The oil and gas industry is a highly competitive component of the global economy and companies can find themselves in a serious profit margin decline when cash flow minimizes. Many times, corporations with these types of problems eventually must close the doors on the operation. But, some corporations are actually positioned to make a return or morph into a new entity with a new direction and corporate mission. That is exactly what happened to Penn West Oil of Canada, an energy company that found themselves in a bad financial situation over the past decade. Today what once was Penn West is now named Obsidian Energy, complete with a new energy focus on how the company will conduct business going forward.
Penn West Petroleum was once upon a time a company with a clearly imbalanced financial statement. They were heavily over-leveraged with debt with input revenue that could not sustain the former operating model. It was obvious to the shareholders that changes must be made in order to protect their investments, and that is exactly what happened. The transition has now progressed to renaming the company Obsidian Energy after wholesale changes within the upper-level corporate management team. Obsidian brought in some new young talent such as new CEO David French, who has significant experience in the energy industry, and began the process that has resulted in a leaner corporate structure and a stable balance sheet. Get More Information Here.
The new management staff at Obsidian immediately set out on reducing debt by selling off as many corporate assets as possible and applying those proceeds to reducing liabilities. At the same time, they reduced the number of company employees and production was focused on four specific high-yield segments of the company business that indicated solid promise of future growth. They previously were offering over 30 different products. That is exactly where Obsidian Energy sits today. The legacy issues associated with Penn West are now settled as the company has also built significant cash flows high enough that the company can continue production using on-hand capital instead of reverting to the borrowing cycle that Penn West had found themselves utilizing just a few years ago.
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