Penn West Petroleum (PWE) recently changed its name to Obsidian Energy (ticker symbol OBE on the NYSE) in order to rebrand itself. However, it was also charged by the SEC at around the same time due to past accounting issues. These issues were disclosed several years ago, and Obsidian also restated its financials at the time, so it seems unlikely that the SEC charges will have a significant impact on the company. Sluggish oil and gas prices are a larger concern though. Obsidian can do okay at current strip prices, but will be limited to modest production growth unless it wants to increase debt.
SEC Investigation
The SEC recently charged Obsidian and several of its former executives with accounting fraud for allegedly improperly reclassifying operating expenses as capital expenditures in 2012 to Q1 2014. As a result, operating expenses were said to be understated by 16% to 20%.
I concur with the assessment that the SEC charges will have minimal impact on Obsidian. The company self-reported the accounting issues to the SEC in 2014 and also restated its 2012 to Q1 2014 financial statements that year. The employees involved had their positions terminated in 2014 as well, while Obsidian settled shareholder lawsuits in 2016 for $53 million CDN ($41 million USD).
Obsidian believes that the SEC charges will not have a material impact on the company and other examples of SEC penalties appear to bear this out. For example, Diamond Foods ended up paying $5 million to settle accounting fraud charges (and nearly $100 million for the related shareholder lawsuit) where it was accused of inaccurately reporting costs.
Production Growth And Long-Term Breakeven
https://seekingalpha.com/article/4085782-penn-west-petroleum-survivor-current-strip-growth-will-modest#alt2