Canada — Penn West Petroleum Ltds second-quarter profit more than halved after Alberta wildfires and floods in Saskatchewan hit production, prompting it to lower its full-year output target.
The western Canada-focused companys assets were at the epicenter of several major fires in north central Alberta and flooding in southern Saskatchewan and Manitoba.
The company said extreme flooding, forest fires in the Slave Lake region and third-party facility outages in the second quarter have extended into the current quarter, leading to delays in restoring production.
Penn West, which is one of the largest conventional oil and natural gas producers in Canada, had shut 25,000-30,000 barrels a day of heavy oil production from operations in north-central Alberta.
The wildfires, whipped by high winds, had forced oil companies in Canadas largest energy-producing province to shut off tens of thousands of barrels of output.
The industry continues to be subjected to some of the worst operating conditions experienced in western Canada in the last 30 years, the company said in a statement.
Penn West now expects 2011 production to average 162,000-164,000 barrels of oil equivalent per day (boe/d), down from its prior forecast of 172,000-177,000 boe/d. But the company raised its exploration and development capital budget to C$1.4-C$1.5 billion, from its earlier view of C$1.1-C$1.2 billion.
Demand growth is low in the OECD nations, while drilling costs continue to rise, the company said.
Penn West, which renewed an C$2.25 billion bank facility in June, said it expects to recover production outages in the fourth quarter.
Penn West, which has grown its light-oil production base over the last year, also named Chief Operating Officer Murray Nunns as its chief executive, effective immediately. Nunns takes the reins from William Andrew, who moves to the position of chairman.
For the April-June quarter, net income plunged 64 percent to C$271 million ($273.0 million), or 58 Canadian cents per share.
Analysts, on average, had expected a profit of 22 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Total production fell 5 percent to 156,107 boe/d, while gross revenue rose 28 percent to C$920 million.
The companys focus areas remain the Cardium, Northern Carbonates and the Viking plays. Penn West shares were down 3 percent at C$18.25 in Wednesday morning trading on the Toronto Stock Exchange. ($1 0.993 Canadian Dollars)