People leave the Penn West Tower in Calgary, Tuesday, Sept.1, 2015. Penn West Petroleum and ConocoPhillips laid-off hundreds of employees in Calgary, Alta., Tuesday, Sept. 1, 2015.Jeff McIntosh/The Canadian Press
Embattled energy producer Penn West Petroleum Ltd. is once again at risk of losing a key exchange listing south of the border.
Early Tuesday the company disclosed it no longer meets the listing requirements for the New York Stock Exchange, and a failure to address the deficiency over the next six months would result in it losing the listing altogether.
Such action could significantly affect Penn West's trading volumes. In 2015, the company saw an average of 5.3 million shares traded per day in Canada, while an average of 3.9 million shares changed hands each day on the New York Stock Exchange, representing 42 per cent of total trading volume.
To stay listed on the NYSE, the average closing price of a company's shares over a consecutive 30-day trading period must remain above $1 (U.S.). Penn West's shares averaged 97 cents each for the 30 days ending Dec. 30. If the company's shares fail to meet this requirement for the next six months, "the NYSE will commence suspension and delisting procedures," Penn West said in a statement. The company will continue to trade on the NYSE during this time, and the potential U.S. delisting has no effect on its Toronto Stock Exchange listing.
Penn West received the same warning notice in September, and was able to comply with minimum NYSE listing requirements by early December.
The company's stock has suffered for quite some time, and is down 95 per cent over the past five years. However, Penn West was particularly troubled in 2015 when energy prices cratered. By September the company had suspended its dividend and announced plans to lay off 35 per cent of its staff.
Penn West is wrestling with a heavy debt burden, with senior debt totalling 4.3 times its earnings before interest, taxes, depreciation and amortization. The covenants on its bank loans require the debt load to be less than five times EBITDA.
To get its balance sheet in order, Penn West has targeted asset sales, most recently a 9.5-per-cent stake in the Weyburn oil field in southeast Saskatchewan for $205-million. Last year asset sales totalled $810-million. Because some assets are going at fire-sale prices, Penn West is also racking up impairment charges, including a total of $399-million on its last two asset sales, because they sold for less than book value.
Last quarter Penn West also recorded a $435-million impairment charge largely tied to non-core properties in northeast British Columbia and and the Swan Hills and Wainwright areas of Alberta because of low oil prices.
Tim Kiladze