CALGARY, Nov. 5, 2015/CNW/ - PENN WEST PETROLEUM LTD. (TSX - PWT; NYSE - PWE) ('Penn West', the 'Company', 'we', 'us' or 'our') is pleased to announce its financial and operational results for the third quarter ended September 30, 2015. All figures are in Canadian dollars unless otherwise stated.

President's Message

The third quarter was focused on strengthening our balance sheet and continuing to lower costs within our business. On September 1, we announced specific actions we will take in the context of the current commodity price environment in order to prevent the Company from taking on additional debt. We undertook a 35 percent workforce reduction to significantly reduce our cost structure, we suspended our dividend, and we made clear we intend to align our capital expenditures to be within our funds flow from operations on an annual basis starting in 2016.

We also highlighted our non-core assets which comprised approximately 34,000 barrels of oil equivalent per day of production. We not only reiterated our focus on two of our core assets, the Viking and the Cardium, but we have since announced two sales of non-core assets. The dispositions of our Mitsue properties and our Weyburn Unit working interest that we announced following September 1provide proceeds of almost $400 million, which we will apply against our outstanding debt. With approximately $810 millionin divestitures announced this year, we have surpassed our $650 millionnon-core asset disposition target, despite a challenging commodity price environment. We believe that these transactions continue to demonstrate our ability to complete non-core asset dispositions at attractive deal metrics. We will continue our divestiture process on additional non-core assets.

We continue to be in compliance with all of our financial covenants and had approximately $650 millionof undrawn capacity under our syndicated bank facility of $1.2 billion, at the end of the third quarter, and Senior Debt to EBITDA was 4.3 times, relative to the 5.0 times covenant. We expect to create some additional headroom in the covenant in the fourth quarter when we apply proceeds from our dispositions against outstanding debt. Additionally, we view the monetization of our existing foreign exchange hedges as a key lever in remaining within covenant levels. Given the progress we have made on our disposition program, we may no longer need to monetize our remaining foreign exchange hedges until next year.

The third quarter was operationally challenged in part due to third party pipeline access issues, particularly in the Cardium, causing production to come in below our expectations. Although we continue to find ways to mitigate the impact, we now anticipate these pipeline access issues will impact some volumes through the first half of 2016. We remain positive on our Cardium position, as reflected by some initial well results from our second half drilling program. Three of our wells each averaged above 500 barrels of oil equivalent per day, over a three day period. One of these wells exceeded 1,600 barrels of oil equivalent per day, over a three day period, while another well produced in excess of 3,000 barrels of oil in a single day.

We continue to ramp down activity to reach our target pace and resulting capital run rate. While we had seven rigs running at the end of July, we are now down to five rigs and expect to be down to three rigs by mid-November. This would leave us with a single rig in Viking and two rigs in PROP, where we are largely carried by our joint venture partner.

We believe that our business is better positioned today than at the start of the quarter, however, we have more work to do. Over the last year, we have been proactive in responding to the decline in commodity prices by engaging our lenders early on to ensure sufficient flexibility within our covenant limits. We have been successful with our divestitures during a period where the industry has seen a limited number of transactions. As I have said before, we continue to build the enterprise to operate in a 'lower for longer' environment. We remain committed to reducing our leverage and will continue to engage buyers that see value in our non-core asset base. Although we are now a leaner Company, we remain well positioned to execute through the rest of the year and into 2016.

We remain disciplined and I am confident we are taking the steps required to ensure a strong future for Penn West and provide our shareholders with long-term value. I look forward to updating you on our progress and providing our 2016 budget in the new year.

Financial and Operational Highlights

• During the third quarter, we entered into agreements to sell our Mitsue properties for proceeds of approximately $193 millionand our WeyburnUnit working interest for proceeds of $205 million, prior to closing adjustments. Subsequent to the end of the third quarter, the Mitsue transaction closed on October 30, 2015and we anticipate the Weyburntransaction to close in November 2015, with proceeds from both dispositions to be applied against our senior notes and our syndicated bank facility
• As at September 30, 2015, we were in compliance with all of our financial covenants under our lending agreements and had approximately $650 millionof undrawn capacity under our syndicated bank facility of $1.2 billion. Senior Debt to EBITDA was 4.3 times, relative to a 5.0 times limit
• Production in the third quarter averaged 82,198 barrels of oil equivalent per day. The majority of the difference relative to the second quarter was the result of dispositions closed in late June. Third quarter volumes were also impacted by approximately 1,000 barrels of oil equivalent per day of third party infrastructure constraints, including the TransCanada Pipeline and Alliance Pipeline systems. Additionally, certain turnarounds had been deferred from the second quarter for operational reasons
• Third quarter funds flow from operations, which excludes foreign exchange hedge monetizations/settlements, realized foreign exchange losses and restructuring charges was $45 million($0.09per share). Despite WTI prices of approximately US$46per barrel, resulting in Edmonton Par prices of approximately $56per barrel, our field netbacks including risk management activities remained strong at approximately $14per boe
• Capital expenditures were $116 millionduring the third quarter of 2015, with our development program selectively focused on the Viking and Cardium plays
• In the third quarter of 2015, we recorded non-cash impairment charges of $435 millionprimarily related to certain non-core properties in the Fort St. Johnarea of northeastern British Columbiaand in the Swan Hillsand Wainwrightareas of Alberta. This was mainly due to a decline in forecasted commodity prices compared to December 31, 2014
• Additionally, as a result of entering into definitive sales agreements related to the Mitsue and Weyburntransactions, we recorded non-cash impairment charges of $399 millionon these two transactions as the book value of these assets exceeded the fair value received

Select Metrics in Core Areas

The table below outlines select metrics for our core areas for the nine months ended September 30, 2015and excluding the impact of hedging:

Operated Development Activity

Greater Viking
During the quarter, we drilled 33 wells in the Dodslandarea, completed 21 wells and brought 19 on production. We expect to continue running at a one rig pace in Dodsland. The quarter also revealed some initial positive results from a nine section water flood in the Dodsland Viking play, which began injecting water in February. The water flood area gas to oil ratio is improving and we have now seen both an arrest of the oil decline and a trend of increasing oil production that is on target with our water flood area development forecast. Facilities and source water are in place to increase injection volumes in Q4 2015, with the potential to expand the water flood area in the future.

Results on some of our recent farmouts as well as regional peer activity has been encouraging and is reflective of the significant Viking potential we hold at our existing lands within our Greater Viking core area. We continue to assess our opportunities throughout the Greater Viking core area where our plans include further technical evaluation of the prospectivity of other zones where we hold rights, such as the Mannvilleand Bakken.

Cardium
We were running five rigs in the Cardium at the end of July. Currently, we are down to two rigs, both of which we expect to be finished their current pads by mid-November. We have a significant number of Cardium wells drilled with follow on activities to be completed. We anticipate to bring on 14 (8.9 net) Cardium wells through the fourth quarter.

Looking at the results of the Cardium drilling program in the second half of the year, we believe that the significant technical work, particularly regarding pressure regimes within the reservoir, has improved our well results. In October, we brought on three wells, two in the Crimson Lake area and one in the J-Lease area, that each delivered in excess of 500 barrels of equivalent per day over a three day period. Specifically, the well in the J-Lease area delivered rates greater than 3,000 barrels of oil per day over a 24 hour period. While we continue to expect variability in our Cardium drilling results, we believe these wells reinforce our confidence in our core Cardium position as well as our ability to high grade locations.

We will continue to evaluate and prioritize our future inventory. Additionally, we are evaluating the potential of additional horizons throughout our land base, including up hole opportunities in the Belly River as well as deeper horizons in the Rock Creekand the Mannville.

The table below provides a summary of our operational activity in our core areas during the third quarter:

Senior Debt Compliance

We continue to remain in compliance with all our financial covenants, including the Senior Debt to EBITDA covenant that was 4.3 times at September 30, relative to a 5.0 times limit. We will continue to pursue our strategy of reducing absolute debt and leverage levels through further dispositions of non-core assets. We currently have approximately $650 millionof undrawn capacity under our $1.2 billionsyndicated bank facility. Unlike many of our industry peers, availability under our syndicated bank facility is not based on a borrowing base calculation and therefore is not subject to redeterminations prior to its scheduled maturity in May 2019.

Additionally, we believe that the monetization of our existing foreign exchange hedges is a key lever in remaining within existing covenant limits. At the end of the quarter, these contracts held a positive mark to market value of approximately $75 million. Given our current projections of the 2015 year end Senior Debt to EBITDA covenant, which incorporate the benefit of the recently announced dispositions, we are now expecting to monetize the majority of these contracts in first half of 2016 if commodity prices and exchange rates remain at current levels.

The table below outlines the calculation of our Senior Debt to EBITDA covenant as at the end of the third quarter:

Updated Hedging Positions

Our hedging program continues to help reduce the volatility of our funds flow from operations, and thereby improve our ability to align capital programs going forward. We target having hedges in place for approximately 25% to 40% of our crude oil exposure, net of royalties, and 40% to 50% of our gas exposure, net of royalties in the current year. We are layering on positions in a systematic fashion, subject to market conditions. We have reached the lower end of our crude oil and natural gas target levels for the remainder of 2015 and continue to increase our 2016 position over time. We have also started extending positions out through 2017 in order to maintain the length of our hedging program.

Our existing positions as of November 4are as follows:

2015 Guidance

We have maintained the midpoint of our annual production guidance, but refined the range to 85,000 - 87,000 boe/d from 84,000 - 88,000 boe/d. Our capital budget for the year remains unchanged at $500 million. We continue to expect our operating costs for the year to be between $19.25/boe and $19.75/boe with our G&A for the year to be between $2.80/boe and $3.05/boe.

Conference Call and Webcast Details

A conference call and webcast presentation will be held to discuss our third quarter results at 9:00am MT(11:00am ET) on Thursday, November 5, 2015.

To listen to the conference call, please call 647-427-7450 or 1-888-231-8191 (toll-free). This call will be broadcast live on the Internet and may be accessed directly at the following URL:

http://event.on24.com/r.htm?e=1063899&s=1&k=931DE006B8CB2FE5CB59D1E4782DA683

Forward-Looking Statements

Certain statements contained in this press release 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', 'budget', '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: actions that will be taken in order to prevent the Company from taking on additional debt, the closing of non-core asset dispositions and the use of proceeds towards outstanding debt, continuing the divestiture process on additional non-core assets, being in compliance with all financial covenants and that additional headroom will be created once proceeds from non-core asset disposition are applied against the debt, finding ways to mitigate third party pipeline access issues, decreasing activity to reach our target pace and resulting capital run rate, expected rig numbers, the state of the Company today versus the start of the quarter and building to operate in the 'lower for longer' environment, positioning the Company for success in the future, water flooding activities in Q4 2015 and the potential to expand the water flood area in the future, assessing different opportunities in areas and other zones that we hold rights in, expectations for current pads finishing dates, anticipating when different wells would be brought online, the reasons behind certain well results, continuing to evaluate and prioritize our future inventory, the belief that the monetization of our existing foreign exchange hedges is a key lever in remaining within existing covenant limits and that it will be done in the first half of 2016 if commodity prices and exchange rates remain at current levels, that certain hedges produce benefits for the Company and the range for the annual production guidance and expectations for our operation costs and G&A. The forward-looking information is based on certain key expectations and assumptions made by Penn West, including expectations and assumptions concerning: prevailing and future commodity prices and currency exchange rates; applicable royalty rates and tax laws; interest rates; future well production rates and reserve volumes; operating costs; the timing of receipt of regulatory approvals; the performance of existing wells; the success obtained in drilling new wells; anticipated timing and results of capital expenditures; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the successful completion of acquisitions and dispositions; the availability and cost of labour and services; the state of the economy and the exploration and production business; the availability and cost of financing; and ability to market oil and natural gas successfully.

Although Penn West believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Penn West can give no assurances that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; interest rate fluctuations; marketing and transportation; loss of markets; environmental risks; competition; incorrect assessment of the value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; ability to access sufficient capital from internal and external sources; failure to obtain required regulatory and other approvals; reliance on third parties; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Readers are cautioned that the foregoing list of factors is not exhaustive.

Additional information on these and other factors that could affect Penn West, or its operations or financial results, are included in the Company's most recently filed Management's Discussion and Analysis (See 'Forward-Looking Statements' therein) , Annual Information Form (See 'Risk Factors' and 'Forward-Looking Statements' therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com) or Penn West's website.

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.

See also 'Forward-Looking Statements' in the attached Management's Discussion and Analysis.

Additional Reader Advisories

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.

Non-GAAP Measures

This news release includes non-GAAP measures not defined under International Financial Reporting Standards ('IFRS') including funds flow, funds flow from operations, funds flow per share-basic, funds flow per share-diluted, funds flow from operations per share-basic, funds flow from operations per share-diluted, netback, EBITDA and gross revenues. Such terms are explained under the heading 'Non-GAAP Measures' in the attached Management's Discussion and Analysis. 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.

MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three and nine months ended September 30, 2015

This management's discussion and analysis of financial condition and results of operations ('MD&A') of Penn West Petroleum Ltd. ('Penn West', the 'Company', 'we', 'us', 'our') should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2015(the 'Consolidated Financial Statements') and the Company's audited consolidated financial statements and MD&A for the year ended December 31, 2014. The date of this MD&A is November 4, 2015. All dollar amounts contained in this MD&A are expressed in millions of Canadian dollars unless noted otherwise.

Certain financial measures such as funds flow, funds flow from operations, funds flow per share-basic, funds flow per share-diluted, funds flow from operations per share-basic, funds flow from operations per share-diluted, netback, EBITDA and gross revenues included in this MD&A do not have a standardized meaning prescribed by International Financial Reporting Standards ('IFRS') and therefore are considered non-GAAP measures; accordingly, they may not be comparable to similar measures provided by other issuers. This MD&A also contains oil and gas information and forward-looking statements. Please see the Company's disclosure under the headings 'Non-GAAP Measures', 'Oil and Gas Information', and 'Forward-Looking Statements' included at the end of this MD&A.

Quarterly Financial Summary
(millions, except per share and production amounts)(unaudited)