Penn West's long-term plan includes asset divestitures, debt reduction

By Lisa Kerner

Charlotte, N.C., Nov. 6 - Penn West Petroleum Ltd. said it plans to make up to C$2 billion of asset divestitures and use proceeds to reduce debt.

The company's board and management, following a strategic review process that began in June, developed a long-term business plan that emphasizes a more focused portfolio and profitable production growth. The plan also aims to restore Penn West's balance sheet to more competitive levels, president and chief executive officer Dave Roberts said during a conference call on Wednesday.

Under the plan, Penn West's goal is to become Canada's leading conventional liquids producer.

According to Roberts, the last four months have been a period of active transition for the company. The third quarter proved to be one of Penn West's lowest investment quarters in its history at C$69 million.

Roberts' presentation also highlighted third-quarter debt of C$3 billion, a total debt-to-EBITDA ratio of 2.3 times and narrowed production guidance.

Penn West will tighten up its portfolio with asset divestitures, said Roberts. The plan anticipates about C$485 million of dispositions closing by the end of 2013 and up to an additional C$1.5 billion by the end of 2014.

Total debt is expected to be reduced and managed at between C$1.5 billion and C$1.7 billion once the C$2 billion of anticipated dispositions are completed.

"Our funds flow profile is more than sufficient relative to the periodic and balanced nature of our maturities," Roberts said.

The board also approved a 2014 capital budget of C$900 million focused on improving capital efficiencies and profitability over short-term production. More than 80% of the budget is allocated to light oil development.

Penn West is a Calgary, Alta.-based energy company.

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