Canadian Oil

[kraftdinner]

Penn West Energy earns $96.3-million in Q1


2007-05-07 07:56 MT - News Release

Mr. William Andrew reports

PENN WEST ANNOUNCES FIRST QUARTER RESULTS

Penn West Energy Trust is releasing its results for the first quarter ended March 31, 2007.

Operations:

- Production averaged 128,447 barrels of oil equivalent per day in the first quarter of 2007 compared with 96,713 boe per day in the same period of 2006.

- Crude oil and NGL production averaged 71,716 barrels per day and natural gas production averaged 340 million cubic feet per day in the first quarter of 2007.

- Penn West invested $216-million on capital development that included $17-million of net property acquisitions and drilled 61 net wells in the first quarter with a success rate of 95 per cent.

Financial:

- Cash flow of $311-million ($1.31 per unit, basic) in the first quarter of 2007 was 28 per cent higher than cash flow of $243-million ($1.49 per unit, basic) realized in the first quarter of 2006, for the most part due to higher production as a result of the Petrofund merger reflected from July 1, 2006, forward.

- Net income decreased to $96-million (41 cents per unit, basic) in the first quarter of 2007 from $144-million (88 cents per unit, basic) in the first quarter of 2006, mainly due to higher depletion charges as a result of the Petrofund merger, a reduction of unrealized gains on commodity contracts and higher financing costs.

- For the third consecutive quarter, operating costs were held flat.

- In April, 2007, as previously reported in Stockwatch, Penn West added a $250-million demand credit facility to increase its bank lines and also priced the proposed private placement of $475-million (U.S.) of notes.

Distributions

- Penn West's board of directors recently resolved to keep the trust's distribution level at 34 cents per unit, per month based on current forecasts of commodity prices, production and currently planned 2007 capital expenditures.

Distribution tax update

On March 29, 2007, the government of Canada introduced legislation that includes the proposed changes to the taxation of income trusts. Under the undue expansion guidance provided by the government, Penn West can increase its equity by approximately $10-billion over the four-year transition period without prematurely triggering the proposed tax. Penn West will remain active with various parties pursuing a re-evaluation of the tax proposals. The trust will also continue to review various tax efficient structural alternatives.

Long-term project updates

During the first quarter of 2007, Penn West drilled 16 horizontal wells and 15 stratigraphic test wells in its Peace River oil sands project. The trust has begun to tie in producing wells to recently constructed production facilities to increase netbacks by reducing trucking costs. On April 11, 2007, the trust closed the previously announced acquisition of producing light oil and natural gas properties, undeveloped lands, additional infrastructure and all-weather roads in the project area. The acquired infrastructure will be important for the future development of the area.

During the quarter, the trust continued to explore an integrated approach to both enhancing light oil recovery rates from large, legacy oil pools and developing conventional resources of heavy oil. A water alternating CO(2) scheme at the trust's Pembina pilot project was initiated and the trust is continuing with detailed engineering work to expand the pilot to use horizontal well technology. At Joffre, CO(2) injection into two new patterns was initiated in the quarter as planned.

SNIP