Financial Highlights

Penn West's corporate strategy is to provide shareholder return through a combination of oil production growth and a stable dividend. We have focused investment over the past several years on establishing the growth potential of the largest light-oil inventory in Western Canada. In three years, we have proven that we can execute on a large scale using horizontal multi-stage fracture technology. We have applied the technology from a standing start to producing over 35,000 boe per day from horizontal wells. We acquired complimentary land positions in our existing plays and emerging trends with a strong weighting to oil. Throughout this period, we maintained capital discipline, increased the term of our debt capital and disposed of non-core assets to partially fund our capital programs while conserving our balance sheet. The first quarter results are a product of our approach to the business.

  • Average production in the first quarter of 2012 was 167,420 boe (1) per day, after the effect of approximately 4,500 boe per day of asset dispositions in January, compared to 168,801 boe per day for the fourth quarter of 2011. 
  • First quarter average liquids production was in excess of 107,000 boe per day, of which approximately 90 percent was oil.
  • Capital expenditures for the first quarter of 2012, including net property dispositions, totalled $338 million compared to $436 million for the first quarter of 2011. Our capital guidance for 2012 remains $1.3 billion to $1.4 billion, net of acquisition and disposition activity in the first quarter of 2012.
  • Funds flow (2) was $337 million ($0.71 per share - basic (2)) in the first quarter of 2012 compared to $356 million ($0.77 per share - basic) reported in the first quarter of 2011 primarily due to lower natural gas prices and wider Canadian crude oil differentials offset by higher WTI oil prices.
  • Net income for the first quarter of 2012 was $59 million ($0.12 per share - basic).
  • Proceeds on net property dispositions in the first quarter of 2012 totalled $322 million.

 

  Three months ended
March 31
  2012 2011 % change
Financial (millions, except per share amounts)
Gross revenues (1) $870 $844 3
Funds flow 337 356 (5)
Basic per share 0.71 0.77 (8)
Diluted per share 0.71 0.77 (8)
Net income 59 291 (80)
Basic per share 0.12 0.63 (81)
Diluted per share 0.12 0.63 (81)
Capital expenditures, net (2) 338 436 (22)
Debt at period-end (3) 3,397 2,838 20
Dividends paid (4) $127 $41 100
Payout ratio (5) 38% 12% 26
Operations
Daily production
Light oil and NGL (bbls/d) 89,029 85,651 4
Heavy oil (bbls/d) 18,170 18,698 (3)
Natural gas (mmcf/d) 361 371 (3)
Total production (boe/d) 167,420 166,135 1
Average sales price
Light oil and NGL (per bbl) $84.16 $80.07 5
Heavy oil (per bbl) 72.68 62.82 16
Natural gas (per mcf) $2.29 $3.79 (40)
Netback per boe
Sales price $57.59 $56.82 1
Risk management loss (1.24) (0.79) (57)
Net sales price 56.35 56.03 1
Royalties (10.59) (10.04) 5
Operating expenses (17.93) (15.92) 13
Transportation (0.49) (0.51) (4)
Netback $27.34 $29.56

(8)

 

(1) Gross revenues include realized gains and losses on commodity contracts.

 

(2) Includes net asset acquisitions/dispositions and excludes business combinations.

 

(3) Comparative debt at December 31, 2011 was $3,219 million.

 

(4) Includes dividends paid prior to those reinvested in shares under the dividend reinvestment plan. In 2011,  we began paying dividends on a quarterly basis. The last monthly distribution payment as a Trust was declared in December 2010 and paid in January 2011 ($0.09 per unit). Our first quarterly dividend ($0.27 per share) as a corporation was paid in April 2011.

 

(5) Payout ratio is calculated as dividends paid divided by funds flow. The term “payout ratio” is a non-GAAP measure. See “Non-GAAP Measures Advisory” section.