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by Stockwatch Business Reporter

West Texas Intermediate crude for October delivery lost $3.79 to $45.41 on the New York Merc, while Brent for October lost $4.59 to $49.56 (all figures in this para U.S.). The benchmarks gave back most of yesterday's gains after Chinese reports indicated that manufacturing activity in August fell to a three-year low; this refuelled concerns about Chinese crude demand. Western Canadian Select traded at a discount of $14.55 to WTI ($30.86), up from a discount of $14.85. Natural gas for October added 1.3 cents to $2.702. The TSX energy index lost 8.38 points to close at 174.47.

Rick George's Penn West Petroleum Ltd. (PWT) lost 19 cents to 84 cents on 9.49 million shares, after scrapping its dividend and cutting its budget, production guidance and work force. It tried hard to keep the quarterly payout alive, lowering it to three cents from 14 cents in December and then to one cent in March, but now, for the first time since 2003, the dividend will disappear. Having no yield will be a new experience for many of Penn West's investors. They are much more used to the layoffs and guidance cuts: Since the start of 2013, the company has lowered its employee count to around 800 (including the 400 cuts announced today) from 2,150, and since last November, it has lowered its 2015 guidance twice, once in December and one just five weeks ago. The current budget is $500-million (down from $840-million in November) and the production guidance is 86,000 to 90,000 barrels of oil equivalent a day (down from 95,000 to 105,000 in November). The fact that staff cuts have been going on for nearly two years shows that Penn West's problems are older than the oil price crash. Penn West acknowledged this in June, 2013, when it formed a committee to review options for boosting shareholder value. At the time, its stock was over $10, much higher than today's price of 84 cents but down sharply from the 2006 high of over $47. Penn West ultimately decided in late 2013 that it would sell $1.5-billion of assets to reduce debt (which it did, although it took longer than planned) and would focus on light oil in the Alberta Cardium, Saskatchewan Viking and Alberta Swan Hills plays. It has done a commendable job cutting costs in those plays. In the Viking, for example, drilling, completion and tie-in costs have gone to around $700,000 a well from around $1.2-million in mid-2013. The stock has still sunk under the weight of the balance sheet.

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