Penn West Energy Trust (PWE)

[LouisDesyjr]

They should liquidate - NOW

PWE is a 'zombie'. The recent sale of $321 million only covers the $250 million CAD that they are losing each quarter, so that will pay for the 2015 Q2 expected losses. 2015 Q1 report shows that current liabilities of 794 million CAD, exceeded current assets of 310 million CAD by 484 million CAD.

PWE is just going to be burning through what assets they have, with sales at 'fire sale prices' in order to keep the company going. I expect that every quarter they are going to have to take write downs of at least a few hundred million, as they sell off land/rights to pay for the operating losses, and have to book the loss on the assets as they sell stuff.

It is like someone tearing up the floor boards in their house to burn in the fire place for heat. Eventually, there is nothing left.

If they sell off everything now, maybe they could net 2.5 billion CAD in equity. With about 500 million shares, they could pay out a liquidating dividend of $5 CAD per share.

Every quarter they go on, that number is going to go down, until at some point they have nothing left to sell, or can't sell anything because everything is pledged for loans.

Louis J. Desy Jr.