The Calgary-based company says its dividend will drop to three cents per share, starting with the April 15 payout to shareholders, from 14 cents per share.
The 2015 capital budget is also being reduced to $625 million, which is $215 million or about 26 per cent less than anticipated in Penn West's previous guidance issued Nov. 17.
In the month that folowed that announcement, the price of crude has fallen dramatically — causing many producers to rethink their plans.
Penn West's previous capital plan for 2015 assumed crude oil would average at US$86.50 per barrel but the revised plan has reduced that to US$65 barrel — still higher than the current price.
"Penn West's business model assumes a conservative long run-term commodity price; however, the recent downturn falls outside our lowest probabilistic expectations," Penn West president and CEO Dave Roberts said in a statement.
"We have the advantage of being able to adjust our spending profile across a diverse portfolio of assets to maximize our returns and focus on higher cash returning assets in such a commodity price environment."
Penn West shares continued to rally on Wednesday, as part of a widespread trend on the TSX energy sector. Penn West broke a string of losses on Tuesday and hit an intraday high of $2.69 on Wednesday. The stock is still down from a month ago, when it closed at $4.72 on Nov. 17.