On June 26th, 2017, Penn West Petroleum Limited turned on a new leaf by formally changing its name to Obsidian Energy. This move came after 92 percent of the shareholders voted in favor of the same. The change of name for the oil and natural gas production company based in Calgary, Alberta, didn’t just happen. The shift comes after the company survived a commodity price crash, four years of high debts and an accounting scandal which resulted in operational and financial difficulties. These necessitated a change to give the company a new face.
In July 2014, Chief Financial Officer David Dyck discovered irregularities at Penn West and reported that nearly $300 million in expenses had been miss-classified. The error forced the company to restate its financial reports for 2012, 2013 and the first months of 2014. As a result, there were class-action lawsuits in the United States and accounting irregularity related lawsuits in Canada.
Obsidian embarked on asset sales after the scandal, which helped to reduce the net debt from three billion dollars to $384 million. Starting late 2012 to June 2014, the company had reduced its workforce by almost 50 percent. In a bid to cut further on expenses, Penn West also decreased its employees from 1,415 to 407 at the end of 2016. Its production was reduced from 135, 000 barrels to 28, 000. There was a suspension of dividends payment and compensation for the board of directors cut. Refer to This Page.
Obsidian Energy has its oil and gas fields in Alberta in a region known as one of the largest petroleum reserves in the globe. Its three main areas of production are Alberta Viking, Peace River oil sands, and the Pembina Cardium. The intermediate-sized oil and gas production company now has a well- balanced portfolio with an estimated production of 30,000 barrel of oil equivalent per day (BOE/D).
As currently constituted, the organization is now leaner and has resolved to be accountable to its partners, the shareholders, and the communities in which it is based. It plans to pursue growth within the next three years through a modest budget that is commensurate with the price of gas and oil.