By reading the latest earnings report it appears that Penn West is attempting to become a smaller but more profitable company. They have a long way to go to get to their desired 110% sustainable ratio. Basically a 110% sustainable ratio means the company will be spending 10% more every quarter than it takes in. Try that with your personal budget and see how it turns out for you long term.
This quarter funds flow was up while capex and production was down but the company only earned six cents per share while paying out .14 cents per share in dividends.. This was accomplished by selling off properties producing 12,500 barrels, shutting in non-economic wells, and eliminating 25% of the work force. The other factor that led to a higher cash flow was the higher price of crude oil offset somewhat by a lower price of natural gas.
With WTI prices falling I don't see much here to get excited about.
You nailed it hardmetalman. They continue to cannibalize the company to pay the bills. They will indeed become smaller, as they have done for the past 5 years. They spend more than they make, they have not earned their cost of capital for more than 6 years now, and when they get in a pinch, they sell more "non-core assets". You would have to believe that this company is made of nothing more than non-core assets the way they sell them off. As you said, they cuts heads and had super high oil prices with good price hedges, and yet they could only turn in 6 cents per share. Q4 will be a disaster with the plunge in crude and the winter maintenance schedule delays.