NEW YORK (TheStreet) -- Shares of Penn West Petroleum (PWE) are gaining by 5.93% to $1.43 in mid-morning trading on Tuesday, as some energy and related stocks get a boost from today's rally in oil prices.
The commodity is reversing some recent losses on bullish views that prices could rise and that production in the U.S. could decline. However, the continuing global supply glut is keeping prices in the $45 to $50 per barrel range.
Crude oil (WTI) is higher by 2.23% to $47.17 per barrel and Brent crude is rising by 2.15% to $49.85 per barrel this morning, according to the CNBC.com index.
Penn West Petroleum is a Canada-based senior exploration and production company. The company explores for, develops and holds interests in oil and natural gas properties.
"There are so many bullish views out there that oil will come off the bottom and move higher and that non-OPEC oil production will fall, and some are looking for an excuse to buy," SEB chief commodities analyst Bjarne Schieldrop told Reuters.
"Our framework suggests that (U.S.) production would drop by 35,000 barrels per day in 2016 at the current rig count under our well deferral scenario, more than the 20,000 barrels per day year-on-year decline estimated a week ago," Goldman Sachs said in a note, Reuters reports.
Additionally, Penn West Petroleum will release its 2015 third quarter earnings results before the market open on Thursday.
Separately, TheStreet Ratings team rates PENN WEST PETROLEUM LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate PENN WEST PETROLEUM LTD (PWE) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- PENN WEST PETROLEUM LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, PENN WEST PETROLEUM LTD reported poor results of -$3.49 versus -$1.66 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 119.6% when compared to the same quarter one year ago, falling from $143.00 million to -$28.00 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, PENN WEST PETROLEUM LTD's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$67.00 million or 132.84% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 74.25%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 120.68% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: PWE