Drilling prospects give them big potential

Article Excerpt

PENN WEST PETROLEUM $18.34 (Toronto symbol PWT; Shares outstanding: 466.9 million; Market cap: $8.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 5.9%) is one of North America’s largest oil and gas producers. The company produces an average of 156,107 barrels of oil equivalent per day (weighted 63% to oil and 37% to natural gas). In the three months ended June 30, 2011, cash flow per share rose 7.1%, to $0.85 from $0.62, mostly due to higher oil and gas prices. The company owns 50% of the huge Cordoba Embayment shale-gas project in B.C. Japan’s Mitsubishi Corp. owns 30%, state-owned Korea Gas Corp. owns 5%, and four other Japanese companies own 3.75% each. Penn West’s partners are spending a total of $850 million to earn their stakes. In response to the federal government’s income-trust tax, Penn West converted from a trust to a corporation on January 1, 2011. However, it has $7.0 billion of tax pools that it is using to offset the new…
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