Penn West Rises as Rick George Named Chairman: Calgary Mover
Penn West Petroleum Ltd. (PWT), the Canadian oil and natural gas producer with the highest dividend yield, had its biggest gain in 17 months after naming former Suncor Energy Inc. (SU) head Rick George as its chairman.
Penn West climbed 5.6 percent to C$10.04 at 11:21 a.m. in Toronto, after earlier rising the most since November 2011. George, 62, ran Canada’s largest energy company until last year and his appointment at Penn West is effective immediately, the Calgary-based company said in a statement yesterday. It also named Allan Markin, Canadian Natural Resources Ltd. (CNQ)’s chairman until last year, vice chairman.
George’s appointment is giving Penn West “credibility with the markets,” Sam La Bell, a Toronto-based analyst at Veritas Investment Research Co., said in a phone interview today. Penn West has begun driving down drilling costs, which may prevent a dividend cut, and “they brought in somebody on the board level who’s known for running a tight ship.”
The appointments come after Penn West director Jack Schanck replaced eight-year chairman John Brussa on May 1. Penn West is the worst performing stock this year among Canadian energy companies with market values more than C$3 billion ($2.97 billion) after Cenovus Energy Inc. (CVE), according to figures compiled by Bloomberg.
High costs at Penn West were boosting debt relative to cash flow and threatening the company’s dividend, La Bell said. Penn West’s dividend yield of 11.4 percent is the highest among the same group of Canadian energy companies. The stock has six buy, 13 hold and four sell recommendations from analysts.
The dividend continues to be an “ongoing strategic discussion with the board,” Penn West Chief Executive Officer Murray Nunns said on a May 2 conference call with analysts. Clayton Paradis, head of investor relations at Penn West, didn’t immediately return a voicemail seeking comment.
To contact the reporter on this story: Rebecca Penty in Calgary at firstname.lastname@example.org
To contact the editor responsible for this story: Susan Warren at email@example.com