November 3, 2011
- All $s are CAD unless otherwise mentioned
PENN WEST PETROLEUM LTD. (TSX: PWT) (NYSE: PWE)
is pleased to announce its results for the third quarter ended
September 30, 2011
Over the last two years, Penn West has demonstrated the ability to add value through the application of horizontal multi-stage technology to our assets. From the beginning of 2010 to year end 2011, we anticipate increasing our light-oil production to 51 percent of our production from 39 percent and our total liquids production to 66 percent from 57 percent. For 2012, Penn West targets a seven to nine percent annual average production growth rate and a further increase in its liquid weighting prior to the disposition of non-core assets.
- Penn West has dominant and leading positions in four of Canada's five largest light-oil producing regions. This provides us with unrivaled leverage to low-risk, large-scale light-oil development. Since 2009, our focus has been to appraise our significant oil resources with an emphasis on optimizing the application of evolving drilling and completions technology. These activities have provided Penn West with an inventory of drilling locations to fuel light-oil growth well into the future. In 2012, we will further shift our capital spending into large-scale development in the Cardium, Carbonates, Spearfish and Viking oil trends. To maximize efficiency, we will drill on a continuous basis to the fullest extent possible. Resource appraisal activities will be focused on Peace River oil sands, Cordova shale gas, enhanced oil recovery and selected exploratory plays.
- Funds flow (1) was $348 million in the third quarter of 2011, a 30 percent increase from the $267 million reported in the third quarter of 2010 due to stronger commodity prices and an increase in our weighting to light-oil production and a 12 percent decrease from the $396 million reported in the second quarter of 2011 due to lower commodity prices. Basic funds flow was $0.74 per share (1)in the third quarter of 2011 compared to $0.59 per share in the third quarter of 2010 and to $0.85 per share in the second quarter of 2011.
- Net income for the third quarter of 2011 was $138 million ( $0.29 per share-basic) compared to $304 million ( $0.67 per share-basic) in the third quarter of 2010 and $271 million ( $0.58 per share-basic) in the second quarter of 2011. Net income in the prior periods included gains on asset dispositions, including a $368 million gain on the formation of our joint venture in the Cordova Embayment in the third quarter of 2010 and a $127 million gain on minor property dispositions recorded in the second quarter of 2011.
- Average production for the third quarter of 2011 was consistent with our guidance at 161,323 boe (2) per day compared to 156,107 boe per day in the second quarter of 2011. Third quarter activities were concentrated on restoring production and on resuming full operations in areas affected by fires and floods in the second quarter.
- Our production was weighted 63 percent to oil and liquids in the third quarter of 2011 compared to 60 percent in the third quarter of 2010.
- Capital expenditures for the third quarter of 2011, including net property acquisitions, totalled $481 million compared to $357 million for the third quarter of 2010. For the first nine months of 2011, capital expenditures, including net property dispositions, totalled $1,157 million including land expenditures of $172 million and the drilling of 318 net wells primarily focused on our suite of light-oil resource plays.
(1) The terms "funds flow" and "funds flow per share-basic" are non-GAAP measures. Please refer to the "Calculation of Funds Flow" and "Non-GAAP Measures Advisory" sections below. (2) Please refer to the "Oil and Gas Information Advisory" section below for information regarding the term "boe".