Penn West Petroleum lowers capex, suspends dividend, cuts jobs

Tue Sep 1, 2015 1:51pm EDT
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(Reuters) - Canada's Penn West Petroleum Ltd (PWT.TO: Quote) on Tuesday announced a number of measures, including a lower budget and job cuts, to chop costs and said it would only spend cash it earned from operations, a step that will shrink its growth prospects.

It was the latest in a string of negative announcements from North American oil producers desperate to survive the slump in oil prices and taking any and all means to right their ships, batten down the hatches and await what they and analysts hope will be a price rebound in 2016.

ConocoPhillips (COP.N: Quote) also said on Tuesday it is laying off 400 employees and 100 contractors in Canada.

Penn West on Tuesday cut its 2015 capital budget for the third time, lowered pay for its board, suspended its dividend and said it would lay off 400 employees, or about a third of its workforce. It also cut its 2015 production forecast.

Shares of the company, which has oil reserves in Alberta, British Columbia, and Saskatchewan, Manitoba and the Northwest Territories, fell as much as 14.6 percent.

The moves were crucial to strengthening the company's balance sheet, Chief Executive Dave Roberts said.

"Limiting our capital programs to the funds flow generated from our assets and suspending our dividend are necessary steps," Roberts said in a statement.

The company, which has been selling assets to reduce debt, said it could cut even more costs later this year.

"It is an indication that they want to live within their means and they do not want to draw a lot of debt," CRT Capital analyst David Epstein said.   Continued...