Spotting the gap: timely hedging helped Canada's Penn West Energy Trust record record profits in a turbulent third quarter
Penn West scores on hedging
Canada’s Penn West Energy Trust saw third quarter earnings skyrocket on a successful hedging strategy put in place in January, but also recorded gains on higher production.
Penn West reported net earnings in the quarter of C$1.06 billion (US$886 million), or C$2.78 per basic unit, up from C$138 million, or 57 cents per unit, in the same period in 2007.
The figures includes a C$1.11 billion unrealised gain on hedging, compared with a loss of C$18 million in the previous period.
Revenues rose to C$1.24 billion in the quarter from C$628 million in the year-ago quarter.
Penn West’s total production rose in the period to an average 190,177 barrels of oil equivalent per day, from 125,345 boe per day previously.
Capital expenditure in the quarter was C$232 million, bringing total capital expenses, excluding acquisitions, for the year to date to C$757 million. The company kept its full-year capital expenditure target at C$1 billion.
Penn West said it had set a preliminary capital budget of C$800 million for 2009, which could be expanded to C$1 billion or cut to as low as C$600 million, depending on market conditions.
The company said it planned to drill about 210 net operated wells in the coming year.
For the nine month period, Penn West reported net earnings of C$817 million, or C$2.19 per basic unit, up from C$48 million, or 20 cents per basic unit, for the first three quarters of 2007.
Revenue for the year to end September was C$3.68 billion, compared with C$1.82 billion previously.
Average production for the year to date at the end of September was 190,991 boe per day, up from 126,785 boe per day in the first nine months of 2007.