September 18, 2014 / 1:41 PM / 3 years ago

UPDATE 1-Penn West says revamping accounting practices

(Adds details, shares)

Sept 18 (Reuters) - Canadian oil producer Penn West Petroleum Ltd said it was strengthening its accounting practices after a review uncovered irregularities that forced to company to restate some of its prior results.

Penn West initiated the internal review after it discovered in July accounting irregularities that misclassified nearly C$300 million ($273 million) in expenses.

Penn West's Toronto-listed shares were up more than 8 percent at C$8.35 in early trading as the company also reported a profit for the second quarter ended June 30.

The company said on Thursday there were material weaknesses and a significant deficiency in its internal controls over financial reporting and that it was working to fix these issues.

"We will continue to treat this matter very seriously and are committed to ensuring that we avoid a similar situation in the future," Chief Executive Dave Roberts said.

The CEO added that the accounting errors did not impact the company's production and operations.

The irregularities were discovered by Chief Financial Officer David Dyck after he undertook a review of the company's accounting practices.

Penn West said on Thursday it had restated its results since 2012 and that its audit committee determined that the company needs to review results going back to 2007.

The company cut its 2014 capital budget to C$820 million to reflect the reclassification of C$80 million of the budget from capital expenditures to operating expenses.

Penn West, which has reduced its headcount by almost 50 percent since late 2012, posted a profit of C$143 million, or 29 Canadian cents per share, in the quarter, compared with a loss of C$53 million, or 11 Canadian cents per s hare, a year earlier.

Revenue fell 13 percent to C$650 million, hurt by a 24 percent drop in total production.

The company maintained its 2014 average production forecast of 101,000 to 106,000 barrels of oil equivalent per day.

Up to Wednesday's close, Penn West's shares have fallen more than 20 percent since July 29, when the company said it had uncovered accounting irregularities. (1 US dollar = 1.1000 Canadian dollar) (Reporting by Ashutosh Pandey in Bangalore; Editing by Saumyadeb Chakrabarty)

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