Comments on: Penn West Energy Q4 2008 Update

By: Davy Bui

Davy Bui — Thu, 26 Feb 2009 18:44:07 +0000

Bob, I’m kind of at a loss on how to answer your question. My real name is Davy Bui; it’s not a pseudonym or anything, if that helps.

If you have more specific questions, drop me a line at
dvb@.@.@enlightened-american.com (sorry bout the funky @ signs to throw off spammers).

By: bob jacobson

bob jacobson — Thu, 26 Feb 2009 17:24:50 +0000

David Thanks for the analysis of PWE.
You are doing professional work. Who are you?

By: Davy Bui

Davy Bui — Thu, 26 Feb 2009 04:23:14 +0000

Hi Bob,

I can’t pretend to predict where I think the stock/unit price will go. If I could, we wouldn’t be having this conversation .

I also can’t speak to the likelihood of PWE converting to a corporate structure — it’s hard to handicap what management might be thinking. They’ve stated that they have enough tax losses to offset taxes even after the SIFT hits. Combine that with the favorable tax treatment if they convert before 2013 and I’d say there’s a good chance PWE stays a trust until sometime before the conversion benefit expires.

I will say, as an American shareholder, that I’d prefer to see them convert to a corporation once NOLs run out as I won’t get the same benefit that some Canadian holders will receive. But I can’t say how likely it is.

I can’t speak to when a good time to bail out is (boy, I’m pretty useless!) but personally, I’d have to assess my cash position and also the market at any given time but generally, I’d be happy to breakeven on my remaining position (with distributions) at this point.

By: Bob Sharron

Bob Sharron — Wed, 25 Feb 2009 23:30:08 +0000

David,

Thank you for your analysis on Penn West. I agree that Nunns is a great addition to the team.

I also regret not unloading the 17,000 units that I still own. However, I don’t intend to sell at this low price either.

I like the performance measurements you have listed as a guide.

I do have a couple of questions:

What in your opinion is the likelihood that PWE will convert
to a corporate entity prior to or during 2011 thus ending its distribution and perhaps investors realizing a significant gain on the share price of the new entity?

Secondly, assume they remain a Trust for awhile (beyond 2011), do you think that the unit value on the market will rebound (assuming oil is at 60-70 USD per barrel by 2010) to say mid 20s? I don’t think that we will ever see the market value of this Trust near the low 30′s that we saw last Summer.

I’d really appreciate hearing your thoughts on market price and also when you think would be a good time to bail out.