03/10/2016 09:31 EST | Updated 03/11/2017 00:12 EST

Penn West seeking leeway from lenders, posts $1.6-billion quarterly loss

CALGARY — Penn West Petroleum, which posted a $1.6-billion net loss for the last three months of 2015, is looking for some leeway from its lenders.

The Calgary-based crude producer said Thursday that it should finish the first quarter onside with its debt agreements, but warned that won't be the case by the end of June if low oil prices persist.

The company said it is in talks with bank lenders and senior noteholders about amending agreements. It's also looking at more asset sales on top of the $800-million worth it closed last year and at selling hedging positions. 

"Although we maintain strong relationships with our key lenders and have had initial discussions with them with respect to proposed amendments, there can be no assurance that we will be able to reach appropriate agreements with them," Penn West cautioned.

Penn West's staff count is down about 40 per cent from mid-2015 and its capital budget for this year is a meagre $50 million — 90 per cent lower than in 2015.

U.S. benchmark crude is at around US$38 a barrel — an improvement from the lows it touched earlier this year but still a dramatic drop from mid-2014 highs of US$108 a barrel and below what many producers need to be profitable.

On a conference call with analysts, CEO David Roberts said painful measures taken as a result of the downturn in crude prices will pay off.

"The important thing is we are now a company that is fighting fit for a mid-US$40 oil world," he said.

"The fact is, the market will turn and it will be companies like ours that use this time to get leaner, get smarter and get tougher that are going to succeed."