CALGARY – The CEO of Penn West Petroleum (TSX:PWT) says the oil and gas producer is changing more than its name as it looks to turn its back on its high-spending past and instead pursue affordable growth with spending budgets tightly tied to commodity prices.
At its annual general meeting Monday, shareholders voted 92 per cent in favour of changing the Calgary-based company’s name to Obsidian Energy. It is to start trading on the Toronto Stock Exchange under stock symbol OBE later this week.
Dave French, president and CEO since October, said the 30-year-old producer chose the name because obsidian is a naturally occurring volcanic glass that can be “sharpened and honed.”
He said Obsidian has little in common with Penn West.
“If you were to go back into the early 2000s, we were probably in the top five producers in Calgary, had tremendous name recognition, but it was time for us to think about who we were going to be going forward,” he said.
Four years ago, Penn West was active in 30 operating areas with two million hectares of drilling rights, French said, adding it occupied 24 floors in two buildings in downtown Calgary and had 15 executives and 15 field offices.
Today, he said, that has been cut to four key areas, about 500,000 hectares of drilling rights, two and half floors of offices, five executives and four field offices.
Production has fallen to about 30,000 barrels of oil equivalent per day from 135,000 boepd. In regulatory filings, it reported 400 workers as of the end of 2016 versus 1,400 at the end of 2013.
During the meeting, investor Jeffrey Gauf rose to call for the company to be sold, saying he has no faith in the board of directors no matter what name is on the front door.
“If you look at what they’ve done, all they’ve done is take assets that they paid a lot of money for, they discounted them and sold them to get rid of debt,” he said in an interview.
He said he has accumulated about half a million shares over the past three years at prices ranging from 60 cents to $3.
So far this year, the closing stock price has varied from $1.61 to $2.69 on the Toronto Stock Exchange.
French said the company plans to spend $180 million this year to drill about 100 wells, adding it has sold forward contracts on about half of its oil output to lock in prices above US$50 per barrel.
Penn West was rocked by an accounting scandal in 2014 that resulted in class-action lawsuits by investors that were settled last year.
Asset sales allowed it to reduce its net debt to $384 million as of March 31 this year compared with almost $3 billion at the end of 2013.
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