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Penn West Is On Sale

|Includes:Penn West Petroleum Ltd. (PWE)

PennWest (NYSE:PWE) is one of largest Canadian oil producers. Recent news on accounting review pushed stock well into oversold territory. Using most recent available filing net tangible value is about 11.6 CAD vs. current price of 8.36 CAD. Possible re-classification of about 200M of expenses will not affect the balance sheet much. Of the risk factors I think further dividend cut is possible given on-going net losses. Also, even though current oil price is weak at the moment, it will not stay low for long. Overall, this could be a good medium-term trade with 10.5-11 CAD price target.

Disclosure: The author is long PWE.

Stocks: PWE