(RTTNews) - Canadian oil and gas investment trust Penn West Energy Trust (PWE: News , PWT_U.TO) reported Thursday a profit for the third quarter that plunged from last year, reflecting significant revenue drop amid lower commodity prices and a 6% decline in production.

The company also reaffirmed its production outlook for the full year 2009, and provided initial production guidance for fiscal 2010.

With the economic crisis curtailing demand for oil, companies operating in the oil sector have had a tough time. Lower commodity prices and a decline in margins have hurt the bottom line of many of them. Oil prices have almost halved from an all-time high of $147 per barrel in July 2008, although they have improved from a yearly low of less than $34 a barrel in February this year. Oil prices in the third quarter averaged US$68.29 per barrel, while it averaged US$118.13 per barrel in the year-ago quarter.

Penn West noted that it continued to focus on positioning the company to move from a trust to a corporate model prior to the end of 2011. The company intends to primarily use a combination of organic growth and dividends to provide a return on capital in the future so as to position itself with the other senior independent North American oil and gas producers.

Third Quarter Results

The Calgary, Canada-based company, which engages in acquiring, developing and holding interests in petroleum and natural gas properties, reported net and comprehensive income of C$7 million or C$0.02 per unit, sharply lower than C$1.06 billion or C$2.73 per unit in the prior-year quarter. The company noted that the significantly higher income in the prior year was primarily due to unrealized risk management gains on our oil and natural gas collars.
Funds flow for the quarter dropped 47% to C$349 million from C$662 million in the year-ago quarter as a result of continued weakness in commodity prices. On a per-unit basis, funds flow nearly halved to C$0.83 from C$1.71 in the comparable quarter a year ago.

Penn West's gross revenues, including realized gains and losses on commodity, for the quarter dropped 35% to C$800 million from C$1.24 billion in the comparable period a year ago.

Quarterly revenues plunged to C$610 million from C$1.17 billion in the year-ago quarter. Oil and natural gas revenues were C$732 million, sharply lower than C$1.44 billion recorded in the prior-year quarter. Royalties' expenses declined to C$122 million from C$265 million in the year-ago quarter.

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