Penn West (PWE) +3.3% premarket, apparently on speculation the energy company could be up for...

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CaptKorn Comments (99)
 
Well that would be nice!
8 Mar, 08:30 AM Reply Like

Uncle Pie Comments (1646)
 
The SA article suggests that PWE is ON sale, not FOR sale.

No doubt PWE owns some valuable assets, however there must be some reason that the company has not earned its cost of capital for over five years, has a return on assets of only 1.1%, and had a mass exodus of senior management people a few months ago.

No position in PWE
8 Mar, 08:48 AM Reply Like

Brian McMorris Comments (327)
 
They have not earned cost of capital because of poor executive management decisions (I consider the exodus of management as a firing and a net positive), bad and overpriced property acquisitions betting on $150 oil and perhaps counting too on Keystone. If new management manages development / investment more conservatively and pays down debt a bit and refinances at lower interest rates (it is good to have some leverage), there is no reason PWE cannot be cash flow positive and exceed its book value of $19. This is true even at today's $90 price for WTI
8 Mar, 02:03 PM Reply Like

Bob Carl Comments (103)
 
PWE is the result of a motley array of assets from predecessor energy trusts like Acclaim and Canetic.
8 Mar, 11:07 AM Reply Like

Brian McMorris Comments (327)
 
Nothing wrong with that. It is the nature of energy trusts to be motley collections of reserves. At one time back in the 1980s, the majors controlled all those assets. They were left for dead in the late 1980s and early 1990s and picked up by small, local independents. They were reassembled into medium size energy companies like PWE as the price of oil came back in the late 1990s and early 2000s. Such is the ebb and flow of the energy business. But energy assets are real assets and that is where the value is derived. Not even bad management can destroy that value.

No one at SA ever talks about the fracing potential in Alberta, which is just as great as in the Bakken / Williston basin just south. There is also latent value in the deeper reserves once the old reserves are played out.
8 Mar, 02:11 PM Reply Like