Penn West nearly doubles capital spending plans to $180M

Penn West Petroleum Ltd. is preparing to boost drilling activity and production output in 2017 with a $180-million capital budget — nearly double what it allocated last year.

It's the latest in a series of planned capital spending expansions from Alberta energy companies, many of which are looking to grow in 2017 after an extended period of contraction in the wake of the 2014 oil price crash.

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Calgary-based Penn West spent much of 2016 selling assets and grappling with its debt amid low crude prices.

Its 2017 budget includes $160 million for exploration and development and $20 million for decommissioning expenses.

That compares with $80 million for exploration and development and $15 million for decommissioning in 2016.

It said Thursday that its 2017 plan calls for production in its key development areas to be 15 per cent higher by the fourth quarter, compared with the same period of 2016.

Other companies boosting capital spending

The announcement from Penn West follows several other reports of planned capital spending expansions in the oil and gas sector.

Statistics Canada tracks major "economic events" in the industry, and in December those included:

• Calgary-based Canadian Natural Resources Limited announced its 2017 capital budget is targeted at approximately $3.890 billion. The company said it anticipates total 2016 capital expenditures to be $3.845 billion.
• Calgary-based Husky Energy Inc. announced its capital expenditure program for 2017 will be in the range of $2.6 billion to $2.7 billion, up from about $2.0 billion in 2016. The company also announced it had sanctioned several new projects, including three new Lloyd thermal projects with total design capacity of about 30,000 barrels per day at Dee Valley, Spruce Lake North and Spruce Lake Central, with first production for all three expected in 2020.
• Calgary-based Crescent Point Energy Corp. announced a $1.45 billion capital expenditures budget for 2017, up from its 2016 capital expenditures guidance of $1.1 billion. The company said approximately $1.29 billion, or 89 per cent of its 2017 capital budget, has been allocated to drilling and development activities, including the drilling of approximately 670 net wells.
• Calgary-based Cenovus Energy Inc. announced it plans to invest between $1.2 billion and $1.4 billion in 2017, a 24 per cent increase compared to the company's forecast capital spending for 2016. The company said the 2017 budget includes capital to resume construction of the Phase G expansion at Cenovus's Christina Lake oil sands project.
• Calgary-based TransCanada Corporation announced its wholly-owned subsidiary, NOVA Gas Transmission Ltd., will move forward with a $655-million expansion of its NGTL System, the Saddle West Project, which is expected to increase total natural gas transportation capacity by approximately 355 million cubic feet per day. The company said it expects construction to start in 2018, subject to regulatory approvals.

Executive changes at Penn West

Penn West also announced a change in senior management, with the departures of chief financial officer David Dyck and senior vice-president for exploration and production, Gregg Gegunde.

David French, who has been Penn West's president and CEO since replacing David Roberts in October, said the departures "reflect a natural evolution of the company" as it evolves into a smaller company.

Penn West said its new chief financial officer is David Hendry, who has been vice-president of finance for two years.

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