Shares in the Calgary-based oil producer closed down more than four per cent to $10.45 on the Toronto Stock Exchange on Wednesday.
Penn West didn't say specifically how many people would lose their jobs but according to regulatory documents the company had 2,130 employees at the end of Dec. 31.
Penn West said a former senior executive from Marathon Oil, David Roberts, will become the new CEO and president effective June 19.
Penn West's current CEO, Murray Nunns, will retire on July 1 after eight years with the company, including about two as chief executive officer.
Nunns will also resign his seat on the Penn West board.
Penn West's dividend will be reduced to 14 cents per common share, after the second-quarter dividend is paid at 27 cents per share, as previously announced, to shareholders of record as of June 28.
The shakeup follows the appointment of former Suncor CEO Rick George as Penn West's chairman amid what was described as a "renewal process" for the board and executive ranks.
"We will be reviewing all staffing levels and while these are never easy decisions, and we appreciate the efforts of each and every employee, we expect to start by reducing staffing levels by 10 per cent over the next few weeks," George said in a statement issued late Tuesday.
He added that "Penn West has many high quality assets but the company has yet to unlock their complete value. The board is focused on maximizing value for all shareholders."
George thanked Nunns on behalf of the board and said his successor brings more than 30 years of operational experience in the upstream oil and gas business.
Roberts was executive vice-president and chief operating officer at Marathon Oil, and also held management positions at other oil and gas companies. He's expected to join the Penn West board after his employment begins.
Penn West shares have recovered since hitting a 52-week low of $8.82 in mid-April.
Two weeks later, George was appointed chairman of its board and former Canadian Natural chairman Allan Markin was named vice-chairman.