividend of 14 cents per share on April 15. It has been at that level since Penn West cut the payout from 27 cents per share last summer as part of a cost-cutting effort, staff reduction and change in CEO.
Writedown on Manitoba properties
In the fourth quarter, Penn West recorded $742 million of asset impairment charges related to natural gas property, plant and equipment and lower reserve recoveries in its Manitoba properties.
It announced in January, in the current year's first quarter, that it had reached another deal to sell another $175 million of non-core assets in Alberta.
The company said it's doing better than expected with asset dispositions under a strategy adopted four months ago — which called up to $2 billion of divestments by the end of 2014 — and said its organization is 35 per cent smaller than a year ago.
Some analysts said they were unimpressed with details of the January transaction — both in terms of size and price — and Penn West shares fell about 13 per cent over a two-day period to $7.89 on Jan. 23.
The shares have risen since then but remain well off a 52-week high of $13.57 set last summer.