The Calgary-based company said the review will lresult a restatement of previous financial reports for at least 2012 and 2013, as well as for the first quarter of 2014, and may delay completion of its full second-quarter report.
"We have acted quickly and effectively to review our accounting practices. We will take the steps necessary to correct our historical financial statements and we will take appropriate steps to ensure that we avoid a similar situation in the future," board chairman Rick George said in a statement.
Among other things, the board's audit committee and its independent ad visors have identified $111 million of operating expenses were classified as capital expenditures in property, plant and equipment without adequate support in 2012 and a further $70 million in 2013.
They also found about $100 million in operating expenses that were incorrectly reclassified as royalty expenses.
Penn West said that the review may require it to reduce its 2014 capital spending assumptions, as well as its royalty expense assumptions, and increase operating cost assumptions — resulting in reduced funds flow this year than anticipated.
However, Penn West also says its 2014 production guidance remains between the equivalent of 101,000 and 106,000 barrels per day of crude, gas and liquids.
In the quarter ended June 30, Penn West says it produced the equivalent of about 108,130 barrels per day.