Although I can understand why one would not buy PWE (based on the cash flow statement, which relies too much on cash from financing with equally high "investment" expenditures), I think it is very risky to be shorting the stock at the current price. The problem for shorts is that the assets (proven + probable reserves) have real value, as evidenced by PWE's recent divestment of oil properties. The price received by PWE per flowing barrel ($103,000) and boe of 2P reserves ($19) was a bit light in comparison with other Canadian transactions (see an analysis published by the Calgary Herald last spring, which valued light oil assets at an average price of $133,000 per flowing barrel and $32 per barrel of 2P). However, even after subtracting the latest divestment from PWE's published reserves, the Company should be producing 155,000 boe/day, which could be worth 10-15 billion (depending on gas/oil ratio). Furthermore, the potential of PWE's extensive properties to produce much greater amounts of oil is considerable (i.e, 2P reserves are conservative). In short, with a market cap of about $5 billion (and long-term debt now equal to about $3 billion, taking into account the latest divestment), the true value of the Company's assets is greater (maybe much, much greater) than suggested by the stock price. Indeed, if the Company were sold (either in one transaction or a series of transactions), it would not be inconceivable that the Company would fetch $15 billion. Irrespective of how you do the math, the Company is AT LEAST worth $11/share, and could easily be worth Book Value (with or without Goodwill).
So go ahead and short the Company. Eventually, the market will price the assets correctly. Furthermore, there is a chance that recent changes in management (and an enlightened Board), might just start to control capital "investments", in which case cash flow from operations could actually be sufficient to pay for investments. In the meantime, there appear to be plenty of parties willing to buy PWE's assets.