Penn West Rises After Announcing Financial Results

Canadian energy company, Penn West Petroleum Ltd, which had misclassified its expenses, rose the highest in past five years after it completed an accounting review while its dividend and output goals were maintained.

The natural gas and oil producer based in Calgary climbed 8.7% to C$8.40 after it rose 12% in intraday from February 2009 as reported by Business Week.

Penn said that it would maintain its forecast and output while reducing its capital spending projection of 2014 by 9% after reclassifying C$367 million in royalty expenses and capital as operating costs over the period of two years from 2012.

Over this review, there are class-action lawsuits against the company, which were started by David Dyck, chief financial officer after he took office on May 1.

National Bank Financial analyst, Kyle Preston said, “The accounting situation does not appear to be as bad as first anticipated. The pending litigation remains an uncertainty and will likely continue to weigh on the stock until resolved.”

According to Bidness ETC, the company had revenue of $591.2 million, which beat the $573.6 million estimate of analysts by 3.1%.

The net income for the period beginning 2012 to Q1 of 2014 was restated higher while the cash flow was reduced. The debt balances and current cash remained unaffected and reserve values and volumes unchanged, as reported by the company.

CEO Dave Roberts said, “We addressed these issues head on and have made significant progress in resolving them. We will continue to treat this matter very seriously and are committed to ensuring that we avoid a similar situation in the future.”

Penn West reported that there was “significant deficiency” in the internal control regarding the control systems and financial reporting and said that it would make changes to processes. Preston said that the per share cash flow of 60% that Penn West reported was 20% more than the National Bank’s estimate.

To contact the reporter of the story: Yashu Gola at yashu@forexminute.com

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