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by Stockwatch Business Reporter

West Texas Intermediate crude for September delivery added 81 cents to $48.79 on the New York Merc, while Brent for September added eight cents to $53.38 (all figures in this para U.S.). Western Canadian Select traded at a discount of $15.90 to WTI ($32.89), down from a discount of $15.85. Natural gas for August added 6.5 cents to $2.886. The TSX energy index added 5.14 points to close at 182.86.

Rick George's Penn West Petroleum Ltd. (PWT) added 12 cents to $1.72 on 3.15 million shares, trying to rally from the all-time low of $1.52 that it touched on Monday. Part of Monday's pessimism may have reflected a research note from Barclays in which analysts worried about a potential debt covenant breach. "Although the company successfully renegotiated its debt covenants," said the analysts, referring to Penn West's talks with its lenders earlier this year, "we would highlight Penn West as potentially at risk of breaching these new terms under our latest commodity price assumptions." The covenant relaxations took effect in May and came with plenty of strings attached, such as the reduction of Penn West's three-cent quarterly dividend to one cent. It now yields 2.3 per cent. This time last year, the quarterly dividend was a whole 14 cents, but then the stock was closer to $10. The oil crash, a relative lack of production hedges to protect cash flow, and the $2.2-billion-plus debt load have all taken a toll, and will likely continue to do so. Investors will get a better sense of how much when Penn West releases its second quarter financials tomorrow morning. It is widely expected to lower its budget at the same time. The current budget of $625-million is based on a Canadian light oil pricing assumption of $65 a barrel, about $10 higher than the current price.

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