Analyst Kyle Preston, of National Bank Financial, said in a research note that Penn West is getting a “decent price” of about $82,000 per flowing barrel through the deal, but its impact on the estimated 2016 debt-to-cash-flow ratio is minimal.
“As oil prices remain lower for longer, we are becoming increasingly concerned about PWT’s ability to manage through this downturn, especially as it is forced to sell high-quality assets like Weyburn,” he wrote, adding his 12-month target price is being cut to 50 cents per share from $1
“Frankly, I think they have to sell one of their jewels if they want to survive, the jewel being the Viking, most likely,” Brian Kristjansen, an analyst at Dundee in Calgary, said in a phone interview. The Viking tight oil asset in Saskatchewan produces light crude, generates high returns and is probably worth at least C$800 million, he said.
“The resulting company won’t be as attractive because it’s their highest net-back asset.”
An oil market slump that began last year is keeping prices below $50 a barrel for the U.S. benchmark, curbing cash flow for producers. Calgary-based Penn West will probably violate a covenant on its debt in the first three months of 2016 if it doesn’t sell a key property, Kristjansen said.
The producer’s debt remains “a significant headwind,” at more than six times its cash flow, according to a note by Kristopher Zack at Desjardins in Calgary.
Nov 5 (Reuters) - Canadian oil producer Penn West Petroleum Ltd said some production volumes would be impacted through the first half of 2016 due to issues accessing pipelines
from 2.192 billion last year to 2.249 billion now
Penn West Petroleum (TSE:PWT) Director John Brydson sold 200,000 shares of the company’s stock in a transaction dated Thursday, October 15th. The stock was sold at an average price of C$1.11, for a total value of C$221,960.00.