Penn West Exploration (previously known as Penn West Energy Trust) is a Canadian oil and natural gas production 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"). 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 Exploration was previously an independent exploration and production company named as Penn West Petroleum Ltd. In May 2005, it converted into an income trust and operated under the trade name as Penn West Energy Trust. This was 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 income trusts since reorganizing as a trust in 2005: Vault, Canetic, and Petrofund. These acquisitions made it the single largest energy trust on the continent. In January 2011, Penn West Petroleum Ltd. converted back from an income trust into an exploration and production company. Penn West now operates under the trade name as Penn West Exploration.
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 bbl (32,000 to 33,000 m3) 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 Mbbl (76,760,000 m3) equivalent throughout their holdings. Of their output, a total of 44% has been natural gas, with oil and NGLs accounting for the remaining 56%. In addition, Penn West maintains a project to recover heavy oil from the Peace River Oil Sands.
Penn West Energy Trust paid 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.
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