Penn West shares jump after release of accounting review
By Scott Haggett and Ashutosh Pandey
CALGARY Alberta (Reuters) - Penn West Petroleum Ltd said on Thursday a review of its accounting practices showed weak internal controls, but its shares rose nearly 8 percent as it reported a strong, though delayed, second-quarter profit.
The company, one of Canada's largest conventional oil producers, launched the accounting review in late July after its incoming chief financial officer found irregularities that misclassified nearly C$300 million ($273 million) in expenses.
Shares of Penn West, which has often struggled to meet its own production and profit targets, had dropped more than 20 percent after it admitted to the irregularities. The accounting problems undercut Chief Executive Dave Robert's moves to regain investors' confidence by reducing staff, revamping operations and selling off surplus properties.
But the release of the review and the quarterly results showing that the company returned to profit after a loss in the comparable year-ago period reassured investors.
"There wasn't any more damage than what was first filed," said Jeremy McCrea, an analyst with AltaCorp Capital. "Guys are just elated that there isn't any more bad news and that's why we've seen this reaction."
Penn West's shares rose 60 Canadian cents to C$8.33 on the Toronto Stock Exchange. Volume was more than 3.1 million shares, nearly three times the daily average over the past 90 days.
Despite the rise, Roberts said he expects investors to remain cautious about the company's prospects after years of weak results and missed targets.
"We still have a lot of proving to do in terms of execution capability," he told Reuters. "This is a company with a pretty poor track record. ... The market is going to remain in a 'show-me' state for a little while." Continued...