Penn West CEO and President David E. Roberts. Image courtesy of Penn West.

Calgary-based upstream Penn West Petroleum said Thursday that $281 million of accounting irregularities did not impact its reserve volumes or the values of those reserves.

In July, Penn initiated a voluntary internal audit into accounting entries made to reduce operating costs and increase Penn’s reported capital expenditures and royalty expenses.

Preliminary findings identified $70 million in 2013 and $111 million in 2012 that were improperly reclassified from operating expenses to capital expenditures.

The auditors also found $100 million in operating expenses that were improperly reclassified as royalty expenses throughout 2013.

The investigation determined that the volumes of Penn’s proved and proved plus probable crude oil, natural gas and natural gas liquids reserves was not impacted by the irregularities.

The company also said the net present value of the future net revenues for those reserves were not impacted.

In its 2014 annual report, Penn reported independently audited proved plus probable gross reserves of 625 million barrels of oil equivalent with approximately 66 percent of those reserves being proved.

Approximately 70 percent of Penn’s proved plus probable reserves estimate were comprised of oil and natural gas liquids.

Penn has delayed filing its second quarter financial statement and its restated historical financial statements until the investigation is complete.

Penn said the statements should be published no later than October 14, 2014.

The senior finance and accounting personnel believed to be responsible for the irregularities are no longer at Penn.

The investigation is still ongoing.


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