Penn West Exploration
|Penn West Exploration|
|Traded as||TSX: PWT
|Industry||Oil and natural gas|
|Founded||Calgary, Alberta, Canada (1979)|
|Headquarters||Headquarters in Calgary; oil and gas wells throughout western Canada|
|David Roberts, President, CEO|
|Products||Oil and natural gas|
Number of employees
Penn West Exploration Ltd. (previously known as Penn West Energy Trust) is a Canadian oil and natural gas production company based in Calgary, Alberta, one of the S&P/TSX 60, the sixty largest companies on the Toronto Stock Exchange. From 2005-2011 it was a Canadian royalty trust (CANROY), and as such did not pay federal income taxes. With a market capitalization in January 2008 of approximately US $9.5 billion, it was the largest oil and gas energy trust in North America.
Penn West Exploration was previously an independent exploration and production company named as Penn West Petroleum Ltd. In May 2005, it converted into an income trust and operated under the trade name as Penn West Energy Trust. This was an entity which pays the majority of its earnings directly to shareholders (known as "unitholders" in a trust), in the form of dividends. Penn West has acquired several other income trusts since reorganizing as a trust in 2005: Vault, Canetic, and Petrofund. These acquisitions made it the single largest energy trust on the continent. In January 2011, Penn West Petroleum Ltd. converted back from an income trust into an exploration and production company. Penn West now operates under the trade name as Penn West Exploration.
Penn West's oil and gas fields are distributed throughout the Western Canadian Sedimentary Basin, a region which is one of the world's largest petroleum reserves. Production comes from three main areas, the "Northern", "Central", and "Plains", areas which stretch from northeastern British Columbia, southeast across central Alberta to southern Saskatchewan, and then along the U.S. border to the border with the province of Manitoba. Penn West projects a production of 200,000 to 210,000 bbl (32,000 to 33,000 m3) equivalent per day throughout 2008, and claims a reserve lifetime of 10.2 years as of December 31, 2006, on the known and probable reserves of 482.8 Mbbl (76,760,000 m3) equivalent throughout their holdings. Of their output, a total of 44% has been natural gas, with oil and NGLs accounting for the remaining 56%. In addition, Penn West maintains a project to recover heavy oil from the Peace River Oil Sands.
Penn West Energy Trust paid a high dividend, yielding an annual rate of between 15 and 16% in early 2008; in addition, it paid out monthly, a relative rarity for equities listed on the New York Stock Exchange. Since the Trust's assets are considered a depletable resource, its dividend payments are not taxed at the regular dividend rate, but rather as return of capital instead of return on investment. This is an additional tax advantage in the United States, and applies to all royalty trusts.
Penn West became a Canadian royalty trust (CANROY) in 2005. In 2011 the federal government phased out this tax advantaged structure and Penn West reverted to a corporation.
Canadian royalty trusts (CANROYs)
Penn West was one of a group of oil and gas producers which also included Advantage, ARC Energy, Baytex Energy, Bonavista Energy, Bonterra, Canadian Oil Sands, Crescent Point Energy, Daylight Resources, Enerplus Resources, Enterra, Fairborne Energy, Freehold Royalty, NAL Oil & Gas, Paramount, Pengrowth, Peyto Energy, Progress Energy, Provident Energy, Trilogy, Vermillion Energy and Zargon Energy who did not pay "federal income taxes if they distributed their income to shareholders."
"The resulting double-digit dividend yields grabbed dividend investors’ attention in the mid-2000s. Eventually the government cracked down and starting in 2011, trusts were required to pay the same taxes as regular corporations. Consequently, all trusts converted to corporations, and many cut their dividends."—Harry Domash
On January 1, 2011, Penn West converted from a CANROY to a conventional corporation.
References and notes
- "Company Listing for Penn West Exploration (PWE)". Retrieved 2012-09-23.
- Domash, Harry (2011), Canadian Energy: Exploration & Production, Dividend Detective, retrieved 23 December 2014
- "Penn West Petroleum Ltd (TSE:PWT)", Google Finance, 23 December 2014, retrieved 23 December 2014
- "Penn West "at a glance"", Penn West, nd, retrieved 23 December 2014
- "Penn West Corporate Fact Sheet", Penn West, 2014, retrieved 23 December 2014
- Full description of Penn West at Reuters
- Penn West Energy Trust - Oil and Gas Operations - Heavy Oil: Seal – North Central Area
- Wall Street Journal information page on PWE
- Cattaneo, Claudia (13 August 2011), Penn West went east to stoke oil expansion, Financial Post, retrieved 23 December 2014