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Penn West Petroleum Ltd. Message Board

  • lionelman17 lionelman17 Apr 11, 2013 8:26 PM Flag

    Globe on Tues

    2013-04-09 07:49 ET - In the News

    The Globe and Mail reports in its Tuesday edition Penn West Petroleum management is doing its best to market an operational makeover, but for the moment the company's debt burden and its prospects for a dividend cut remain the focal points. The Globe's Tim Kiladze writes Murray Nunns, chief executive officer, stresses that he is focused on bringing new wells on stream this year, adding the company's board is now playing a much more active role after four executives left the company in November. The company's dividend, however, now yields just over 10 per cent. At the moment the company pays out $525-million to shareholders annually, or 56 per cent of expected 2013 cash flows. According to RBC's calculations that payout has to drop to $366-million this year and $318-million in 2014 -- a 40-per-cent cut from current levels. At the end of 2012, net debt was $2.9-billion, and Penn West simply cannot afford to keep paying its dividend while also making hefty interest payments. RBC figures Penn West needs to reduce its debt burden to between $1.5-billion and $2-billion. Management will not admit the dividend could be in trouble. Mr. Nunns calls it "an appropriate component of our business model."

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