Penn West Petroleum's Stock Drops After Dividend Slashed

Penn West Petroleum's stock slumped 3% in premarket trade Wednesday, after the oil and natural gas producer said it was slashing its dividend and reducing its capital budget in response to the sharp decline in oil prices. Starting with the first quarter of 2015, the dividend will be cut to 3 Canadian cents from 14 cents. The capital budget is being reduced by C$215 million, or 26%, to C$625 million. "Penn West's business model assumes a conservative long run-term commodity price, however, the recent downturn falls outside our lowest probabilistic expectations," said Chief Executive Dave Roberts. Oil futures prices have been roughly halved over the past six months as supply has outstripped softening demand. Penn West's stock has tumbled 76% this year through Tuesday, compared with a 16% drop in the SPDR Energy Select Sector ETF and a 6.7% rise in the S&P 500.