Shakeups continue at Penn West Petroleum (NYSE: PWE) with the retirement of Murray Nunns as president and CEO and a slash of dividends and staffing levels by 10% during the next few weeks, the company said on June 4.
Penn West, based in Calgary, appointed David Roberts, former executive vice president and COO of Marathon Oil Corp., as president and CEO, effective June 19. Nunns will officially be on board until July 1.
Clearly trying to right the ship, the announcement comes about a month after Penn West appointed Rick George as chairman and Allan Markin as vice-chairman of the board of directors. George was a mover behind Suncor Energy Inc. ("Suncor"). Markin was prominent in the growth of successful Canadian Natural Resources ("CNRL").
And in November, the company announced that its executive vice president and COO, senior vice president of operations engineering, vice president of corporate planning and vice president, treasury, left the organization.
The company also divested “non-core” assets for $1.35 billion in December, with proceeds used to pay outstanding debt.
George said the company, under new leadership, will focus more efficient business operations, including reducing general and administrative expenses and field operating costs.
“We will be looking for a huge step change in both where capital is spent as well as the efficiency of each dollar invested,” he said. “The company will focus its efforts on execution across the board, maximizing the use of its mid-stream assets and improving the netbacks it receives on each barrel produced.”
The company is also pulling back on its dividends. Effective for its third quarter, Penn West's quarterly dividend will be reduced to $0.14 per common share from $0.27 per common share. The company said the measure will provide Penn West with increased financial flexibility and a sustainable dividend as it continues to improve operating performance.
The second quarter dividend of$0.27 per common share will be paid as declared on May 1, 2013, to shareholders of record on June 28, 2013.
Staffing, too, will be examined at levels in anticipation of cuts. "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% over the next few weeks," George said.
Previous staff cuts of about 10% in began in 2012.
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Play | Near Term | Mid Term (1 – 3 years) | Long Term (3 years +) |
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Spearfish |
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Source: Penn West |
In a letter to shareholders May 2, the company said its first quarter results showed improved performance in capital efficiency and production reliability.
“While this quarter provides a strong data point, our goal is to establish a longer-term trend of this performance. Average production of 142,804 barrels of oil equivalent per day (BOE/d) in the first quarter was on budget. Full year 2013 average production guidance remains 135,000-145,000 (BOE/d)."
Roberts has 30 years of operational experience in the upstream oil and gas business. At Marathon, he served as executive vice president, upstream.
He previously served as executive vice president and managing director for BG Group Plc with responsibility for Asia and the Middle East. He also served as advisor to the vice chairman of ChevronTexaco Corp. from 2001 to 2003, where he provided strategic and operational advice to executive management regarding the company's upstream operations.
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