November 15, 2017 / 9:04 PM / a month ago

Canada's Obsidian Energy settles fraud charges with U.S. regulator

CALGARY, Alberta, Nov 15 (Reuters) - Canadian oil and gas producer Obsidian Energy, the company formerly known as Penn West Petroleum Ltd, announced on Wednesday a $8.5 million settlement with U.S. financial regulators over civil accounting fraud charges filed in June.

Calgary-based Obsidian Energy said it had agreed to pay the financial penalty without admitting or denying any of the factual allegations in the U.S. Securities and Exchange Commission complaint.

Earlier this year, the SEC alleged the company had artificially reduced its operating costs by as much as 20 percent and improved metrics for oil extraction efficiency by moving hundreds of millions of dollars from operating expense accounts to capital expenditure accounts.

The company issued a statement at the time saying the lawsuit was based on historic accounting practices that were discovered and reported to the SEC in July 2014.

“Our settlement resolves this legacy Penn West issue, and we are focused on looking forward as a new company,” David French, chief executive of Obsidian Energy said on Wednesday.

Penn West was one of Canada’s largest oil and gas producers at the time of the alleged offences, producing around 100,000 barrels of oil equivalent per day. It has since downsized by selling most of its assets and now produces 31,000 boepd, primarily in Alberta’s Cardium, Peace River and Viking plays.

Obsidian Energy shares were last up 4 percent on the Toronto Stock Exchange at C$1.54.

“We view the settlement positively, given the very limited financial impact,” GMP FirstEnergy analyst Darren Engels said in a research note. “The settlement with the SEC enables the company to move forward away from the historical issue and remain focused on operations.” (Reporting by Nia Williams; Editing by Alistair Bell)

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