Myth454

Penn West Energy: More Questions Than Answers

Davy has a solid point and you guys should read his article. It has changed my thoughts on PWE. For Q1 PWE didn't cover its dividend and basically had to fudge the numbers.

Funds Flow is not Cash Flow. It takes into account sales in assets and changes in working capital. For Q1 PWE couldn't pay its dividend from its operating profits and buried it in the accounting.

PWE #s pulled from the 10Q

Cash flow from operating activities - $367
Increase in non cash working capital - $251
asset retirement expenditures - $14
Funds Flow - $632

Distributions Declared - $382
Capital Expenditures - $278

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They couldn't cover their dividend from a quarter with record prices. How much of that promised 2.8 billion is changes in working capital and asset sales. We were told to expect maybe $500 million in non core asset sales. So maybe $800 million is not operating cash flow.

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I am long PWE and am very disappointed, PWE is 40% of my assets. It is still dirt cheap, if they make 2 billion this year in cash flow its still great for a $15 billion dollar company. When the hedges roll off they should hit 3 billion as oil increases. But its not the 3 billion we were told to expect this year.

FreightCar America: The Ugly Duckling?

Pabrai has also taken a position and his hedge fund has also done quite well.