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3 Comments

    • Penn West Energy: More Questions Than Answers [view article]
      I understand that very minimal amount of reserve is counted from PWE's Peace river oil sands asset. That is because of strict rules enforcing the designation of "proven" or "probable" oil reserves. To be classified as 'proven' reserves, the oil has to be ready to be pumped out, with all the infrastructures in place.

      The 6 to 7 billion bbl mentioned in the potential of the Peace River oil sands is OOIP(original oil in place) ---- far from real reserves. The quality of this oil sands assets appears to be good because this would not require 'mining' to extract, relatively easier to approach.

      It is of note that PWE seems to have a rather conservative reserves figure considering the fact that "proved" reserve is more than 75% of the P+P("probable&quo... plus "proved"), much higher than other companies' figure.







      May 24 09:21 PM
    • Penn West Energy: More Questions Than Answers [view article]
      Here is a pasted information on "standardized distributable cash", which, I assume, is what "funds flow" means. To make a long story short, I think the management's use of "funds flow" in q1 was acceptable as the unusual increase in non cash working capital was a non- recurring event, possibly related to the merger. Inferring from this information, suggesting PWE's dividend might be in danger seems to be way off the mark, in my opinion.

      <<The calculation of standardized distributable cash is, in all material respects, in accordance with the recommendations provided in the CICA publication Standardized Distributable Cash in Income Trusts and Other Flow-Through Entities: Guidance on Preparation and Disclosure. Standardized distributable cash is not a defined term under Canadian generally accepted accounting principles ("GAAP") and does not have a standardized meaning prescribed by GAAP. Standardized distributable cash is defined as cash flow from operations after non-cash working capital items, less: net capital expenditures; restrictions on distributions arising from compliance with financial covenants restrictive at the time of reporting; and limitations arising from the existence of a minority interest. Net capital expenditures represent all capital expenditures incurred during the reporting period. >>

      It certainly is true that PWE needs to improve on its operational performance, in terms of operating cost, reserve replacement efficiency, etc.. But the management did a right thing in acquiring other depressed Conroys( albeit using its depressed stock as currency), before the current run up in energy prices, through dumb luck or not. Bulking up size, without huge sacrifice in terms of per share boe production or reserves, was a right move as size seems to matter in the current environment.

      May 24 02:19 PM
    • Penn West Energy Needs to Show Investors Its Worth [view article]
      Good point. A strong positive, however, for PWE is the long term upward trend for natural gas price due to the rise in global demand. If the nat. gas price stays at current level, operating cash flow of $2.8B for this year is expected, even with somewhat lower oil price. In other words, rising tide seems to be lifting even some rickety ships --- in this case, PWE digesting its recent acquisitions. Bottom line is that PWE's Peace River property is not priced in its current stock price --- a huge plus in terms of valuation. Apr 23 10:30 AM
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