Penn West Petroleum Ltd., the Canadian oil and natural gas producer selling assets to pay down debt, fell to the lowest level in more than three years after announcing the departure of four executives.
Penn West dropped 3.5 percent to C$11.19 at the close in Toronto, the lowest price since March 2009. The Calgary-based company said today that Chief Operating Officer Hilary Foulkes, Senior Vice President Thane Jensen and two other vice presidents have left, effective immediately.
The four executives were terminated because Penn West has been unable to reduce the costs of adding new, reliable production under their watch, Chief Executive Officer Murray Nunns said in a phone interview from Calgary. The company, which has declined 45 percent this year, agreed last month to sell unspecified assets to unidentified buyers for C$1.3 billion ($1.3 billion).
“The market is in full agreement that we have a great asset suite, that the balance sheet was a little stretched and the thing they want to see from us is consistent execution on a capital efficiency basis and on the reliability of production,” Nunns said. “We felt with the existing team that we weren’t going to be able to get there.”
Foulkes, who became COO in August 2011, didn’t immediately respond to a voicemail on her mobile phone seeking comment. Jensen couldn’t be immediately reached for comment.
“I was surprised,” said Sam La Bell, an analyst at Veritas Investment Research Corp. in Toronto who rates the company a sell. “We just listened to their conference call last week and in particular Hilary Foulkes was front and center discussing the strategy.”
A process to boost engineering skills among the company’s top ranks has been under way for two months, Nunns said. David Middleton, Penn West’s executive vice president of engineering, will lead operations in the interim while it seeks to replace Foulkes, either with a new COO or senior engineering executive, Nunns said.
“Shareholders will recognize the imperative on the performance side, that this is a key piece of the puzzle to put together,” Nunns said. The company will release its budget for 2013 next month or in early January, he said.
China Investment Corp., Penn West’s second-largest shareholder according to data compiled by Bloomberg, trusts “management to do whatever they think is appropriate,” Felix Chee, chief representative in Toronto for the company, said in a phone interview.
“A long-term perspective is what we do and some of these short-term perceptions on the company are just some noise we have to go through,” Chee said.