Hi Paul -
Penn West Petroleum Ltd (PWE) -NYSE
I am going to hold off on my sale of PWE shares. I have other sell candidates that are over valued and probably a good time to lock in those profits.
I stumbled on this article on PWE title "Will Penn West deliver in 2012?"
dailyfinance.com
From the article:"...However, production should see a hike in 2012. With access to major oil trends in the form of Vikings, Spearfish, Carbonates, and Cardium, Penn West is now among the top five light-oil producers in Canada. Management expects to fully scale up production in these key oil plays this year. With capital expenditure expected to move up to $1.7 billion, it translates into a 7%?9% increase in annual average production. Again, a proportional increase in cash flows could prompt management to increase dividends and the yield, which is currently 5.5%. Moreover, analysts are expecting the next twelve month P/E to be around 23 -- a substantial drop from 38, which was the average trailing P/E in 2011.
In short, the company's fundamental game plan looks solid. I believe this company will offer investors an excellent opportunity to invest in a dividend stock..."
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A 7%-9% increase in production will increase cash flow and eventually result in a lower PE. As you pointed out in your post back in November, they have 670,000 acres under lease. Maybe they will use some of that extra cash to drill some new wells. This is one of the areas that have significant light oil which sells at a premium. I will hold my shares (a core position for me) to see how 2012 proceeds. It looks quite promising.
EKS |
