Corporate Presentation

September 2015

Important Notices to the Readers

This presentation should be read in conjunction with the Company's unaudited consolidated financial statements and
management's discussion and analysis ("MD&A") for the three and six months ended June 30, 2015. All dollar amounts
contained in this presentation are expressed in millions of Canadian dollars unless otherwise indicated.
Certain financial measures included in this presentation do not have a standardized meaning prescribed by International
Financial Reporting Standards (IFRS) and therefore are considered non-generally accepted accounting practice ("nonGAAP") measures; accordingly, they may not be comparable to similar measures provided by other issuers. This
presentation also contains oil and gas disclosures, various industry terms, and forward-looking statements, including
various assumptions on which such forward-looking statements are based and related risk factors. Please see the
Company's disclosures located in the Appendix at the end of this presentation for further details regarding these matters.

pennwest.com | TSX: PWT NYSE: PWE

Corporate Profile

Operations

Production (Q2/15)
% Liquids
Netback (Q2/15)

69%
$18.72/boe

Asset Base

$661 MM

1P Reserves (YE 2014)

2P Reserve Life Index (2014)

15 Years

Capitalization

EBITDA (trailing 12 months)

91,164 boe/d

368 MMboe

2P Reserves (YE 2014)

561 MMboe

Market Capitalization ($0.84/sh as at Sept 1)

$422 MM

Net Debt (Q2/15)

$2,205 MM

Enterprise Value

$2,627 MM

Senior Debt to EBITDA

pennwest.com | TSX: PWT NYSE: PWE

3.2 times

Actions Taken to Live Within our Means

Limit capital expenditures to

funds flow from operations

Suspend our dividend

2016 capital program will be

Free Cash Flow neutral
Ramping down H2 2015 activity

$20 million annual cash savings

Effective following October 2015 payment

$45 million annual cash savings

Significantly reducing our
current cost structure

pennwest.com | TSX: PWT NYSE: PWE

35% reduction in staff

Board voluntarily reduced retainers

Limiting Capex to Funds Flow from Operations

~$215MM
Surplus

~$150MM
Surplus

Capex
Incl.
Enviro

FFO

Capex
Incl.
Enviro

FFO

Capex
Incl.
Enviro

Going forward, we plan

to limit our Total Capital
Expenditures to Funds
Flow from Operations
FFO

2013

2014

Potential 2015E

@ US$98 WTI

@ US$93 WTI

@ US$50 WTI

Potential 2016E

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

Driving Down Capital Costs

Pembina Cardium Drill Cost

Dodsland Viking Drill Cost

$230

$550

H1 2015 cost per

meter drilled down
~$200/m from 2013
$450

$350

Dodsland Viking

$220

Cost per Meter Drilled ($/m)

Cost per Meter Drilled ($/m)

Pembina Cardium

H1 2015 cost per

meter drilled down
~$30/m from 2013

$210

$200

$190

$250

$180
2013

2014

2015 H1

2013

2014

2015 H1

Expect up to a 10% further reduction in individual well drilling, completion, equip,

and tie-in costs as well as associated facilities relative to where we are today
pennwest.com | TSX: PWT NYSE: PWE

Driving Down Operating Costs

$800

Absolute operating costs at our

existing properties reduced over 20%
excluding the impact of divestitures

Operating Costs ($MM)

$700

$600

Expect further
5 10% operating
cost savings in 2016
$500
2013

2014

2015E

2016E

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

Current Hedge Position

Targeting to hedge 25% - 40% of net oil volumes and 40% - 50% of net gas volumes
~$75MM current mark to market value on senior note FX contracts
Oil Hedge Position: Volumes & Price

Gas Hedge Position: Volumes & Price

14,000

75
70
12,500

70

12,500

12,000

10,000

9,500

8,000

6,000
6,000
5,000

5,000

4,000

Average Gas Volumes Hedged (MMcf/d)

Average Oil Volumes Hedged (bbl/d)

60

45

30

19

19

19

19

15
2,000

WTI
C$70

WTI
C$73

WTI
C$73

WTI
C$72

WTI
C$72

WTI
C$72

Q3

Q4

Q1

Q2

Q3

Q4

AECO
C$2.86

AECO
C$2.86

AECO
C$3.08

AECO
C$3.08

AECO
C$3.08

AECO
C$3.08

Q3

Q4

Q1

Q2

Q3

Q4

0
2015

2016

2015

2016

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

Core Areas Remain Profitable

Total Core Assets
Production
Liquids
Opex
NOI
Netback

54,000 boe/d
76%
$15.50/boe
$440MM
$22.50/boe

Slave Point

Cardium

100 kms
65 miles

Production
Liquids
Opex
NOI
Netback

95 kms
60 miles

29,500 boe/d
66%
$14.50/boe
$230MM
$21.50/boe

Cardium

Viking
150 kms
95 miles

Viking

125 kms
80 miles

135 kms
85 miles

Production
Liquids
Opex
NOI
Netback

18,500 boe/d
87%
$16.00/boe
$160MM
$23.50/boe

205 kms
130 miles

Slave Point
Production
Liquids
Opex
NOI
Netback

6,000 boe/d
97%
$20.00/boe
$50MM
$25.00/boe

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

Viking Overview
Viking Play Details
Production

T30

Penn West land

PW 2015 well
PW 2014 well

4 kms

R22W3

boe/d

18,500

Base Decline

8 - 12

Locations

~1,500

Land

sections

~1,000

1P Reserves

MMboe

56

2P Reserves

MMboe

73

years

11

2 miles

ALBERTA

SASKATCHEWAN

2P RLI (H1 2015)

Viking Upside
1,500

1,000

Dodsland
500

AB

SK
0
2015 Spuds

Gross Booked Locations

Potential Inventory

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

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Cardium Overview
Cardium Play Details

T54

Production

boe/d

29,500

Base Decline

16 - 20

Locations

~2,500

Land

sections

~1,100

1P Reserves

MMboe

160

2P Reserves

MMboe

216

years

20

Easyford

Pembina

T50

PCU #11

J Lease

PCU #9

2P RLI (H1 2015)

T45

Cardium Upside

Lodgepole
3,000

Willesden
Green

Penn West land

PW 2015 well
PW 2014 well
Unit boundary

2,000

Faraway
15 kms

T40

Crimson Lake

1,000

10 miles

R15W5

R10

R5

0
2015 Spuds

Gross Booked Locations

Potential Inventory

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

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Investment Economics Remain Supportive

Viking Play Well Economics (Dodsland)
$1,015

NPV ($K)

IRR (%)

97%

1.14x

PIR (x)
0.85x

$757

70%
0.55x

$490

47%
0.25x

26%

$223

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

Cardium Play Well Economics (Pembina)

$2.1

NPV ($MM)

66%

IRR (%)

0.9x

PIR (x)

46%

$1.5

0.6x

30%

$0.9

0.4x

16%
0.1x

$0.3

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

C$50/bbl

C$60/bbl

C$70/bbl

C$80/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

US$42/bbl

US$50/bbl

US$58/bbl

US$66/bbl

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

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Non-Core Areas: Upside Potential with Stable Base

H1 2015 Operational Summary
NE B.C. & NW AB

Production
Mitsue
Weyburn
Swan Hills
NE BC & NW AB
East Central AB
PROP
Other

PROP

Mitsue

Total Non-Core

Liquids

boe/d
4,500
2,500
8,000
8,000
7,000
3,000
1,000

%
78%
100%
76%
8%
41%
97%
55%

34,000

56%

Swan
Hills
East
Central
AB

Weyburn

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

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Continue to Transact on Non-Core Assets

~$3.4B
Q2 2013 Net Debt

$3,500

Q2 2015 Net Debt

($493)

$3,402

$3,000

($212)
($348)

Net Debt ($MM)

~$2.2B

~$1.5B of dispositions
over the last 24 months

Total production sold of ~30,000 boe/d

implies aggregate transaction metric
of ~$50,000/boe/d

$2,500
($412)
$338

($70)

FX Losses

Other

$2,205

$2,000

$1,500

$1,000
Q2 2013
Net Debt

H2 2013
Dispositions

H1 2014
Dispositions

H2 2014
Dispositions

H1 2015
Dispositions

Q2 2015
Net Debt

See Endnotes
pennwest.com | TSX: PWT NYSE: PWE

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Appendix

Endnotes
Slide 5

Historical data excludes dividend for a better comparison of Penn Wests dividend policy after the payment to be made on October 15, 2015. Potential 2015E Capex based on capital
budget as per guidance and internal estimate for Enviro. Potential 2015E FFO estimated range based on high/low ranges of production, Opex and G&A Cost inputs from guidance
run on the internal forecasting model.
Slide 7

Opex is calculated only for properties that Penn West currently owns and this excludes the impact of acquisitions and divestments. 2015 operating cost estimate based on mid-point
of guidance adjusted for costs incurred on properties that were sold.
Slide 8

5,000 bbl/d of US$ contracts in Q3 2015 illustratively converted to C$ at a rate of C$/US$ 1.30.
Slide 9

Production, Liquids %, Opex, and Netback metrics based on operating leases for the first six months of 2015 with play boundaries defined as per internal standards. NOI is
annualized based on the first six months of 2015.
Slides 10,11

Play boundaries defined as per internal standards. Production based on operating leases for the first six months of 2015. Number of locations based on internally identified inventory.
Reserves, RLI, and gross booked locations based on the year-end 2014 reserve evaluation performed by the external reserve evaluator.
Slide 12

Economic metrics based on internal economic assumptions of revenues, costs, and well performance.
Slide 13

Production and Liquids % based on operating leases for the first six months of 2015 with play boundaries defined as per internal standards.
Slide 14

FX Losses is the impact of changes in foreign exchange rates on Senior Notes outstanding.

pennwest.com | TSX: PWT NYSE: PWE

16

Definitions and Industry Terms

A&D means oil and natural gas property acquisitions and divestitures.
bbl means barrel or barrels.
boe and boe/d mean barrels of oil equivalent and barrels of oil equivalent per day, respectively.
Capex means Total Capital as defined below.
Development Capital includes all direct costs related to our operated and non-operated development programs including drilling, completions, tie-in, development of and expansions
to existing facilities and major infrastructure, optimization and EOR activities.
EBITDA is calculated in accordance with Penn Wests lending agreements wherein unrealized risk management gains and losses and impairment provisions are excluded.
Enviro means decommissioning expenditures.
EOR means Enhanced Oil Recovery.
FX means foreign exchange rate, in our case typically refers to C$ to US$ exchange rates.
FFO means Funds Flow from Operations.
Free Cash Flow (FCF) means Funds Flow from Operations less Total Capital less Enviro less dividends paid.
G&A means general and administrative expenses.
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids % means the percentage of crude oil and NGLs from the total barrels of oil equivalent of production.
Mcf means thousand cubic feet.
MMboe means million barrels of oil equivalent.
MM means millions.
NPV means Net Present Value which is the sum of the present values of income and outgoing cash flows over a period of time
K means thousands.
Net Debt means Senior Debt plus Bank Debt plus non-cash working capital deficit.
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil.
Opex means operating costs.
NOI refers to Net Operating Income which means revenue net or royalties less operating costs.
PIR refers to the Profit Investment Ratio which is the NPV divided by the initial investment.
RLI refers to Reserve Life Index which measures the number of years it will take to deplete reserves at the current pace of production.
Total Capital includes all direct costs related to our operated and non-operated development and base programs including drilling, completions, tie-in, facilities and major
infrastructure capital, optimization, EOR, corporate and other capital.

pennwest.com | TSX: PWT NYSE: PWE

17

Non-GAAP Measures Advisory

Non-GAAP Measures Advisory
In this presentation, we refer to certain financial measures that are not determined in accordance with IFRS. These measures as presented do not have any standardized meaning
prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies. We believe that, in conjunction with results presented in
accordance with IFRS, these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance. You are
cautioned, however, that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance. These
measures include the following:
Funds Flow is cash flow from operating activities before changes in non-cash working capital and decommissioning expenditures. Funds flow is used to assess our ability to fund
dividends and planned capital programs. For additional information relating to funds flow, including a reconciliation of our funds flow to our cash flow from operating activities, see our
latest management's discussion and analysis which is available in Canada at www.sedar.com and in the United States at www.sec.gov;
Funds Flow From Operations excludes the effects of financing related transactions from foreign exchange contracts and debt repayments/ pre-payments and is more
representative of cash related to continuing operations. For additional information relating to funds flow from operations, including a reconciliation of our funds flow from operations to
our funds flow, see our latest MD&A which is available in Canada at www.sedar.com and in the United States at www.sec.gov
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less
royalties, operating costs and transportation. The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets. For
additional information relating to netbacks, including a detailed calculation of our netbacks, see our latest management's discussion and analysis which is available in Canada at
www.sedar.com and in the United States at www.sec.gov;
Net debt is the amount of long-term debt, comprised of long-term notes and bank debt, plus net working capital (surplus)/deficit. Net debt is a measure of leverage and liquidity.
Net working capital (surplus)/deficit is accounts payable and accrued liabilities plus dividends payable less the sum of accounts receivable and other current assets. We use this
as a measure of net cash obligations to be settled in the near-term under the course of normal business operations.

pennwest.com | TSX: PWT NYSE: PWE

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Forward-Looking Information Advisory

Certain statements contained in this presentation constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe
harbour" provisions of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast",
"budget", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "objective", "aim", "potential", "target", "pursue" and similar words suggesting future events or
future performance. In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular,
this presentation contains, without limitation, forward-looking statements pertaining to the following: (a) under "Actions Taken to Live Within Our Means": that capital expenditures will
be limited to Fund Flow from Operations; that the 2016 capital program will be Free Cash Flow neutral; that H2 2015 activity will be reduced; that the dividend suspension will realize
$20 million in annual cash savings; that the current cost reductions will realize $45 million in annual cash savings; and the anticipated 35% reduction in staff and reduced Board
retainers; (b) under "Limiting Capex to Funds Flow from Operations": our plan to limit our future total capital expenditures to Funds Flow from Operations and the annualized FFO and
Capex including Enviro for 2015; (c) under "Driving Down Capital Costs": the expected cost per meter drilled in 2016 for both the Pembina Cardium and Dodland Viking areas; and
the expectation of up to a 10% further reduction in individual well drilling, completion, equip, and tie-in costs as well as associated facilities relative to current levels; (d) under "Driving
Down Operation Costs": the 2015 H1 annualized operating costs and the expectation for a further 5% - 10% operating cost savings in 2016; (e) under the "Current Hedge Position":
our intent to hedge 25% - 40% of net oil volumes and 40% - 50% of net gas volumes; (f) under Core Areas Remain Profitable: the annualized NOIs in each of the respective core
asset areas; (g) under Viking Overview: the long term plan inventory identified and potential; and (h) under Cardium Overview: the long term plan inventory identified and potential.
With respect to forward-looking statements contained in this presentation, we have made assumptions regarding, among other things: that we do not dispose of any material
producing properties or royalties or other interests therein; the economic returns that we anticipate realizing from expenditures made on our assets; future crude oil, natural gas
liquids and natural gas prices and differentials between light, medium and heavy oil prices and Canadian, WTI and world oil and natural gas prices; future capital expenditure levels;
future crude oil, natural gas liquids and natural gas production levels; future exchange rates and interest rates; future taxes and royalties; future debt levels; the continued suspension
of our dividend and our dividend reinvestment plan; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control,
including weather, infrastructure access and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out
development activities and the costs thereof; our ability to market our oil and natural gas successfully; and our ability to add production and reserves through our development and
exploitation activities.
Although we believe that the expectations reflected in the forward-looking statements contained in this presentation, and the assumptions on which such forward-looking statements
are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking
statements included in this presentation, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By
their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking
statements contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the possibility that we will be
unable to complete all or some of our planned non-core asset dispositions; the possibility that we will not be able to realize anticipated costs savings as a result our workforce
reduction and other initiatives; the impact of weather conditions on seasonal demand; the risk that we will be unable to execute our capital programs as planned without significant
adverse impacts from various factors beyond our control, including weather, infrastructure access and delays in obtaining regulatory approvals and third party consents; the possibility
that we breach one or more of the financial covenants pursuant to our amending agreements with the syndicated banks and the holders of our senior notes; risks inherent in oil and
natural gas operations; uncertainties associated with estimating reserves and resources; competition for, among other things, capital, acquisitions of reserves, resources,
undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions or dispositions; geological, technical, drilling and processing problems; general economic
and political conditions in Canada, the U.S. and globally; industry conditions, including fluctuations in the price of oil and natural gas, price differentials for crude oil and natural gas
produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; royalties payable in respect of our oil and
natural gas production and changes to government royalty frameworks; changes in government regulation of the oil and natural gas industry, including environmental regulation;
fluctuations in foreign exchange or interest rates; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed,
including extreme cold during winter months, wildfires and flooding; failure to obtain regulatory, industry partner and other third-party consents and approvals when required, including
for acquisitions, dispositions and mergers; failure to realize the anticipated benefits of dispositions, acquisitions, joint ventures and partnerships, including those discussed herein;
changes in tax and other laws that affect us and our securityholders; the potential failure of counterparties to honour their contractual obligations; stock market volatility and market
valuations; the global supply and demand of crude oil; political uncertainty, including the risks of hostilities, in the petroleum producing regions of the world; and the other factors
described in our public filings (including our Annual Information Form) available in Canada at www.sedar.com and in the United States at www.sec.gov. Readers are cautioned that
this list of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this presentation speak only as of the date of this presentation. Except as expressly required by applicable securities laws, we do not
undertake any obligation to publicly update any forward-looking statements. The forward-looking statements contained in this presentation are expressly qualified by this cautionary
statement.
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19

STOCK EXCHANGE
Toronto:
PWT
New York:
PWE
INDEPENDENT RESERVES EVALUATOR
Sproule Associates Limited
TRANSFER AGENT
CST Trust Company
Toll Free:
1-800-387-0825
Email:
inquiries@canstockta.com
Website:
www.canstockta.com

INVESTOR RELATIONS
Toll Free:
1-888-770-2633
Email:
investor_relations@pennwest.com
Website:
www.pennwest.com
PENN WEST
Suite 200, Penn West Plaza
207 9th Avenue SW
Calgary, Alberta, Canada T2P 1K3
Telephone:
(403) 777-2707
Toll Free:
1-866-693-2707
Facsimile:
(403) 777-2699
Website:
www.pennwest.com