NEW YORK (TheStreet) -- Shares of Penn West Petroleum (PWE) were gaining 1.5% to $2.05 in morning trading Wednesday after the oil company announced it will lower its dividend and reduce its capital budget for 2015 due to declining oil prices.
Starting in the first quarter of 2015 Penn West will reduce its quarterly dividend to 3 Canadian cents from 14 Canadian cents. The company also announced it will suspend its Dividend Reinvestment Plan starting with its first quarter 2015 dividend.
Penn West reduced its 2015 capital budget to C$625 million from C$840 million.
"Penn West's business model assumes a conservative long run-term commodity price, however, the recent downturn falls outside our lowest probabilistic expectations," CEO Dave Roberts said in a statement.
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 and generally disappointing historical performance in the stock itself."