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Penn West Exploration Announces Its Financial Results for the Third Quarter Ended September 30, 2012

November 2, 2012

CALGARY, November 2, 2012 /PRNewswire/ – PENN WEST PETROLEUM LTD. (TSX – PWT) (NYSE – PWE) (“PENN WEST”) is pleased to announce its results for the third quarter ended
September 30, 2012. All figures are in Canadian dollars unless
otherwise stated.

——————————

Our strategy is to unlock intrinsic value for our shareholders by
focusing on optimizing our overall business performance and execution,
continued resource growth across our dominant positions in four of
Western Canada’s five largest light-oil resource plays and balanced
financial management. In the near term, we are committed to optimizing
capital and operational efficiencies and providing dividend income to
our shareholders. As we gain certainty in the outlook for commodity
price realizations and cost structures, we are in a position to add
production growth through the development of our large light-oil plays.

HIGHLIGHTS

        --  Penn West announced agreements in principle for approximately
            $1.3 billion of pending non-core asset dispositions which
            demonstrates the value inherent in our base assets and provides
            us with operational and financial flexibility.
        --  We released external confirmation of our estimated contingent
            resources (1) in our Cardium and Peace River areas.
        --  Our weighting to liquids production reached a new high of 66
            percent during the third quarter compared to 63 percent in the
            third quarter of 2011.
        --  Third quarter development activities were focused on drilling
            in the Carbonates and Cardium trends, as well as resumption of
            tie-ins and facilities construction.
        --  Funds flow (2) was $344 million ($0.72 per share - basic (2))
            in the third quarter of 2012 compared to $348 million ($0.74
            per share - basic) in the third quarter of 2011. Funds flow for
            the third quarter of 2012 included $66 million ($0.14 per share
            - basic) realized from monetizing a portion of our 2013 crude
            oil collars and our 2013 foreign exchange contracts.
        --  Our current 2013 hedge positions include 55,000 barrels per day
            of our oil production hedged between US$91.55 and US$104.42 per
            barrel, and 125 mmcf per day of natural gas production at $3.34
            per mcf.

COMMODITY PRICES

        --  In the third quarter of 2012, WTI crude oil prices averaged
            US$92.19 per barrel compared to US$93.54 per barrel in the
            second quarter of 2012 and US$89.81 per barrel for the third
            quarter of 2011.
        --  Edmonton light sweet oil traded at a discount of $7.21 per
            barrel compared to WTI during the third quarter of 2012 (2011 -
            $4.21 per barrel premium) compared to a discount of $10.32 per
            barrel during the second quarter of 2012 (2011 - $4.17 per
            barrel premium).
        --  In the third quarter of 2012, the AECO Monthly Index averaged
            $2.19 per mcf compared to $1.83 per mcf in the second quarter
            of 2012 and $3.72 per mcf for the third quarter of 2011.

    (1)      Please refer to our "Contingent Resources Disclosures" below.

    (2)      The terms "funds flow" and "funds flow per share-basic" are
             non-GAAP measures. Please refer to the "Calculation of Funds
             Flow" and "Non-GAAP Measures Advisory" sections below.

FINANCIAL AND PRODUCTION

        --  Capital expenditures in the first nine months of 2012, net of
            property dispositions, were $1,053 million compared to $1,157
            million for the first nine months of 2011.
        --  We drilled 251 net wells, excluding stratigraphic test wells,
            in the first nine months of 2012.
        --  Average production for the nine months ended September 30, 2012
            was 163,635 boe (1) per day, compared to 161,171 boe per day
            for the comparative period in 2011.
        --  Capital expenditures for the third quarter of 2012, net of
            property dispositions, totalled $405 million compared to $481
            million for the third quarter of 2011.
        --  Average production in the third quarter of 2012 was 160,339 boe
            per day compared to 161,323 boe per day in the third quarter of
            2011. Delays in new facility construction, wet weather and
            facility outages impacted production.
        --  In the third quarter of 2012, we recorded a net loss of $67
            million ($0.14 per share - basic) compared to net income of
            $138 million ($0.29 per share - basic) in the third quarter of
            2011. The change in net income was primarily due to risk
            management activities as we recorded unrealized losses of $176
            million in the third quarter of 2012 compared to $238 million
            of unrealized gains recorded in the third quarter of 2011.

DIVIDEND

        --  On November 1, 2012, our Board of Directors declared a fourth
            quarter 2012 dividend of $0.27 per share to be paid on January
            15, 2013 to shareholders of record on December 31, 2012.
            Shareholders are advised that this dividend is designated as an
            "eligible dividend" for Canadian income tax purposes.

ASSET DISPOSITIONS

        --  We have agreements in principle to dispose of approximately
            $1.3 billion of our non-core properties, with combined
            production of approximately 12,000 barrels of oil equivalent
            per day. We plan to use the proceeds of the dispositions to
            repay a portion of advances under our credit
            facilities. Subject to customary regulatory and other closing
            conditions, the Company anticipates these dispositions will
            close prior to December 31, 2012.

    (1)      Please refer to the "Oil and Gas Information Advisory" section
             below for information regarding the term "boe".

OPERATIONS UPDATE

Our capital programs remain focused on our large-scale light-oil plays
in Western Canada. Over the past several years, we have increased the
development predictability and de-risked our drilling inventory in
these plays. In addition, we have recently received external
confirmation of our estimated contingent resources((1)) in our Cardium and Peace River areas. Our liquids production weighting
continues to rise, reaching 66 percent this quarter. Infrastructure
investments over the past several years at several key plays provide
the ability to add production at attractive capital efficiencies as we
move into 2013.

Oil Development

Carbonates

        --  Our land holdings across the trend total approximately 500,000
            net acres with significant positions in the Swan Hills and
            Slave Point plays, including dominant holdings in Sawn, Otter,
            Red Earth and Senex. We continue to expand and de-risk our
            large inventory of drilling locations.
        --  Slave Point 2012 activities focused on development drilling and
            facilities expansion in the Otter, Red Earth and Sawn regions.
            We have increased our production capacities at our Otter and
            Sawn batteries and at our Red Earth and Sawn gas plants. We
            expect our available incremental capacity to total 24,000 boe
            per day within the Slave Point area by mid-2013.
        --  In the Swan Hills play we drilled highly successful wells in
            2012, characterized by three-month average production rates(2)
            of greater than 250 boe per day per well.
        --  We plan to leverage our infrastructure investments by focusing
            on half-cycle development, producing into expanded
            infrastructure and have also planned water flood pilots to test
            the long-term viability of enhanced oil recovery in select
            portions of the Slave Point.

Cardium

        --  With over 600,000 net acres, we have the largest land position
            across the Cardium trend. This land position is complemented by
            a large and diverse infrastructure position.
        --  Our 2012 capital program has been focused on the Alder Flats,
            Willesden Green and West Pembina areas where efficiencies
            applying horizontal multi-stage fracture technology continue to
            improve, and production results are proving to be predictable
            and consistent with our type curves.
        --  Over the past few years, our horizontal production has
            increased by approximately 10,000 boe per day in the trend. We
            expanded our infrastructure position in 2012 and now have
            incremental capacity for a further 18,000 boe per day.
        --  We plan to continue improving efficiencies in part by
            leveraging our significant existing and expanded
            infrastructure, selectively drilling in certain areas, and
            continuing to optimize our completion techniques.
        --  We continue to evaluate and will expand on our successful
            waterflood pilot in the West Pembina area.

Viking

        --  We have an established land base within the Viking on which we
            have achieved steady, predictable and very efficient production
            additions over the past few years. In addition, the economic
            returns in the Viking are very robust.
        --  During 2012, development activity has been focused on the
            Saskatchewan side of the play, notably in our core light-oil
            area of Avon Hills, with resource appraisal continuing on the
            Alberta side of the play.
        --  We plan to continue focused development on the Saskatchewan
            side of the play with targeted secondary recovery and continued
            resource appraisal on the Alberta side of the play.

(1)    Please refer to our “Contingent Resource Disclosures” below.
(2)    Please refer to our “Oil and Gas Information Advisory” below.

Spearfish 

        --  We expanded our infrastructure in this area during 2012 and
            established a multi-year drilling inventory of high return
            light-oil targets. Well results continue to be predictable and
            cost improvements have been realized throughout the year.
        --  During 2012, we expanded our facility capacity in the area to
            14,000 boe per day, allowing continued half-cycle development
            at very attractive efficiencies and economic returns.
        --  We plan to continue focused development to expand production to
            match our existing facility capacity. A liquids extraction
            plant is also expected on-stream by mid-year to further
            increase the deliverability and value of this play. Full gas
            conservation is expected to follow in 2014.

EOR and Exploration 

        --  We believe that we have significant potential to increase the
            recoveries across our major plays through the use of waterflood
            and other enhanced recovery techniques. Since 2009, we have
            completed a number of assessments, technical work, and plan to
            initiate further pilots in a number of plays in 2013.
        --  We have been selective and opportunistic in acquiring lands
            complementing our existing asset base. We have accumulated a
            material position in the liquids-rich gas fairway of the
            Duvernay trend and recently completed a stratigraphic test
            well, and closely monitor nearby industry activity.

Joint Ventures

        --  In the Peace River Oil Partnership, the application for
            commercial thermal development at Seal Main has been submitted
            and we received approval to proceed with a thermal pilot at
            Harmon Valley South.
        --  In the Cordova Joint Venture, work on a multi-well pad
            continued with plans to be on production by late 2012.

CONTINGENT RESOURCE STUDIES

        --  On October 17, 2012, we announced the results of contingent
            resource studies completed by independent qualified reserves
            evaluators on behalf of Penn West, which included our interest
            in the Cardium, the largest light-oil trend in Canada, and the
            Peace River Oil Partnership in which we hold a 55 percent
            interest. These studies further substantiate the oil potential
            contained in our asset base and confirm the extent of oil in
            place in these areas(1).

(1)    Please refer to our “Contingent Resource Disclosures” below.

HIGHLIGHTS


                              Three months ended    Nine months ended September
                                    September 30                             30

                                               %                              %
                           2012      2011 change        2012      2011   change

    Financial
    (millions, except per share
    amounts)

    Gross revenues    $     840 $     861    (2)   $   2,484 $   2,625      (5)
    (1)

    Funds flow              344       348    (1)         953     1,100     (13)

       Basic per           0.72      0.74    (3)        2.01      2.36     (15)
       share

       Diluted per         0.72      0.74    (3)        2.01      2.36     (15)
       share

    Net income (loss)                 138  (100)         227       700     (68)
                           (67)

       Basic per                     0.29  (100)        0.48      1.50     (68)
       share             (0.14)

       Diluted per                   0.29  (100)        0.48      1.50     (68)
       share             (0.14)

    Capital                 405       481   (16)       1,053     1,157      (9)
    expenditures, net
    (2)

    Debt at           $   3,935 $   3,129     26   $   3,935 $   3,129       26
    period-end (3)

    Dividends
    (millions)

    Dividends paid    $     128 $     127      1   $     383 $     293       31
    (4)

    DRIP                   (30)      (32)    (6)        (86)      (66)       30

    Dividends paid in $      98 $      95      3   $     297 $     227       31
    cash

    Operations                                                                 

    Daily production                                                           

       Light oil and     88,375    84,061      5      88,314    83,675        6
       NGL (bbls/d)

       Heavy oil         17,213    17,331    (1)      17,534    17,894
       (bbls/d)                                                             (2)

       Natural gas          329       360    (9)         347       358
       (mmcf/d)                                                             (3)

    Total production    160,339   161,323    (1)     163,635   161,171        2
    (boe/d)

    Average sales
    price

       Light oil and  $   73.28 $   82.05   (11)   $   77.55 $   85.25      (9)
       NGL (per bbl)

       Heavy oil (per     60.30     63.39    (5)       64.91     66.43      (2)
       bbl)

       Natural gas    $    2.29 $    3.81   (40)   $    2.19 $    3.89     (44)
       (per mcf)

    Netback per boe                                                            

       Sales price    $   51.56 $   58.05   (11)   $   53.44 $   60.26     (11)

       Risk                3.72    (0.37)    100        0.90    (1.14)      100
       management
       gain (loss)

       Net sales          55.28     57.68    (4)       54.34     59.12      (8)
       price

       Royalties         (9.74)   (10.87)   (10)     (10.06)   (10.96)      (8)

       Operating        (16.78)   (17.49)    (4)     (17.30)   (17.38)        -
       expenses

       Transportation    (0.48)    (0.49)    (2)      (0.49)    (0.50)      (2)

       Netback        $   28.28 $   28.83    (2)   $   26.49 $   30.28     (13)

    (1)      Gross revenues include realized gains and losses on commodity
             contracts. In the third quarter of 2012, we received proceeds
             of $66 million which is included in funds flow related to the
             reset of our 2013 crude oil collars and the monetization of
             our 2013 foreign exchange contracts.

    (2)      Includes net asset acquisitions/dispositions and excludes
             business combinations. There are no business combinations in
             the 2012 period.

    (3)      Comparative debt at December 31, 2011 was $3,219 million.

    (4)      Includes dividends paid prior to those reinvested in shares
             under the dividend reinvestment plan. In 2011, we began paying
             dividends on a quarterly basis. The last monthly distribution
             payment as a Trust was declared in December 2010 and paid in
             January 2011 ($0.09 per unit). Our first quarterly dividend
             ($0.27 per share) as a corporation was paid in April 2011.

DRILLING STATISTICS


                     Three months ended   Nine months ended September
                           September 30                            30

                        2012       2011         2012              2011

                  Gross  Net Gross  Net   Gross  Net Gross        Net

    Oil              87   69   119   88     294  232   322        252

    Natural gas       3    2    22   16      23   19    46         32

                     90   71   141  104     317  251   368        284

    Stratigraphic    11    4     7    1      63   31    77         34
    and service

    Total           101   75   148  105     380  282   445        318

    Success rate        100%       100%         100%             100%
    (1)

    (1)    Success rate is calculated excluding stratigraphic and service
           wells.

CAPITAL EXPENDITURES


                     Three months ended September 30   Nine months ended
                                                            September 30

    (millions)                  2012            2011      2012       2011

    Land acquisition $             1 $            66   $    36 $     172
    and retention

    Drilling and                 312             326       988       807
    completions

    Facilities and               133             105       470       324
    well equipping

    Geological and                 -               2        10         9
    geophysical

    Corporate                      2               8        13        17

    Capital                      448             507     1,517     1,329
    expenditures (1)

    Joint venture,              (33)            (32)     (113)      (77)
    carried capital

    Property                    (10)               6     (351)      (95)
    acquisitions
    (dispositions),
    net

    Business                       -               -         -       286
    combinations

    Total            $           405 $           481   $ 1,053 $   1,443
    expenditures

    (1)      Capital expenditures include costs related to Property, Plant
             and Equipment and Exploration and Evaluation activities.

Our capital activities throughout 2012 have been focused on the
development of our key light-oil plays across the Carbonates, Cardium,
Viking and Spearfish. Since the third quarter of 2011, we have
completed net property dispositions with production of approximately
5,000 boe per day. In October 2012, we announced that we have
agreements in principle to dispose of non-core properties for proceeds
of approximately $1.3 billion, with combined production of
approximately 12,000 barrels of oil equivalent per day.

LAND


                                                    As at September 30

                                Producing             Non-producing

                                            %                        %
                        2012    2011   change    2012    2011   change

    Gross acres (000s) 5,972   6,195      (4)   2,801   2,997      (7)

    Net acres (000s)   4,028   4,159      (3)   1,984   2,126      (7)

    Average working      67%     67%        -     71%     71%        -
    interest

COMMON SHARES DATA


                      Three months ended   Nine months ended September
                            September 30                            30

    (millions of                       %                             %
    shares)            2012  2011 change    2012  2011          change

    Weighted average                                                  

      Basic           476.5 469.2      2   474.5 465.9               2

      Diluted         476.6 469.4      2   474.6 466.1               2

    Outstanding as at                      476.8 469.5               2
    September 30

Letter to our Shareholders

——————————

During the third quarter, broad macro-economic uncertainty persisted,
stranding capital on the sidelines as the equity markets maintained a
risk averse posture in their view of Canadian energy investments. Volatility in crude oil pricing is expected to continue. Transportation
infrastructure in North America has not grown at the same pace as new
crude oil production, creating bottlenecks and apportionment of
pipeline space, which in turn increases volatility in both the
underlying commodity as well as quality and transportation
differentials for the various Canadian crude oil streams. We benefited
from a narrowing Edmonton par to WTI differential in the quarter but
has since widened due to heavier than normal fall refinery maintenance
schedules and the temporary shut-in of the Keystone pipeline. New
pipeline capacity being brought on in the coming year is expected to
help narrow Canadian crude oil differentials from current levels. The
outlook for natural gas improved through the summer as weekly storage
injections were consistently smaller than historical norms due to
increased demand from the power generation sector. This eliminated
concerns of breaching storage capacity before the start of this year’s
winter withdrawal season. Going forward, we expect pricing for natural
gas to trade in a range not significantly different than we are
realizing in 2012.

Against this background of macro-economic uncertainty, and volatility in
commodity prices, Penn West undertook a program to divest between $1.0
billion and $1.5 billion of non-core assets to provide greater
financial and operational flexibility. Prior to year-end, it is
anticipated that we will close on approximately $1.3 billion of
divestitures, the proceeds from which will go toward strengthening the
company’s balance sheet.

In the next 12 months, Penn West’s strategies will be focused on
balanced financial management, continued growth in our light-oil
resource base and optimizing our overall business performance and
execution. On the financial side of the business, we have been actively
hedging both crude oil and natural gas volumes to underpin our cash
flow to fund both our capital program and the quarterly dividend. We
believe that the independently substantiated one billion barrels of
light oil and bitumen contingent resources((1)) located on our Cardium and Peace River assets confirms our appraisal
activities of the past several years. We now need to take the next step
and translate this resource into value for our shareholders. Optimizing
our overall business performance will require focus on two
deliverables. First, improving the production reliability on our base
assets through facilities optimization, automation and streamlining
field operating processes. Second, improving capital efficiencies as we
grow the light-oil resource side of our business.

Ultimately, we believe we will be bringing into focus a tremendous asset
base with significant intrinsic value. Several months ago, we told the
market that we were going to divest non-core assets and proceed on
asset sales; we’ve done that. Now we’re going to turn our attention and
discipline to deliver optimized capital efficiency in our growing
resource assets and reliability in our base assets. These are the next
steps in the capture of our substantial intrinsic value. We remain
committed to a business model that balances commodity cycles,
competitive capital efficiencies and value growth with a meaningful
dividend.

(signed)

Murray R. Nunns
President and Chief Executive Officer  

Calgary, Alberta
November 1, 2012

(1) Contingent resources are net best estimate figures.  See “Contingent
Resource Disclosures” below.

Outlook

This outlook section is included to provide shareholders with
information about our expectations as at November 1, 2012 for
production and capital expenditures for 2012 and readers are cautioned
that the information may not be appropriate for any other purpose. This
information constitutes forward-looking information. Readers should
note the assumptions, risks and discussion under “Forward-Looking
Statements” and are cautioned that numerous factors could potentially
impact our capital expenditure levels and production performance for
2012, including our current disposition program.

Our 2012 forecast exploration and development capital, net of
acquisitions and dispositions closed through September 30, 2012, is
expected to be in the range of $1.3 billion to $1.4 billion, slightly
higher than our previous forecast. Our Board approved this incremental
capital in order to optimize operational and capital efficiencies for
2013 by commencing certain 2013 projects late in 2012. This incremental
capital is not expected to have any impact on 2012 production. As a
result of delays in new facility construction, wet weather and facility
outages during the second half of 2012, we are updating our 2012
forecast average production to between 161,000 and 163,000 boe per day.

Our prior forecast, released on August 10, 2012 with our second quarter
results and filed on SEDAR at www.sedar.com, reflecting the impact of net acquisitions and dispositions completed
at that date, was for 2012 average production of between 165,000 and
168,500 boe per day and exploration and development capital in the
range of $1.2 billion to $1.25 billion.

Non-GAAP Measures Advisory

This news release includes non-GAAP measures not defined under
International Financial Reporting Standards (“IFRS”) including funds
flow, funds flow per share-basic, funds flow per share-diluted and
netback. Non-GAAP measures do not have any standardized meaning
prescribed by GAAP and therefore may not be comparable to similar
measures presented by other issuers. Funds flow is cash flow from
operating activities before changes in non-cash working capital and
decommissioning expenditures. Funds flow is used to assess our ability
to fund dividends and planned capital programs. See “Calculation of
Funds Flow” below. Netback is a per-unit-of-production measure of
operating margin used in capital allocation decisions, to economically
rank projects and is the per unit of production amount of revenue less
royalties, operating costs, transportation and realized risk
management.

Calculation of Funds Flow


                                     Three months ended   Nine months ended
                                           September 30        September 30
    (millions, except per share
    amounts)                          2012         2011     2012       2011

    Cash flow from operating        $  238 $        428   $  752 $      923
    activities

    Increase (decrease) in non-cash     85         (97)      141        132
    working capital

    Decommissioning expenditures        21           17       60         45

    Funds flow                      $  344 $        348   $  953 $    1,100

    Basic per share                 $ 0.72 $       0.74   $ 2.01 $     2.36

    Diluted per share               $ 0.72 $       0.74   $ 2.01 $     2.36

Oil and Gas Information Advisory

Barrels of oil equivalent (“boe”) may be misleading, particularly if
used in isolation. A boe conversion ratio of six thousand cubic feet of
natural gas to one barrel of crude oil is based on an energy
equivalency conversion method primarily applicable at the burner tip
and does not represent a value equivalency at the wellhead. Given that
the value ratio based on the current price of crude oil as compared to
natural gas is significantly different from the energy equivalency
conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is
misleading as an indication of value.

References to three-month average production rates are useful in
confirming the presence of hydrocarbons, however, such rates are not
determinative of the rates at which such wells will continue production
and decline thereafter. Additionally, such rates may also include
recovered “load oil” fluids used in well completion stimulation. While
encouraging, readers are cautioned not to place undue reliance on such
rates in calculating the aggregate production for Penn West.

Contingent Resource Disclosures

In this press release, Penn West discusses the results of two recently
completed independent resource evaluation studies which include an AJM
Deloitte (“AJM”) contingent resource evaluation dated October 16, 2012
and effective July 31, 2012, for Penn West’s Cardium properties and a
Sproule Unconventional Limited (“Sproule”) contingent resource
evaluation report effective September 30, 2012 for Penn West’s interest
in the Peace River Oil Partnership (the “PROP”). Penn West holds a 55
percent interest in PROP and all figures presented in this release in
respect of PROP assets reflect Penn West’s 55 percent interest. This
release contains certain information reproduced from both the AJM
Report and the Sproule Report, but does not contain either report in
its entirety.

AJM has assigned contingent resources of 533 million barrels of oil in
the best estimate case for Penn West’s Cardium properties. Sproule has
assigned contingent resources of 473 million barrels of bitumen in the
best estimate case for Penn West’s interest in the PROP assets.

The contingent resource assessments prepared by AJM and Sproule were
prepared in accordance with the definitions, standards and procedures
contained in the Canadian Oil and Gas Evaluation Handbook (the “COGE
Handbook”) and National Instrument 51-101 – Standards of Disclosure for
Oil and Gas Activities (“NI 51-101″). Contingent resource is defined in
the COGE Handbook as those quantities of petroleum estimated to be
potentially recoverable from known accumulations using established
technology or technology under development, but which do not currently
qualify as reserves or commercially recoverable due to one or more
contingencies. Contingencies may include factors such as economic,
legal, environmental, political and regulatory matters or a lack of
markets. There is no certainty that it will be commercially viable to
produce any portion of the contingent resources.

The economic viability of Penn West’s Cardium contingent resources is
undetermined, as economic studies have not yet been completed. All of
PROP’s contingent resources are considered economic using Sproule’s
September 30, 2012 forecast prices.

Under the COGE Handbook and NI 51-101, naturally occurring hydrocarbons
with a viscosity greater than 10,000 centipoise are classed as bitumen.
The majority of the contingent resource at PROP will be recovered by
thermal processes.

Please refer to our press release dated October 17, 2012 “Penn West
Updates Asset Dispositions and Results of the Contingent Resources
Studies” for further information.

Forward-Looking Statements

In the interest of providing our securityholders and potential investors
with information regarding Penn West, including management’s assessment
of our future plans and operations, certain statements contained in
this document constitute forward-looking statements or information
(collectively “forward-looking statements”) within the meaning of the
“safe harbour” provisions of applicable securities legislation.
Forward-looking statements are typically identified by words such as
“anticipate”, “continue”, “estimate”, “expect”, “forecast”, “may”,
“will”, “project”, “could”, “plan”, “intend”, “should”, “believe”,
“outlook”, “objective”, “aim”, “potential”, “target” and similar words
suggesting future events or future performance. In addition, statements
relating to “reserves” or “resources” are deemed to be forward-looking
statements as they involve the implied assessment, based on certain
estimates and assumptions, that the reserves and resources described
exist in the quantities predicted or estimated and can be profitably
produced in the future.

In particular, this document contains forward-looking statements
pertaining to, without limitation, the following: our belief that we
have one of the largest inventories of low-risk light oil projects in
North America; our intention to unlock intrinsic value for our
shareholders by focusing on optimizing our overall business performance
and execution, continued resource growth across our dominant positions
in four of Western Canada’s five largest light-oil resource plays and
balanced financial management; our intention to optimize capital and
operational efficiencies and providing dividend income to our
shareholders; the details of our fourth quarter dividend; our
expectation to complete the disposition of certain non-core properties
for proceeds of approximately $1.3 billion prior to December 31, 2012
and our intentions to use the proceeds of such dispositions to repay a
portion of the advances under our credit facilities and to strengthen
our balance sheet; our intention to continue to focus our capital
program on our large-scale light-oil plays in Western Canada; our
expectation that we will be able to add production at attractive
capital efficiencies in 2013 as a result of infrastructure investments
over the past several years;  our expectation that available
incremental production capacity within the Slave Point area to total
24,000 boe per day by mid-2013; our plans to leverage our
infrastructure investments by focusing on half-cycle development and
producing into expanded infrastructure; our plans to conduct water
flood pilots to test the long-term viability of enhanced oil recovery
in select portions of the Slave Point area; our plans to continue
improving efficiencies in 2013 in the Cardium trend in part by
leveraging our significant existing and expanded infrastructure,
selectively drilling in certain areas, and continuing to optimize our
completion techniques; our intention to continue to evaluate and expand
our waterflood pilot in the West Pembina area; our intention to
continue focused development on the Saskatchewan side of the Viking
play and targeted secondary recovery and continued resource appraisal
on the Alberta side of the Viking play; our plan to continue focused
development to expand production to match our existing facility
capacity in the Spearfish area; our expectation that a liquids
extraction plant in the Spearfish area will be on-stream by mid-2013
and that it will further increase the deliverability and value of the
Spearfish play; our expectation that full gas conservation will follow
in the Spearfish area in 2014; our belief that we have significant
potential to increase the recoverability across our major plays through
the use of waterflood and other enhanced recovery techniques; our
expectation that crude oil pricing will be volatile for the foreseeable
future; our belief that new pipeline capacity being brought on in the
coming year will help narrow Canadian crude oil differentials from
current levels; our expectation that pricing for natural gas to trade
in a range that is not significantly different than we are realizing in
2012; our intention over the next 12 months to focus on balanced
financial management, continued growth in our light-oil resource base
and optimizing our overall business performance and execution; our
belief that in the future we will be bringing into focus a tremendous
asset base with significant intrinsic value; and certain disclosures
contained under the heading “Outlook” relating to our 2012 forecast
exploration and development capital and expectations of 2012 forecast
average production.

With respect to forward-looking statements contained in this document,
we have made assumptions regarding, among other things: future crude
oil, natural gas liquids and natural gas prices and differentials
between light, medium and heavy oil prices and Canadian, WTI and world
oil prices; future capital expenditure levels; future crude oil,
natural gas liquids and natural gas production levels; drilling
results; future exchange rates and interest rates; the amount of future
cash dividends that we intend to pay and the level of participation in
our dividend reinvestment plan; our ability to deleverage our balance
sheet by disposing of non-core assets; our ability to obtain equipment
in a timely manner to carry out development activities and the costs
thereof; our ability to market our oil and natural gas successfully to
current and new customers; the impact of increasing competition; our
ability to obtain financing on acceptable terms, including our ability
to renew or replace our credit facility and our ability to finance the
repayment of our senior unsecured notes on maturity; and our ability to
add production and reserves through our development and exploitation
activities. In addition, many of the forward-looking statements
contained in this document are located proximate to assumptions that
are specific to those forward-looking statements, and such assumptions
should be taken into account when reading such forward-looking
statements: see in particular the assumptions identified under the
heading “Outlook”.  In particular, it should be noted that our current
guidance for our forecast exploration and development capital
expenditures for 2012 and our forecast average production levels for
2012 does not take into account our expectation to sell non-core assets
for proceeds of approximately $1.3 billion prior to December 31, 2012;
any such sales could have a material impact on our guidance.

Although we believe that the expectations reflected in the
forward-looking statements contained in this document, and the
assumptions on which such forward-looking statements are made, are
reasonable, there can be no assurance that such expectations will prove
to be correct. Readers are cautioned not to place undue reliance on
forward-looking statements included in this document, as there can be
no assurance that the plans, intentions or expectations upon which the
forward-looking statements are based will occur. By their nature,
forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties that contribute to the possibility that
the predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause our actual performance and
financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed or
implied by such forward-looking statements. These risks and
uncertainties include, among other things: the impact of weather
conditions on seasonal demand and ability to execute capital programs;
risks inherent in oil and natural gas operations; uncertainties
associated with estimating reserves and resources; competition for,
among other things, capital, acquisitions of reserves, resources,
undeveloped lands and skilled personnel; incorrect assessments of the
value of acquisitions; geological, technical, drilling and processing
problems; general economic conditions in Canada, the U.S. and globally;
industry conditions, including fluctuations in the price of oil and
natural gas; royalties payable in respect of our oil and natural gas
production and changes thereto; changes in government regulation of the
oil and natural gas industry, including environmental regulation;
fluctuations in foreign exchange or interest rates; unanticipated
operating events or environmental events that can reduce production or
cause production to be shut-in or delayed, including wild fires and
flooding; failure to obtain industry partner and other third-party
consents and approvals when required; stock market volatility and
market valuations; OPEC’s ability to control production and balance
global supply and demand of crude oil at desired price levels;
political uncertainty, including the risks of hostilities, in the
petroleum producing regions of the world; the need to obtain required
approvals from regulatory authorities from time to time; failure to
realize the anticipated benefits of dispositions, acquisitions, joint
ventures and partnerships; failure to deleverage our balance sheet by
disposing of non-core assets; changes in tax and other laws that affect
us and our securityholders; changes in government royalty frameworks;
uncertainty of obtaining required approvals for acquisitions and
mergers; the potential failure of counterparties to honour their
contractual obligations; and the other factors described in our public
filings (including our Annual Information Form) available in Canada at
www.sedar.com and in the United States at www.sec.gov. Readers are
cautioned that this list of risk factors should not be construed as
exhaustive.


                                      Penn West Petroleum Ltd.
                                     Consolidated Balance Sheets

    (CAD millions, unaudited)        September 30, 2012   December 31, 2011

    Assets                                                                 

    Current                                                                

       Accounts receivable       $                  447   $             486

       Other                                        152                 104

       Deferred funding assets                      156                 236

       Risk management                               82                  39

                                                    837                 865

    Non-current                                                            

       Deferred funding assets                      303                 360

       Exploration and                              618                 418
       evaluation assets

       Property, plant and                       12,026              11,893
       equipment

       Goodwill                                   2,020               2,020

       Risk management                               34                  28

                                                 15,001              14,719

    Total assets                 $               15,838   $          15,584

    Liabilities and
    Shareholders' Equity

    Current                                                                

       Accounts payable and      $                  754   $           1,117
       accrued liabilities

       Dividends payable                            129                 127

       Risk management                               19                 114

                                                    902               1,358

    Non-current                                                            

       Long-term debt                             3,935               3,219

       Decommissioning liability                    570                 607

       Risk management                               43                  46

       Deferred tax liability                     1,365               1,287

                                                  6,815               6,517

    Shareholders' equity                                                   

       Shareholders' capital                      8,950               8,840

       Other reserves                                99                  95

       Retained earnings                                                132
       (deficit)
                                                   (26)

                                                  9,023               9,067

       Total liabilities and     $               15,838   $          15,584
       shareholders' equity


                                    Penn West Petroleum Ltd.
                               Consolidated Statements of Income

                                    Three months ended   Nine months ended
                                          September 30        September 30

    (CAD millions, except per share     2012      2011      2012      2011
    amounts, unaudited)

      Oil and natural gas sales     $    785   $   866   $ 2,444   $ 2,675

      Royalties                        (143)     (161)     (451)     (482)

                                         642       705     1,993     2,193

      Risk management gain (loss)                                         

          Realized                        55       (5)        40      (50)

          Unrealized                   (154)       249       146       261

                                         543       949     2,179     2,404

    Expenses                                                              

      Operating                          248       260       776       765

      Transportation                       7         7        22        22

      General and administrative          43        38       126       112

      Share-based compensation            15      (66)         2        16

      Depletion and depreciation         309       292       927       850

      Gain on dispositions              (10)         -     (105)     (151)

      Exploration and evaluation           1         1         2         5

      Unrealized risk management          22        11       (1)       (2)
      (gain) loss

      Unrealized foreign exchange       (58)       136      (54)        91
      (gain) loss

      Financing                           51        47       147       142

      Accretion                           11        11        32        33

                                         639       737     1,874     1,883

    Income (loss) before taxes          (96)       212       305       521

      Deferred tax expense              (29)        74        78     (179)
      (recovery)

    Net and comprehensive income    $   (67)   $   138   $   227   $   700
    (loss)

    Net income (loss) per share                                           

      Basic                         $ (0.14)   $  0.29   $  0.48   $  1.50

      Diluted                       $ (0.14)   $  0.29   $  0.48   $  1.50

    Weighted average shares
    outstanding (millions)

      Basic                            476.5     469.2     474.5     465.9

      Diluted                          476.6     469.4     474.6     466.1


                                   Penn West Petroleum Ltd.
                             Consolidated Statements of Cash Flows

                                   Three months ended     Nine months ended
                                         September 30          September 30

    (CAD millions, unaudited)           2012     2011        2012      2011

    Operating activities                                                   

      Net income (loss)              $  (67) $    138   $     227 $     700

      Depletion and depreciation         309      292         927       850

      Gain on dispositions              (10)        -       (105)     (151)

      Exploration and evaluation           1        1           2         5

      Accretion                           11       11          32        33

      Deferred tax expense              (29)       74          78     (179)
      (recovery)

      Share-based compensation            11     (66)         (7)        14

      Unrealized risk management         176    (238)       (147)     (263)
      loss (gain)

      Unrealized foreign exchange       (58)      136        (54)        91
      loss (gain)

      Decommissioning expenditures      (21)     (17)        (60)      (45)

      Change in non-cash working        (85)       97       (141)     (132)
      capital

                                         238      428         752       923

    Investing activities                                                   

      Capital expenditures             (415)    (475)     (1,404)   (1,252)

      Property dispositions               10      (6)         351        89
      (acquisitions), net

      Change in non-cash working        (37)      191       (176)        57
      capital

                                       (442)    (290)     (1,229)   (1,106)

    Financing activities                                                   

      Increase (decrease) in bank        302     (44)         771       245
      loan

      Proceeds from issuance of            -        -           -        75
      notes

      Repayment of acquired credit         -        -           -      (39)
      facilities

      Issue of equity                      -        1           3       160

      Dividends paid                    (98)     (95)       (297)     (227)

      Settlement of convertible            -        -           -      (31)
      debentures

                                         204    (138)         477       183

    Change in cash                         -        -           -         -

    Cash, beginning of period              -        -           -         -

    Cash, end of period              $     - $      -   $       - $       -


                                 Penn West Petroleum Ltd.
                       Statements of Changes in Shareholders' Equity

                                                      Retained
    (CAD millions,   Shareholders'        Other       Earnings
    unaudited)             Capital     Reserves      (Deficit)        Total

    Balance at       $       8,840 $         95 $          132 $      9,067
    January 1,
    2012

    Net and                      -            -            227          227
    comprehensive
    income

    Share-based                  -           25              -           25
    compensation

    Issued on                   24         (21)              -            3
    exercise of
    options and
    share rights

    Issued to                   86            -              -           86
    dividend
    reinvestment
    plan

    Dividends                    -            -          (385)        (385)
    declared

    Balance at       $       8,950 $         99 $         (26) $      9,023
    September 30,
    2012

                                                      Retained
    (CAD millions,   Shareholders'        Other       Earnings
    unaudited)             Capital     Reserves      (Deficit)        Total

    Balance at       $       9,170 $          - $        (610) $      8,560
    January 1,
    2011

    Elimination of                            -            610            -
    deficit                  (610)

    Net and                      -            -            700          700
    comprehensive
    income

    Implementation               -           81              -           81
    of Option Plan
    and CSRIP

    Share-based                  -           31              -           31
    compensation

    Issued on                  182                           -          160
    exercise of                            (22)
    options and
    share rights

    Issued to                   66            -              -           66
    dividend
    reinvestment
    plan

    Dividends                    -            -          (379)        (379)
    declared

    Balance at       $       8,808 $         90 $          321 $      9,219
    September 30,
    2011

Investor Information

——————————

Penn West shares are listed on the Toronto Stock Exchange under the
symbol PWT and on the New York Stock Exchange under the symbol PWE.

A conference call will be held to discuss Penn West’s results at 10:00am
Mountain Time (12:00pm Eastern Time) on November 2, 2012.

To listen to the conference call, please call 647-427-7450 or
1-888-231-8191 (North America toll-free). This call will be broadcast
live on the Internet and may be accessed directly on the Penn West
website at www.pennwest.com or at the following URL:

http://event.on24.com/r.htm?e=534020&s=1&k=1B6BACDDB286FDD932626D3653C9FA40

A digital recording will be available for replay two hours after the
call’s completion, and will remain available until November 16, 2012
21:59 Mountain Time (23:59 Eastern Time). To listen to the replay,
please dial 416-849-0833 or 1-855-859-2056 (North America toll-free)
and enter Conference ID 55355345, followed by the pound (#) key.  

 

SOURCE Penn West Exploration


Source: PR Newswire