Penn West Exploration

Penn West Petroleum Ltd.
dba Penn West Exploration
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Type	Public (NYSE: PWE, TSX: PWT)
Industry	Oil and natural gas
Founded	Calgary, Alberta, Canada (2005)
Headquarters	Headquarters in Calgary; oil and gas wells throughout western Canada
Key people	William E. Andrew, Director & CEO
Products	Oil and natural gas; royalty trust
Employees	1,850 (2008)
Website	www.pennwest.com

Penn West Exploration (formerly the Penn West Energy Trust) (TSX: PWT, NYSE: PWE) is a Canadian oil and natural gas company based in Calgary, Alberta, one of the S&P/TSX 60, the sixty largest companies on the Toronto Stock Exchange. Until the end of 2010 it was one of the companies known as "Canroys" (a shortened form of "Canadian royalty trust").^[2] With a market capitalization in January 2008 of approximately US $9.5 billion, it was the largest oil and gas energy trust in North America.

Penn West Energy Trust was previously an independent exploration and production company named Penn West Petroleum Ltd. In May 2005 it converted into an energy trust, an entity which pays the majority of its earnings directly to shareholders (known as "unitholders" in a trust), in the form of dividends. Penn West has acquired several other trusts since reorganizing as a trust in 2005: Vault, Canetic, and Petrofund. These acquisitions made it the single largest energy trust on the continent.^[3]

Penn West's oil and gas fields are distributed throughout the Western Canadian Sedimentary Basin, a region which is one of the world's largest petroleum reserves. Production comes from three main areas, the "Northern", "Central", and "Plains", areas which stretch from northeastern British Columbia, southeast across central Alberta to southern Saskatchewan, and then along the U.S. border to the border with the province of Manitoba. Penn West projects a production of 200,000 to 210,000 boe (barrels of oil equivalent) per day throughout 2008, and claims a reserve lifetime of 10.2 years as of December 31, 2006, on the known and probable reserves of 482.8 mmboe (million barrels of oil equivalent) throughout their holdings. Of their output, a total of 44% has been natural gas, with oil and NGLs accounting for the remaining 56%.^[3]^[4] In addition, Penn West maintains a project to recover heavy oil from the Peace River Oil Sands.^[5]

Penn West Energy Trust pays a high dividend, yielding an annual rate of between 15 and 16% in early 2008; in addition, it pays out monthly, a relative rarity for equities listed on the New York Stock Exchange. Since the Trust's assets are considered a depletable resource, its dividend payments are not taxed at the regular dividend rate, but rather as return of capital instead of return on investment. This is an additional tax advantage in the United States, and applies to all royalty trusts.^[6]^[4]