Penn West Petroleum Shares of Penn West Petroleum (NYSE: PWE) dropped approximately 7% despite the company reported strong results for the fourth-quarter 2015. This drop in its share price was due to the change of its debt covenant that Penn West feared of being obliged in 2016, due to continued downturn in the strip prices. Nevertheless, this trend is reversing with NYMEX natural gas future prices rising in the second-half of 2016. According to a report released on March 10, 2016 by Premier Energy Group, the NYNEX natural gas future prices showed unfailing improvements in the latter half of 2016 and in 2017. For instance, both the 12 and 24 months natural gas NYMEX strip prices increased slightly from last week, settling at $2.240 dth and …show more content…
For instance, PWE expects its operating costs for the year to be in the range of $18 per Boe to $18.75 per Boe and its G&A to be between $2.50 per Boe and $2.90 per Boe. These new costs levels symbolizes approximately a 20% decrease in its operating costs and $15 million to $20 million reduction in G&A costs in 2016 on an absolute basis as compared to 2015 levels. This should have positive impact on its bottom line performance in 2016. Penn West is able to produce these level of costs savings due to its refined drilling and completions methods such as its transition to new completion technique of a 12-stage and 12-ton technique from a previous 15-stage, 15-ton design. For instance, driven by these techniques the company had produced nearly $36 million in operating costs savings during the fourth-quarter of 2015. This significant costs savings had positive impact on its cash flow, offsetting the decrease in revenue due to lower commodity prices as observed in the chart