Split, Sale May Help Penn West (PWE) Regain Recent Losses
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Penn West Petroleum Ltd. (NYSE: PWE) could be posed for further gains should a recent revmap of management and vow to enhance shareholder value play out.
Bloomberg noted Tuesday that a break-up of Penn West might mean over 70 percent of possible upside in the name. The company's CDN$5.1 billion in assets should be valued at about CDN$18.20 per share (market valuation of CDN$8.8 billion), or 73 percent above Monday's closing price.
Penn West does carry about CDN$3 billion of debt with production on the decline. It's book value to share is at 0.58 times, or lower than 99 percent of peers in the North American production and exploration segment with valuations over $1 billion.
Penn West could split into two companies: one with stable returns and a solid dividend payout; the other more focused on growth and development.
Assets that could potentially be included in the dividend-paying side include Viking and Spearfish formations, as well as its Cerdium play, on which Penn West is implementing new technology for better oil extraction.
Cardium and Penn West's Duvernay assets could also be sold off with potential proceeds of CDN1.2 billion.
A complete takeover of the company isn't out of the question, given its market cap of around $5.2 billion, down over $5.7 billion the last two years.
Shares of the stock are up 3.4 percent Tuesday.
Bloomberg noted Tuesday that a break-up of Penn West might mean over 70 percent of possible upside in the name. The company's CDN$5.1 billion in assets should be valued at about CDN$18.20 per share (market valuation of CDN$8.8 billion), or 73 percent above Monday's closing price.
Penn West does carry about CDN$3 billion of debt with production on the decline. It's book value to share is at 0.58 times, or lower than 99 percent of peers in the North American production and exploration segment with valuations over $1 billion.
Penn West could split into two companies: one with stable returns and a solid dividend payout; the other more focused on growth and development.
Assets that could potentially be included in the dividend-paying side include Viking and Spearfish formations, as well as its Cerdium play, on which Penn West is implementing new technology for better oil extraction.
Cardium and Penn West's Duvernay assets could also be sold off with potential proceeds of CDN1.2 billion.
A complete takeover of the company isn't out of the question, given its market cap of around $5.2 billion, down over $5.7 billion the last two years.
Shares of the stock are up 3.4 percent Tuesday.
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