Penn West to Cut Jobs, Dividend, Mull Deals With New CEOJim Polson and Rebecca Penty
Penn West Petroleum Ltd., the third-worst performing Canadian oil and natural gas producer in the past year, will replace its chief executive officer, cut staff, lower the dividend and consider divestitures.
David Roberts, former chief operating officer of Marathon Oil Corp., will replace Chief Executive Officer Murray Nunns June 19, Calgary-based Penn West said late yesterday in a statement.
Penn West cut the dividend to 14 cents from 27 cents, will cut staff by 10 percent within weeks and “significantly” reduce headquarters and field costs to revive profit, according to the statement. All strategic options will be reviewed, according to the statement.
“The strategic review process could potentially result in a corporate split which would likely be well-received,” Allan G. Stepa, a Calgary-based analyst for Desjardins Securities Inc., wrote today in a note to clients. Roberts, a 30-year industry veteran, “will provide fresh outside perspective on the company’s current challenges,” he wrote.
Shares fell 2.2 percent to C$10.66 at 11:24 a.m. in Toronto. They have declined 22 percent in a year.
Investors had anticipated a dividend cut, wrote Stepa, who rates the shares at buy. Penn West kept its full-year production and capital spending forecasts.
Former Suncor Energy Inc. CEO Rick George took over as chairman last month after Penn West reported $C217 million ($210 million) in losses over the past three quarters. The shares had plunged 39 percent in the 12 months prior to George’s appointment.
“We will be looking for a huge step change in both where capital is spent as well as the efficiency of each dollar invested,” George said in today’s statement.
Nunns will retire on July 1 and also resign from the board of directors, according to the statement.