Author Topic: PWE - Penn West Petroleum  (Read 367632 times)

alertmeipp

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Re: PWE - Penn West Petroleum
« Reply #10 on: May 02, 2014, 03:24:54 PM »
It's a rather dramatic change, and it started from the top.


tengen

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Re: PWE - Penn West Petroleum
« Reply #11 on: July 30, 2014, 09:45:43 AM »
Account irregularities at Pennwest. Stock sinking like a rock.

http://www.calgaryherald.com/business/Penn+West+warns+accounting+irregularities/10073522/story.html

I've never really trusted earnings statements from any big company. There's just too many ways to manipulate them. I guess Pennwest had some incompetent accountants to do it in an illegal way. They've been fired and I still have faith in the integrity of the current management team. Note that the irregularities were detected by the new CFO.

My immediate thought is that the market has over-reacted; so I added to my position.

alertmeipp

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Re: PWE - Penn West Petroleum
« Reply #12 on: July 30, 2014, 08:20:58 PM »
Complicated feeling. Lost lots of paper profit today but nice to see the new CFO cleaning house. This will lead to a much stronger company down the road and should help asset sales down the road with cleaned book.

Operationally this is going to the right direction and showing pretty good #s already.

Hope this will be over soon.

yzstevie

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Re: PWE - Penn West Petroleum
« Reply #13 on: July 30, 2014, 08:21:46 PM »
Anyone following the story at Penn West?  A large-cap oil and gas explorations company in Canada.  Stock dropped by 14% on an accounting issue brought up voluntarily by the management.  Think the drop was overdone and provides a good buying opportunity.  Company is in a turnaround phase with excellent new management, and the company is deeply undervalued both on an intrinsic value basis and relative value basis.  Thoughts? 

kevin4u2

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Re: PWE - Penn West Petroleum
« Reply #14 on: July 30, 2014, 08:49:01 PM »
Anyone following the story at Penn West?  A large-cap oil and gas explorations company in Canada.  Stock dropped by 14% on an accounting issue brought up voluntarily by the management.  Think the drop was overdone and provides a good buying opportunity.  Company is in a turnaround phase with excellent new management, and the company is deeply undervalued both on an intrinsic value basis and relative value basis.  Thoughts?

What is your intrinsic value and how did you calculate it?  TIA

ItsAValueTrap

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Re: PWE - Penn West Petroleum
« Reply #15 on: July 30, 2014, 09:02:07 PM »
Account irregularities at Pennwest. Stock sinking like a rock.

http://www.calgaryherald.com/business/Penn+West+warns+accounting+irregularities/10073522/story.html

I've never really trusted earnings statements from any big company. There's just too many ways to manipulate them. I guess Pennwest had some incompetent accountants to do it in an illegal way. They've been fired and I still have faith in the integrity of the current management team. Note that the irregularities were detected by the new CFO.

My immediate thought is that the market has over-reacted; so I added to my position.

Judging from the press release, it seems like the company capitalized expenses that should have been expensed.  This is a classic method for inflating earnings (e.g. Worldcom).

I don't think that the accountants were incompetent.  Somebody told them to do this.
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saltybit

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peter1234

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Re: PWE - Penn West Petroleum
« Reply #17 on: July 31, 2014, 03:27:48 AM »
Account irregularities at Pennwest. Stock sinking like a rock.

http://www.calgaryherald.com/business/Penn+West+warns+accounting+irregularities/10073522/story.html

I've never really trusted earnings statements from any big company. There's just too many ways to manipulate them. I guess Pennwest had some incompetent accountants to do it in an illegal way. They've been fired and I still have faith in the integrity of the current management team. Note that the irregularities were detected by the new CFO.

My immediate thought is that the market has over-reacted; so I added to my position.

Judging from the press release, it seems like the company capitalized expenses that should have been expensed.  This is a classic method for inflating earnings (e.g. Worldcom).

I don't think that the accountants were incompetent.  Somebody told them to do this.

Agreed, old Accounting staff probably was too aggressive and got accountants to sign off on it or even withheld information.


This statement might need further analysis:
Quote
It added it may also cease to be in compliance with debt covenants, adding it is talking with lenders about possibly waiving those covenants.

Andy Dufresne

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Re: PWE - Penn West Petroleum
« Reply #18 on: July 31, 2014, 03:37:25 AM »
Anyone following the story at Penn West?  A large-cap oil and gas explorations company in Canada.  Stock dropped by 14% on an accounting issue brought up voluntarily by the management.  Think the drop was overdone and provides a good buying opportunity.  Company is in a turnaround phase with excellent new management, and the company is deeply undervalued both on an intrinsic value basis and relative value basis.  Thoughts?

yzstevie,

Welcome to the Corner :) Please note that there already is a Penn West thread in existence so it would be better to concentrate all of the conversations there.

Best,

Andy

biaggio

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Re: PWE - Penn West Petroleum
« Reply #19 on: July 31, 2014, 09:05:06 AM »
Chinese trope for crisis=danger + opportunity or something like that.

A few weeks ago I was wishing for a larger position in PWE. Now I have the opportunity.

Concerns ("danger"):

-will there be more accounting issues uncovered
-how will restatements effect operations going forward
-how will restatements effect debt covenants
-are directors/audit committee members that originally signed off on statements the ones looking into this.

Facts ("opportunity"):

i still has good assets with

2p reserves valued at $9B vs EV of ~$6.5B (though I think the value of the oil in this evaluation is overstated if the projected operating costs in the estimate are over stated-anyone more knowledgeable on this correct me if I am wrong)

If they produce 104,000 barrel per day with $29 netback they will have cash flow of just over $1b not bad for EV of $6.5b (15% return)

ii I like new management

-they seem like straight shooter
-so far has done great job operationally
-I am glad they have not had a fire sale on their assets

iii I think PWE can be a good business. I think the world is still going to need oil in 5-10 years

iv restatements occurred under old management

My 5 year outcome probability calculation (number pulled out of my a$$ mostly so may not mean anything but I think might be helpful to think of possibility)

i  Bullish Projection-->
50% =Meets management goal for 2018 of $4.20/fund from op x 7.5 or $32  = $16                             
ii  Base rate-->
23%=No growth in net back EPS $2.24 EPS x 7.5       $17                                 $4
23%= current earnings with 3-4% growth x 7.           $20                                 $5
iv Bear Case--->
   2% economic disaster with oil dropping by 50%  IV cut in half = $4                  $1
   2%bankrupt= shares go to 0                                                                          0                   


Total 5 year estimated probable outcome: $26---> IRR 24% + 6% dividend