PENN WEST PETROLEUM $13.81 - Toronto symbol PWT

PENN WEST PETROLEUM $13.81 (Toronto symbol PWT; Shares outstanding: 472.9 million; Market cap: $6.5 billion; TSINetwork Rating: Average; Dividend yield: 7.8%) is one of North America’s largest oil and gas producers. Its average daily output of 167,420 barrels of oil equivalent is weighted 64% to oil and 36% to natural gas.

In the three months ended March 31, 2012, Penn West’s cash flow per share fell 7.8%, to $0.71 from $0.77, mostly due to lower gas prices.

The company’s shares yield a high 7.8%, but it paid out just 38% of its cash flow as dividends in the latest quarter. That gives it the funds to keep dividends high and yet keep increasing production.

Penn West’s $3.4 billion of long-term debt is a manageable 52.3% of its market cap. The stock trades at 5.8 times the company’s forecast 2012 cash flow of $2.40 a share.

Penn West is still a buy.

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