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Penn West Exploration Announces Its Financial Results For The Second Quarter Ended June 30, 2013

Stocks in this article: PWE PWT

Second quarter 2013 production was ahead of plan as we reduced our cycle times from the start of drilling wells to on production. This continued to result in new production coming on-stream ahead of plans and downward trending costs. For the first six months of 2013, average production was 141,436 boe per day, in-line with our expectations and our annual average production guidance. Production for the second quarter of 2013 and year-to-date in 2013 was lower than the corresponding periods of 2012 due to the asset dispositions completed in the fourth quarter of 2012.

During the second quarter of 2013, exploration and development capital expenditures totalled $112 million (2012 - $329 million). Second quarter development activities were focused on completion and tie-in work from our winter drilling program, notably in the Viking and Spearfish plays. For the first six months of 2013, exploration and development capital expenditures totalled $539 million (2012 - $989 million).

We remain on target to meet our capital guidance for 2013. The incremental capital wedge of $300 million previously contemplated by the Company will not be invested in 2013.


Funds flow for the second quarter of 2013 was $278 million ( $0.57 per share - basic) and ahead of budget due to stronger crude oil prices and narrower WTI to Edmonton light-oil differentials. This compared to $267 million ( $0.55 per share - basic) in the first quarter of 2013 with both quarters including the effect of the late 2012 asset dispositions.

In the second quarter of 2013, we recorded a loss of $40 million ( $0.08 per share - basic) primarily due to unrealized foreign exchange losses on our U.S. denominated debt, as a result of the weakening of the Canadian dollar relative to the US dollar.

For the second half of 2013, we currently have 55,000 barrels per day of crude oil production hedged between US$91.55 and US$104.42 per barrel and approximately 175,000 mcf per day of natural gas production hedged at $3.43 per mcf.

For the first six months of 2014, we have 26,000 barrels per day of crude oil production hedged, with 20,000 barrels per day swapped at an average price of US$93.74 per barrel and 6,000 barrels per day collared between US$92.00 and US$98.67 per barrel. Additionally, we have 2014 natural gas production hedged with 90,000 mcf per day swapped at $3.90 per mcf and 50,000 mcf per day collared between $3.41 per mcf and $4.17 per mcf.


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