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LONDON, UK / ACCESSWIRE / January 10, 2017 / Active Wall St. blog coverage looks at the headline from Penn West Petroleum Ltd. (NYSE: PWE) as the Company reported on January 05, 2017, its Q4 2016 operational and production update and also announced Senior Management changes. The oil and natural gas producer announced an increase of its total capital budget to $180 million in 2017 from $150 million and stated that its 2017 capital budget is expected to provide approximately 15% production growth in its key development areas from Q4 2016 to Q4 2017. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.
One of Penn West Petroleum's competitors within the Oil & Gas Drilling & Exploration space, Concho Resources Inc. (NYSE: CXO), is expected to report its fiscal Quarter ending December 2016 earnings on February 21, 2017 after market close. AWS will be initiating a research report on Concho Resources following the release of its next earnings results.
Today, AWS is promoting its blog coverage on PWE; touching on CXO. Get all of our free blog coverage and more by clicking on the links below:
Q4 2016 Operational Update
In Q4 2016, Penn West completed its second half drilling program of 5 Cardium wells, 11 Alberta Viking wells, and 19 Peace River oil wells. The Company stated that H2 2016 drilling program contributed over 3,000 Boe per day of production on December 31, 2016.
Penn West stated that in the J-Lease area of Pembina, it successfully fracture-stimulated the 2 wells drilled in September 2016, using a cemented liner system, and brought the wells on production in November 09, 2016. Penn West noted that the wells encountered higher than expected pressure and have recently been optimized and are performing at 130 bbls of oil per day per well. In the Crimson area of Willesden Green, Penn West drilled the second and third wells of its three well development program in October and completed all three wells in November 2016.
In the Peace River area, Penn West drilled and rig released the remaining 17 wells of its 19 well second half program. The Company stated that through simultaneous drilling and facility build operations, it was able to reduce per well costs to $2.4 million, or approximately 15% below budget. The Peace River wells are averaging 300 bbls/d of oil in the first 30 days of production.
In the Alberta Viking, Penn West brought 9 wells on production in Q4 2016. The Company stated that these wells are performing ahead of expectations with average to date per well production rates of 130 bbl per day of oil and 220 Boe per day of total volumes. Penn West expects to have the last 2 wells of the program on stream in January 2017.
Q4 and FY 2016 Production
Penn West announced that Q4 2016 volumes averaged approximately 38,500 Boe per day, bringing its FY16 production to 55,000 Boe per day. Penn West FY16 Exploration and Development capital expenditures were approximately $80 million, plus $15 million for decommissioning expenditures.
Asset Disposition Program Finalization
In Q4 2016, Penn West received an additional $20 million in proceeds for a total of $95 million in proceeds in H2 2016. The Company announced that it is under agreement discussions to complete transactions for additional cash consideration of approximately $80 million. Penn West anticipates receipt of the remaining cash proceeds early in Q1 2017.
Senior Secured Debt
In Q4 2016, Penn West reduced the capacity available under its revolving syndicated bank facility to $600 million from $1.2 billion. This move is expected to save Penn West approximately $2.5 million annually in reduced standby fees. As at December 31, 2016, the Company had approximately $330 million drawn on its bank facility.
Senior Management Changes
Penn West reported that David Dyck, Chief Financial Officer, and Gregg Gegunde, Senior Vice President of Exploitation, Production and Delivery, will be departing from the Company. Mr. Dyck has served in his current role for nearly three years, and Mr. Gegunde has served Penn West for over 18 years in a variety of leadership roles.
The Company announced that David Hendry, Penn West's Vice President of Finance for the last two years, will assume the position of CFO. Mr. Hendry is a Chartered Accountant, and brings over 25 years of finance experience, most recently as finance Vice President at Talisman Energy Inc. where he also served overseas for nine years in the Norway and UK North Sea offices.
2017 Capital Budget Details
Penn West announced that it will focus on integrated waterflood development in Pembina and Willesden Green, combining new horizontal producers with simultaneous injection drilling to support reserve development and arrest base decline. The Company's plan contains a 55 well program, including 45 vertical injection wells to provide pressure support for 2015 & 2016 horizontal producers, and drill new horizontal producers in H2 2017.
Penn West reported an increase the development pace in the Peace River area with a program of 24 producing wells. The Company is currently carried on 90% of its capital and operating commitments through its joint venture partner, and forecasts the carry to finish by the end of 2017.
Penn West also disclosed that it will extend its reach by drilling 3 Mannville wells in 2017, the Company's first operated development into the multi-horizon potential across the Cardium area acreage, and partnered on an additional 4 Mannville wells. These wells have liquid yields in the 30-40 bbls/mmscf and deliver attractive economics competitive with the rest of its portfolio.
Overall, Penn West's $180 million total capital budget is expected to deliver FY17 production of 27,000 – 29,000 Boe per day, approximately two-thirds of which will be liquids, with 2017 exit rates 15% over Q4 2016 production volumes in its key development areas.
On January 09, 2017, Penn West Petroleum's share price finished the trading session at $1.94, falling 4.90%. A total volume of 2.81 million shares exchanged hands, which was higher than the 3 months average volume of 2.52 million shares. The stock has surged 38.57% and 177.14% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 9.60%. The stock has a dividend yield of 1.55% and currently has a market cap of $914.75 million.
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