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Penn West cuts workforce by 35% as commodity slide bites

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The company has revised its 2015 production guidance to between 86,000 - 90,000 boe/d (barrel of oil equivalent per day)

The oil price crunch has led Canada producer Penn West Petroleum (TSE:PWT; NYSE:PWE) to reduce its staff by 35%, suspend the dividend and cut back on spending.

The rationale behind the move is to be well positioned when prices firm up again, the company told investors.

The firm has a land base encompassing around 4.3mln acres and said development capital would be focused on its core Viking and Cardium light oil properties in 2016. 

"These light oil plays continue to offer attractive rates of return with short payback periods even at current commodity price levels and existing cost structures. Development will be directed towards primary exploitation in order to reduce payback periods," the firm said.

President and chief executive Dave Roberts added: "Limiting our capital programmes to the funds flow generated from our assets and suspending our dividend are necessary steps.

"Building on a combination of process and efficiency improvements over the past 12 to 18 months, we are taking further actions today to significantly reduce our cost structure without impacting our ability to execute."

The company has revised its 2015 production guidance to between  86,000 - 90,000 boe/d (barrel of oil equivalent per day). 

"Although we continue to view funds flow from operations to be an important metric, we will shift our focus to providing guidance on our controllable costs given the continuing volatility in commodity prices.

"Consequently, we expect our operating costs for the year to be between $19.25/boe and $19.75/boe.," the group said.

 

The 35% cut in the workforce translates to more than 400 full time employees and contractors and cost savings associated with this are expected to be around $45 million per year.

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