Penn West lawsuits stacking up after disclosure of accounting woes
By Scott Haggett
CALGARY Alberta (Reuters) - Penn West Petroleum Ltd, a Canadian oil producer that said last month it had discovered nearly C$400 million ($364 million) in accounting irregularities, faces a growing number of lawsuits after its shares dropped more than a fifth following the admission.
The Calgary, Alberta-based company, one of Canada's largest conventional oil producers, last month said it will delay the release of its second-quarter results and revise its financial statements beginning in 2012. The delay came after it discovered that C$181 million in operating expenditures were misidentified as capital spending over the past two years and C$200 million in expenses were classified as royalty payments.
The changes did not affect the company's net income or cash flow, but its shares have dropped 21 percent since it revealed the errors, raising the ire of investors who have launched two class action suits in Canada. At least 18 U.S. law firms have said they may pursue litigation against the company.
"We're deciding what the best forum may be to pursue the claim," said Clint Docken of Calgary-based class-action firm Docken Klym, which filed a C$400 million suit earlier this month in the Alberta Court of Queen's Bench against the company and its management.
The statement of claim says the company should have known its financial statements were misleading. Penn West did not immediately return calls seeking comment on the allegations.
Docken said his firm is working with an Ontario-based counterpart and the case may be heard in Alberta or Ontario.
Another Ontario firm, Toronto-based Rochon Genova LLP, said on Tuesday it has also commenced a class-action suit. The firm could not be reached for further comment.
Penn West shares rose 25 Canadian cents to C$7.94 on Tuesday on the Toronto Stock Exchange. The shares have dropped 38 percent over the past 12 months, the worst performance among the stocks included in the exchange's energy index.
(Reporting by Scott Haggett; Editing by Cynthia Osterman)
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