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Penn West Exploration announces its financial results for the first quarter ended March 31, 2013 and the appointment of a new Chairman

May 2, 2013

CALGARY, May 2, 2013 /PRNewswire/ – PENN WEST PETROLEUM LTD. (TSX – PWT; NYSE – PWE) (“PENN WEST”) is pleased to announce its results for the first quarter ended March
31, 2013. All figures are in Canadian dollars unless otherwise stated.

——————————

BOARD OF DIRECTORS

The Board of Directors of Penn West (the “Board”) has commenced a
renewal process. Effective May 1, 2013, Mr. Jack Schanck, a Director of
Penn West since 2008, assumed the position of Chairman of the Board.
Mr. Schanck has over 37 years of direct oil and natural gas industry
experience in both Canada and the U.S. including President of Unocol
Canada, President of Spirit Energy (the upstream domestic operation of
Unocol Oil and Gas) and Co-CEO of Samson Investment Company. Mr.
Schanck’s extensive experience in domestic and international
exploration, management, business strategy and directorship in various
organizations is a continuing benefit to the Board.

Penn West’s former Chairman, Mr. John Brussa, stepped down from the
Board effective May 1, 2013. Mr. Brussa joined the Board in 1995 and
was named Chairman in 2005. During Mr. Brussa’s tenure, Penn West grew
from a junior oil and natural gas producer to one of Canada’s largest
energy producers. Mr. Brussa possesses a unique business acumen and
insight which has been instrumental in the progression of the company.
The Board and Management of Penn West thank Mr. Brussa for his
extensive contributions over the past 18 years.

STRATEGY

With the potential of Penn West’s resource base well established, from
the fourth quarter of 2012 forward the company has focused on
maximizing the efficiency of our programs and the reliability of our
production base while continuing to improve the balance sheet. These
objectives are key to demonstrating the profitability and the intrinsic
value inherent in Penn West.

HIGHLIGHTS

In the first quarter, capital expenditures were on budget, anticipated
drilling and completion cost savings were realized and all planned
development activities were executed. Production to date is on target,
wells were brought on-stream on schedule, and execution of our base
production reliability initiatives are on plan.

        --  Average production for the first quarter of 2013 was 142,804
            boe (1) per day driven in part by improved production
            reliability and reduced repair and maintenance cycle times;
            annual 2013 average production guidance remains at 135,000 to
            145,000 boe per day.
        --  Exploration and development capital expenditures of $427
            million were on budget; full year 2013 capital guidance remains
            $900 million.
        --  Improvements in capital efficiencies and cost structures on all
            key plays were realized, driven by reductions in drill times
            and decreased completion costs in addition to improvements in
            field execution.
        --  119 net development wells were drilled in the first quarter,
            consistent with plans.
        --  First quarter light oil and natural gas liquids production
            comprised 82 percent of total liquids production and received
            average prices of $80.75 per barrel after hedging.
        --  Hedges are in place on over 80 percent of forecast 2013 oil
            production, net of royalties, between US$91.55 and US$104.42
            per barrel.
        --  First quarter 2013 light oil and natural gas liquids price
            differentials, after price adjustments, were $14.43 per barrel
            (2012 - $23.16 per barrel) compared to benchmark WTI oil
            prices, narrower than internal expectations.
        --  Funds flow (2) for the first quarter was $267 million ($0.55
            per share - basic (2)) ahead of internal expectations due to
            higher light-oil price realizations.

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

    (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.

OPERATIONS UPDATE

Appraisal, land acquisition and facilities construction activities of
the past several years set-up forward operational efficiencies as well
as a higher level of predictability of well results. The 2013 capital
program is focused on plays that have been advanced to the full
development stage. The reliability of our production base has improved
in 2013 with reduced cycle times to restore temporary production
interruptions, both scheduled and unscheduled.

During the first quarter of 2013, drilling activity peaked at 21 rigs
compared to 38 rigs in the same period of 2012 with 119 wells drilled
consistent with our budget plan. For the full year 2013, the $900
million budget includes drilling 160 to 180 net operated development
wells, concentrated on light oil. Development costs showed significant
improvement from prior programs with substantial reductions in drilling
days and overall cycle times compared to prior programs.

Spearfish 

This play is a key focus area in 2013 given its attractive economics and
capital efficiency due in part to the expanded facility capacity
brought on stream in 2012. For 2013, drilling plans total approximately
100 wells under the $900 million capital program.

        --  In the first quarter of 2013, with up to five rigs running, 58
            net wells were drilled.
        --  The average cost of a Spearfish well was reduced by
            approximately $150,000 to approximately $1.2 million due to
            improved drilling engineering procedures, top performing rigs
            and concentrated development.
        --  Drilling times from spud to rig release have been reduced to
            five days on average compared to a first half 2012 average of
            eight days.
        --  The focused nature of the development program also enabled
            procurement efficiencies with various suppliers.
        --  Subsequent to the end of the first quarter, the natural gas
            liquids recovery plant was brought on stream, on budget and on
            schedule.

Carbonates

With approximately 500,000 net acres, the Carbonates light-oil play
(Slave Point and Swan Hills) represents a significant long-term asset.
In 2012, operated oil and gas infrastructure was significantly expanded
to accommodate further development over the next several years.

        --  In the first quarter of 2013, eight single lateral horizontal
            wells were drilled in the Sawn (Slave Point) and Swan Hills
            areas.
        --  Compared to the first half of 2012, average drilling and
            completion costs were reduced by approximately $1.9 million per
            well, to $4.8 million at Sawn, by utilizing experienced crews,
            top performing rigs and moving into the development phase of
            the project.
        --  Also compared to the first half of 2012, Swan Hills average
            drilling and completion costs dropped approximately $900,000
            per well, to $4.3 million, by reducing drilling times and
            modifying completion procedures.
        --  In the second quarter, plans include the tie-in of the wells
            drilled in the first quarter and advancing waterflood pilots in
            the Sawn and Otter areas of the Slave Point, both of which are
            anticipated to be operational in the second half of 2013.

Cardium

With over 600,000 net acres across the trend, Penn West is the largest
landholder in the Cardium. The independent contingent resource study
identified a contingent resource of 533 million barrels ((1)) from only primary development. The Cardium is a cornerstone asset, with
numerous positive attributes including significant remaining light-oil
in place, the recent success of primary horizontal redevelopment, the
long established positive impact of water flooding, and recent
improvements in cost structure.

        --  In the first quarter of 2013, activity was focused in the Alder
            Flats area with six wells drilled. Economic returns were
            enhanced by a reduction in drilling costs due to a reduction in
            drilling times and completion costs by adopting slick water
            completions.
        --  Compared to the first half of 2012, average costs to drill and
            complete an Alder Flats well were reduced on average
            approximately $1.3 million per well to $2.0 million.
        --  The horizontal water flood pilot in the West Pembina area
            continues to perform to expectation with reduced gas to oil
            ratios and increased oil rates. Two additional pilots in the
            Willesden Green area are anticipated to be on-stream later in
            2013.

    (1) The 533 million barrels represents the "best" case scenario. Please
        refer to our "Contingent Resource Disclosures" below.

Viking

The Viking play is known for consistent productivity, high netbacks,
strong economic rates of return and a predictable cost structure. The
company has a 700,000 net acre position in the play area.

        --  During the first quarter of 2013, 27 net wells were drilled.
        --  Longer lateral wells will be used in future Viking development,
            as experience indicates that ultimate recoveries and rates of
            return are higher than for shorter laterals.
        --  Development drilling in the Viking will continue over the
            balance of 2013, consistent with plans.
        --  Selective integration of horizontal water flooding is
            anticipated to begin in 2014.

Exploration and Joint Ventures

Extensive land positions provide excellent resource optionality.
Assessment at a measured pace will continue through 2013.

        --  The company has established a material position of
            approximately 150,000 net acres in the liquids rich fairway of
            the emerging Duvernay shale play at Willesden Green. Industry
            activity and results continue to confirm the significant
            potential of the company's position.
        --  In the first quarter of 2013, the Peace River Oil Partnership
            completed a primary development and stratigraphic drilling
            program and progressed on the three-well thermal pilot at
            Harmon Valley South which is expected to commence steam
            injection in the second half of 2013. The regulatory
            applications for the 10,000 barrel per day Seal Main Commercial
            Project were submitted in late 2012.

Second Quarter Production Outlook

Production in the second quarter was budgeted to be modestly lower than
the first quarter due to the impact of plant turnarounds and spring
breakup. Turnarounds are imperative to ensure reliability of our
production. Significant snow accumulations in eastern Alberta, western
Saskatchewan and western Manitoba have created the potential for
large-scale flooding and production interruptions to industry
producers.

        --  All planned first quarter development operations were completed
            prior to break-up.
        --  To ensure capital efficiency gains are sustained, there are no
            drilling, completion or tie-in operations planned through
            break-up.
        --  Planned operated and non-operated facility turnarounds in the
            second and third quarter are expected to reach a peak
            production impact of 10,000 boe per day in late June. These
            turnarounds were included in our annual production guidance.
        --  In Manitoba, the risk to operations was minimized through the
            construction of improved drainage ditches, elevated leases, and
            group gathering pipelines in 2011 and 2012. Potential still
            exists for temporary production losses depending on the
            magnitude of flooding and other break-up conditions.
        --  In the remaining operating areas with significant run-off
            exposure, similar preparations have been made to economically
            manage the reliability of production.

Dividend

        --  On May 1, 2013, our Board of Directors declared a second
            quarter 2013 dividend of $0.27 per share to be paid on July 15,
            2013 to shareholders of record at the close of business on June
            28, 2013.

FINANCIAL AND OPERATING RESULTS

Production and cost performance combined with improved light-oil price
realizations compared to WTI prices resulted in first quarter funds
flow in excess of internal expectations. Capital investment levels were
on plan and production and capital guidance remains unchanged for 2013.
In April 2013, the heavy oil differential (WCS to WTI) has narrowed,
trading at approximately US$14 per barrel to date for May.
Approximately $1.6 billion of oil-weighted asset dispositions were
closed in 2012.


                                                Three months ended March 31

                                     2013                     2012 % change

    Financial
    (millions, except
    per share amounts)                                                     

    Gross revenues (1)   $            704       $              870     (19)

    Funds flow                        267                      337     (21)

       Basic per share               0.55                     0.71     (23)

       Diluted per share             0.55                     0.71     (23)

    Net income (loss)                (97)                       59    (100)

       Basic per share             (0.20)                     0.12    (100)

       Diluted per share           (0.20)                     0.12    (100)

    Capital expenditures
    (2)                               427                      660     (35)

    Debt at period-end   $          2,962       $            3,397     (13)

    Dividends
    (millions)                                                             

    Dividends paid (3)   $            129       $              127        2

    DRIP                             (28)                     (27)        4

    Dividends paid in
    cash                 $            101       $              100        1

    Operations                                                             

    Daily production                                                       

       Light oil and NGL
       (bbls/d)                    72,926                   89,029     (18)

       Heavy oil
       (bbls/d)                    16,324                   18,170     (10)

       Natural gas
       (mmcf/d)                       321                      361     (11)

    Total production
    (boe/d)                       142,804                  167,420     (15)

    Average sales price                                                    

       Light oil and NGL
       (per bbl)         $          80.23       $            84.16      (5)

       Heavy oil (per
       bbl)                         50.78                    72.68     (30)

       Natural gas (per
       mcf)              $           3.18       $             2.29       39

    Netback per boe                                                        

       Sales price       $          53.93       $            57.59      (6)

       Risk management
       gain (loss)                   0.60                   (1.24)      100

       Net sales price              54.53                    56.35      (3)

       Royalties                   (9.30)                  (10.59)     (12)

       Operating
       expenses                   (16.88)                  (17.93)      (6)

       Transportation              (0.59)                   (0.49)       20

       Netback           $          27.76       $            27.34        2

    (1) Gross revenues include realized gains and losses on commodity
        contracts.

    (2) Capital expenditures include exploration and development capital
        less joint venture, carried capital.

    (3) Includes dividends paid prior to those reinvested in shares under
        the dividend reinvestment plan.

DRILLING STATISTICS


                              Three months ended March 31

                                    2013             2012

                              Gross  Net Gross        Net

    Oil                         144  118   188        151

    Natural gas                   1    1    20         17

                                145  119   208        168

    Stratigraphic and service    33   16    50         27

    Total                       178  135   258        195

    Success rate (1)                100%             100%

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

CAPITAL EXPENDITURES


                                              Three months ended March 31

    (millions)                                2013                   2012

    Land acquisition and retention          $    1 $                    8

    Drilling and completions                   321                    497

    Facilities and well equipping              129                    199

    Geological and geophysical                   9                      8

    Corporate                                    3                      8

    Exploration and development capital (1)    463                    720

    Joint venture, carried capital            (36)                   (60)

    Property dispositions, net                 (9)                  (322)

    Total capital expenditures              $  418 $                  338

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

In 2013, our capital program is focused on maximizing efficiencies
across our light-oil targets while obtaining a high internal rate of
return. One of our key areas of focus for 2013 is our Waskada play in
southern Manitoba where we drilled 58 net wells during the first
quarter of 2013.

LAND


                                                            As at March 31

                                  Producing               Non-producing

                                              %                          %
                          2013    2012   change      2013    2012   change

    Gross acres                             (9)
    (000s)               5,423   5,979              2,917   2,879        1

    Net acres (000s)     3,675   4,014      (8)     2,001   2,025      (1)

    Average working                           1
    interest               68%     67%                69%     70%      (1)

COMMON SHARES DATA


                               Three months ended March 31

    (millions of shares)        2013  2012        % change

    Weighted average                                      

      Basic                    481.7 472.6               2

      Diluted                  481.7 472.9               2

    Outstanding as at March 31 482.2 472.9               2

Letter to our Shareholders

——————————

The aim of the management and employees of Penn West is to close the gap
between the significant value inherent in the extensive light-oil
resource base of the company and the current market valuation. We
believe the key to achieving this objective is successful execution of
our stated goals of improving capital efficiencies and production
reliability within a balanced financial framework as laid out in our
2013 Capital Budget on January 9, 2013.

We are pleased to report with our first quarter results indications of
improved performance on both capital efficiency metrics and production
reliability. While this quarter provides a strong data point, our goal
is to establish a longer-term trend of this performance. Average
production of 142,804 boe per day in the first quarter was on budget.
Full year 2013 average production guidance remains 135,000 – 145,000
boe per day.

Focusing capital on fewer light-oil areas and driving to reduce drilling
and completion costs across all core light-oil regions has resulted in
positive outcomes. We realized anticipated improvements in drilling
performance and completion costs in several core light-oil regions
which led to significant cost savings on a year-over-year basis. In the
Cardium, costs were reduced on average more than 35 percent; in the
Slave Point in northern Alberta, costs decreased by approximately 25
percent; similarly, in the Spearfish and at Swan Hills we realized cost
reductions of over 15 percent.

Across all regions, improvement in well and pipeline repair and
maintenance cycle times, and recovery from scheduled and unscheduled
outages, all contributed to stronger production performance. Improved
field maintenance response and active resources management prevented
prolonged outages in many of the areas where severe cold temperatures
were experienced.

These cost structure improvements, increased reliability of base
production and forward capital allocations give us a high degree of
confidence that Penn West is on track to hit the capital efficiency
target of $35,000 – $40,000 per flowing barrel as outlined in the 2013
Capital Budget.

Financial management is a key corporate objective for Penn West.
Contributing to this objective, we continue to actively hedge oil and
natural gas volumes to reduce volatility of cash flow. For the
remainder of 2013, we have over 80 percent of forecast oil volumes
hedged between US$91.55 and US$104.42 per barrel and over 55 percent of
our forecast natural gas production hedged at C$3.43 per mcf. Our
target debt to EBITDA ratio is in the 1.5 times to 2.0 times range by
year-end.

I would like to personally thank Mr. John Brussa for his significant
contributions over the past 18 years with Penn West. Since John’s
appointment to the Board in 1995 and subsequent appointment as Chairman
of the Board in 2005, his counsel and advice has served Penn West and
its shareholders well.

At the same time, I would like to welcome Mr. Jack Schanck as the new
Chairman of the Board. Both the management team and I look forward to
working with Jack.

Penn West continues to possess one of the largest portfolios of
light-oil resources in North America. With our strong focus on improved
execution in converting those resources to production and reserves
efficiently, we believe the inherent value of the company will be
realized in the market.

We have now firmly established the focus of the organization and with
our first quarter results, established new performance standards; our
aim is to continue this pattern.

(Signed)

Murray R. Nunns
President and Chief Executive Officer  

Calgary, Alberta
May 1, 2013

Outlook

This outlook section is included to provide shareholders with
information about our expectations as at May 1, 2013 for production and
capital expenditures in 2013 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
2013.

Our 2013 forecast exploration and development capital is $900 million
with an option to layer in up to $300 million of incremental capital
later in 2013, subject to approval of our Board of Directors based on
external market factors and internal performance. After the divestment
activity in 2012, we continue to forecast 2013 average production of
between 135,000 and 145,000 boe per day.

There have been no changes to our guidance from our initial forecast,
released on January 9, 2013 with our “2013 Budget” release and filed on
SEDAR at www.sedar.com.

Advance Notice

Penn West announced that its board of directors has approved the
adoption of an advance notice by-law (the “By-law”). Among other
things, the By-law fixes a deadline by which shareholders must submit a
notice of director nominations to Penn West prior to any annual or
special meeting of shareholders where directors are to be elected and
sets forth the information that a shareholder must include in the
notice for it to be valid.

Specifically, the By-law requires advance notice to Penn West in
circumstances where nominations of persons for election as a director
of Penn West are made by shareholders other than pursuant to: (i) a
requisition of a meeting made pursuant to the provisions of the
Business Corporations Act (Alberta) (the “Act”); or (ii) a shareholder
proposal made pursuant to the provisions of the Act.

In the case of an annual meeting of shareholders, notice to Penn West
must be made not less than 30 days and not more than 65 days prior to
the date of the annual meeting. In the event that the annual meeting is
to be held on a date that is less than 50 days after the date on which
the first public announcement of the date of the annual meeting was
made, notice may be made not later than the close of business on the
10th day following such public announcement.

In the case of a special meeting of shareholders (which is not also an
annual meeting), notice to Penn West must be made not later than the
close of business on the 15th day following the day on which the first
public announcement of the date of the special meeting was made.

The By-law is effective immediately. At the next meeting of shareholders
of Penn West, to be held on June 5, 2013, shareholders will be asked to
confirm and ratify the By-law.

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
gains and losses.

Calculation of Funds Flow


                                           Three months ended March 31

    (millions, except per share amounts)   2013                   2012

    Cash flow from operating activities  $  256 $                  234

    Change in non-cash working capital      (7)                     79

    Decommissioning expenditures             18                     24

    Funds flow                           $  267 $                  337

    Basic per share                      $ 0.55 $                 0.71

    Diluted per share                    $ 0.55 $                 0.71

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.

Contingent Resource Disclosures

In this press release, Penn West discusses the results of the
independent resource evaluation study for its Cardium properties. This
relates to the AJM Deloitte (“AJM”) contingent resource evaluation
dated October 16, 2012 and effective July 31, 2012. This release
contains certain information reproduced from the AJM Report, but does
not contain the 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.

The contingent resource assessment prepared by AJM was 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.

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: under the heading
“Highlights”, among other things: the 2013 annual average production
guidance of 135,000 to 145,000 boe per day and the expected percentage
of our forecast 2013 oil production that is hedged; under the heading
“Operations Update”, among other things: the focus of our 2013 capital
program on plays that have been advanced to the full development stage,
our projections that our 2013 capital program of $900 million will
include 160 to 180 net operated development wells concentrated on light
oil, our expectation that the Spearfish area will be a key focus area
in 2013, plans of drilling 100 wells in the Spearfish area, our belief
that several years of drilling inventory remain in the Spearfish area,
our plans that second quarter activity in the Carbonates light oil play
will include the tie-in of the wells drilled in the first quarter and
advancing waterflood pilots in the Sawn and Otter areas of the Slave
Point, both of which are anticipated to be operational in the second
half of 2013, our expectation that two additional waterflood pilots in
the Willesden green area are to be on-stream later in 2013, our intent
that longer reach laterals will be used in future Viking development,
our expectation that development drilling in the Viking will continue
over the balance of 2013, consistent with plans and that selective
integration of horizontal water flooding is anticipated to begin in
2014, our expectation that assessment at a measured pace of our
extensive land position will continue through 2013 and our expectation
that the three-well thermal pilot at Harmon Valley South will commence
steam injection in the second half of 2013; under the heading “Second
Quarter Production Outlook”, among other things: our expectation that
production in the second quarter will be modestly lower than first
quarter volumes due to the impact of plant turnarounds and spring
breakup, the potential for large scale flooding and production
interruptions to industry producers, our plan that no drilling,
completion or tie-in operations will occur through break-up, our
expectation that operated and non-operated facility turnarounds will
reach a peak production impact of 10,000 boe per day later in the
second quarter, our belief that potential still exists for temporary
production losses depending on the magnitude of flooding and other
break-up conditions, our expectation that the planned turnarounds and
normal spring break up impacts may impact our second quarter production
by 4,000 to 5,000 boe per day; under the heading “Capital Expenditures”
that the focus of our 2013 capital program will be on maximizing
efficiencies across our light-oil targets while obtaining a high
internal rate of return and one of our key areas of focus for 2013 is
our Waskada play in southern Manitoba; in the “Letter to our
Shareholders”, among other things: that the aim of the management and
employees of Penn West is to close the gap between the significant
value inherent in the extensive light-oil resource base of the company
and the current market valuation and our belief the key to achieving
this objective is successful execution of our stated goals of improving
capital efficiencies and production reliability within a balanced
financial framework, our goal of establishing a longer trend of
performance similar to the first quarter, our annual average production
guidance of 135,000 to 145,000 boe per day, our expectation of
achieving the capital efficiency target of $35,000 – $40,000 per
flowing barrel as outlined in the 2013 Capital Budget, the percentage
of our projected 2013 oil and natural gas production which is hedged,
our target debt to EBITDA ratio of 1.5 times to 2.0 times range by
year-end, our belief that the inherent value of the company will be
realized in the market and our aim to continue the pattern established
with our first quarter results and new performance standards; under the
heading “Outlook”, among other things: our 2013 forecast exploration
and development capital of $900 million with an option to layer in up
to $300 million of incremental capital later in 2013, subject to
approval of our Board of Directors based on external market factors and
internal performance, and our forecast 2013 average production of
between 135,000 and 145,000 boe per day.

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 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.

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 and political conditions in Canada, the U.S.
and globally; industry conditions, including fluctuations in the price
of oil and natural gas, price differentials for crude oil produced in
Canada as compared to other markets, and transportation restrictions;
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; changes in
tax and other laws that affect us and our securityholders; changes in
government royalty frameworks; uncertainty of obtaining required
approvals for acquisitions, dispositions 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.

The forward-looking statements contained in this document speak only as
of the date of this document. Except as expressly required by
applicable securities laws, we do not undertake any obligation to
publicly update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.


                                     Penn West Petroleum Ltd.

                                  Consolidated Balance Sheets

    (CAD millions, unaudited)              March 31, 2013   December 31,
                                                                    2012

    Assets                                                              

    Current                                                             

       Accounts receivable       $                    435 $          364

       Other                                           66             79

       Deferred funding assets                        193            187

       Risk management                                 21             76

                                                      715            706

    Non-current                                                         

       Deferred funding assets                        216            238

       Exploration and                                638            609
       evaluation assets

       Property, plant and                         11,047         10,892
       equipment

       Goodwill                                     2,020          2,020

       Risk management                                 31             26

                                                   13,952         13,785

    Total assets                 $                 14,667 $       14,491

    Liabilities and
    Shareholders' Equity

    Current                                                             

       Accounts payable and      $                    868 $          764
       accrued liabilities

       Dividends payable                              130            129

       Current portion of                               5              5
       long-term debt

       Risk management                                 21              9

                                                    1,024            907

    Non-current                                                         

       Long-term debt                               2,957          2,685

       Decommissioning liability                      637            635

       Risk management                                 41             35

       Deferred tax liability                       1,324          1,350

       Other non-current                                4              5
       liabilities

                                                    5,987          5,617

    Shareholders' equity                                                

       Shareholders' capital                        9,021          8,985

       Other reserves                                  94             97

       Deficit                                                     (208)
                                                    (435)

                                                    8,680          8,874

    Total liabilities and        $                 14,667 $       14,491
    shareholders' equity


                                       Penn West Petroleum Ltd.

                           Consolidated Statements of Income (Loss)

                                                         Three months ended
                                                                   March 31

    (CAD millions, except per share amounts,               2013        2012
    unaudited)

      Oil and natural gas sales                        $    696 $       889

      Royalties                                           (119)       (161)

                                                            577         728

      Risk management gain (loss)                                          

        Realized                                              8        (19)

        Unrealized                                         (73)        (63)

                                                            512         646

    Expenses                                                               

      Operating                                             217         273

      Transportation                                          8           8

      General and administrative                             43          39

      Share-based compensation                                8          17

      Depletion and depreciation                            279         312

      Gain on dispositions                                    -        (72)

      Exploration and evaluation                              -           1

      Unrealized risk management gain                       (5)        (42)

      Unrealized foreign exchange loss (gain)                29        (31)

      Financing                                              45          47

      Accretion                                              11          11

                                                            635         563

    Income (loss) before taxes                            (123)          83

      Deferred tax expense (recovery)                      (26)          24

    Net and comprehensive income (loss)                $   (97) $        59

    Net income (loss) per share                                            

      Basic                                            $ (0.20) $      0.12

      Diluted                                          $ (0.20) $      0.12

    Weighted average shares outstanding (millions)                         

      Basic                                               481.7       472.6

      Diluted                                             481.7       472.9


                                Penn West Petroleum Ltd.

                      Consolidated Statements of Cash Flows

                                                Three months ended
                                                          March 31

    (CAD millions, unaudited)                        2013     2012

    Operating activities                                          

      Net income (loss)                           $  (97) $     59

      Depletion and depreciation                      279      312

      Gain on dispositions                              -     (72)

      Exploration and evaluation                        -        1

      Accretion                                        11       11

      Deferred tax expense (recovery)                (26)       24

      Share-based compensation                          3       12

      Unrealized risk management loss                  68       21

      Unrealized foreign exchange loss (gain)          29     (31)

      Decommissioning expenditures                   (18)     (24)

      Change in non-cash working capital                7     (79)

                                                      256      234

    Investing activities                                          

      Capital expenditures                          (427)    (660)

      Property dispositions (acquisitions), net         9      322

      Change in non-cash working capital               18      (8)

                                                    (400)    (346)

    Financing activities                                          

      Increase in bank loan                           243      209

      Issue of equity                                   2        3

      Dividends paid                                (101)    (100)

                                                      144      112

    Change in cash                                      -        -

    Cash, beginning of period                           -        -

    Cash, end of period                           $     - $      -


                                       Penn West Petroleum Ltd.

                       Statements of Changes in Shareholders' Equity

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

    Balance at January 1,   $         8,985 $       97 $      (208) $ 8,874
    2013

    Net and comprehensive                 -          -         (97)    (97)
    loss

    Share-based                           -          3            -       3
    compensation

    Issued on exercise of                 8        (6)            -       2
    options and share
    rights

    Issued to dividend                   28          -            -      28
    reinvestment plan

    Dividends declared                    -          -        (130)   (130)

    Balance at March 31,    $         9,021 $       94 $      (435) $ 8,680
    2013

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

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

    Net and comprehensive                 -          -           59      59
    income

    Share-based                           -          9            -       9
    compensation

    Issued on exercise of                17       (14)            -       3
    options and share
    rights

    Issued to dividend                   27          -            -      27
    reinvestment plan

    Dividends declared                    -          -        (128)   (128)

    Balance at March 31,    $         8,884 $       90 $         63 $ 9,037
    2012

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 9:00am
Mountain Time (11:00am Eastern Time) on May 2, 2013.

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=612727&s=1&k=94B32CE34842C98E4B0288DE6C685561

A digital recording will be available for replay two hours after the
call’s completion, and will remain available until May 16, 2013 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 53400385, followed by the pound (#) key.

 

 

 

 

 

 

 

SOURCE Penn West Exploration


Source: PR Newswire