CALGARY - Shares in Penn West Petroleum Ltd. plunged on Wednesday after the company, which has seen a tumultuous 2013 so far, unveiled a new strategy that will see the Alberta-focused oil producer sell up to $2 billion in assets.
The stock dropped more than 17 per cent on the Toronto Stock Exchange to as low at $9.63 before recovering slightly at the close to $9.74, still down $1.89, or 16.25 per cent. Volume was extremely heavy at more than 6.2 million shares.
Penn West (TSX:PWT) said it plans to sell $1.5 billion to $2 billion in assets before the end of 2014. About $485 million of the sales are expected to close before the end of this year, meaning at least another $1 billion will likely be on the market next year.
Other major Canadian oil and gas producers have announced plans to adjust to weak market conditions by selling or spinning off assets that they consider non-core.
But they haven't been having an easy go of it. The CEO of one of those companies, Talisman Energy, on Wednesday described the market as "challenging" and "slow-moving" in its efforts to sell off assets in Canada and overseas.
Penn West said proceeds from its sales will be used to repay some of the money advanced under its credit agreements, as the company seeks to get its debt level in line with peers.
Since the fall of last year, Penn West has reduced its workforce by 30 per cent.
In June, Penn West appointed a senior executive from Marathon Oil, David Roberts, as its new CEO, replacing Murray Nunns.
Around that time, the company also cut its dividend in half and announced the strategic review.
In May, former Suncor Energy Inc. (TSX:SU) CEO Rick George was appointed the company's new board chairman.
Roberts said the new plan will make for a "stronger and more vibrant" company."
"We have refocused our culture on competitive performance and our spending programs to take full advantage of our strong resource positions in Western Canada," he said.
The company also said Wednesday that it has approved a 2014 capital budget of $900 million. About 80 per cent of the total will be targeted on light oil development.
And it said its fourth-quarter dividend will be remain at 14 cents per share, the same as the third quarter but down from 27 cents prior to that.
Also Wednesday, Penn West posted $27 million in net income for the third quarter, turning around last year's loss of $67 million.
The profit of six cents per share was roughly in line with analyst estimates.