November 2, 2012
PENN WEST PETROLEUM LTD. (TSX - PWT) (NYSE - PWE)
is pleased to announce its results for the third quarter ended
September 30, 2012
. All figures are in Canadian dollars unless otherwise stated.
Our strategy is to unlock intrinsic value for our shareholders by focusing on optimizing our overall business performance and execution, continued resource growth across our dominant positions in four of
five largest light-oil resource plays and balanced financial management. In the near term, we are committed to optimizing capital and operational efficiencies and providing dividend income to our shareholders. As we gain certainty in the outlook for commodity price realizations and cost structures, we are in a position to add production growth through the development of our large light-oil plays.
- Penn West announced agreements in principle for approximately $1.3 billion of pending non-core asset dispositions which demonstrates the value inherent in our base assets and provides us with operational and financial flexibility.
- We released external confirmation of our estimated contingent resources [ (1)] in our Cardium and Peace River areas.
- Our weighting to liquids production reached a new high of 66 percent during the third quarter compared to 63 percent in the third quarter of 2011.
- Third quarter development activities were focused on drilling in the Carbonates and Cardium trends, as well as resumption of tie-ins and facilities construction.
- Funds flow [ (2)] was $344 million ( $0.72 per share - basic [ (2)]) in the third quarter of 2012 compared to $348 million ( $0.74 per share - basic) in the third quarter of 2011. Funds flow for the third quarter of 2012 included $66 million ( $0.14 per share - basic) realized from monetizing a portion of our 2013 crude oil collars and our 2013 foreign exchange contracts.
- Our current 2013 hedge positions include 55,000 barrels per day of our oil production hedged between US$91.55 and US$104.42 per barrel, and 125 mmcf per day of natural gas production at $3.34 per mcf.
- In the third quarter of 2012, WTI crude oil prices averaged US$92.19 per barrel compared to US$93.54 per barrel in the second quarter of 2012 and US$89.81 per barrel for the third quarter of 2011.
- Edmonton light sweet oil traded at a discount of $7.21 per barrel compared to WTI during the third quarter of 2012 (2011 - $4.21 per barrel premium) compared to a discount of $10.32 per barrel during the second quarter of 2012 (2011 - $4.17 per barrel premium).
- In the third quarter of 2012, the AECO Monthly Index averaged $2.19 per mcf compared to $1.83 per mcf in the second quarter of 2012 and $3.72 per mcf for the third quarter of 2011.
(1) Please refer to our "Contingent Resources Disclosures" below.
The terms "funds flow" and "funds flow per share-basic" are non-GAAP
measures. Please refer to the "Calculation of Funds Flow" and
(2) "Non-GAAP Measures Advisory" sections below.
FINANCIAL AND PRODUCTION
- Capital expenditures in the first nine months of 2012, net of property dispositions, were $1,053 million compared to $1,157 million for the first nine months of 2011.
- We drilled 251 net wells, excluding stratigraphic test wells, in the first nine months of 2012.
- Average production for the nine months ended September 30, 2012 was 163,635 boe [ (1)] per day, compared to 161,171 boe per day for the comparative period in 2011.
- Capital expenditures for the third quarter of 2012, net of property dispositions, totalled $405 million compared to $481 million for the third quarter of 2011.
- Average production in the third quarter of 2012 was 160,339 boe per day compared to 161,323 boe per day in the third quarter of 2011. Delays in new facility construction, wet weather and facility outages impacted production.
- In the third quarter of 2012, we recorded a net loss of $67 million ( $0.14 per share - basic) compared to net income of $138 million ( $0.29 per share - basic) in the third quarter of 2011. The change in net income was primarily due to risk management activities as we recorded unrealized losses of $176 million in the third quarter of 2012 compared to $238 million of unrealized gains recorded in the third quarter of 2011.
- On November 1, 2012, our Board of Directors declared a fourth quarter 2012 dividend of $0.27 per share to be paid on January 15, 2013 to shareholders of record on December 31, 2012. Shareholders are advised that this dividend is designated as an "eligible dividend" for Canadian income tax purposes.
- We have agreements in principle to dispose of approximately $1.3 billion of our non-core properties, with combined production of approximately 12,000 barrels of oil equivalent per day. We plan to use the proceeds of the dispositions to repay a portion of advances under our credit facilities. Subject to customary regulatory and other closing conditions, the Company anticipates these dispositions will close prior to December 31, 2012.
Please refer to the "Oil and Gas Information Advisory" section below
(1) for information regarding the term "boe".