UPDATE: Stifel Nicolaus Downgrades Penn West Exploration to Hold Following Commodity Price Updates

Stifel Nicolaus reduced its rating on Penn West Exploration PWT from Buy to Hold and removed its price target of C$22 on shares. Stifel Nicolaus commented, "While we have openly stated in the past we consider Penn West's asset portfolio to be one of the richest in the basin, we believe there are overriding factors that may delay or stall equity growth creation over the next 6-12 months. The company faces the same commodity pressures as all other oil-levered businesses we cover, but the perceived need for $1bn in asset dispositions could be an overhang on the stock, in our view. Penn West's debt levels have risen each of the last 7 quarters (2Q12e excluded), which doesn't present a problem so long as free cash flow generation is increasing at the same or higher rate, but this has not happened. Further, we believe increased volatility in crude oil prices clouds the go-forward picture for the story." Penn West Exploration closed at $12.91 on Thursday.