A Calgary-based oil company says it is in danger of defaulting on some of its debts by the end of June, but is working with its lenders to ensure that doesn't happen.

Penn West Petroleum Ltd. said in its quarterly earnings on Monday that it is considering selling assets and raising capital via other means in order to pay its debts and stay in business.

"If the current low commodity price environment continues, the company anticipates it will not be in compliance with certain of its existing financial covenants by the end of the second quarter of 2016," Penn West said.

"The company is engaged in negotiations with its lenders to amend these financial covenants prior to the end of the second quarter of 2016, which if successful will mitigate the risk of default in 2016 and further into the future at prevailing commodity price levels."

Martin Pelletier, portfolio manager and OCIO at TriVest Wealth Counsel says that's a warning to the company's lenders that if ongoing negotiations to restructure the company's debt don't go well, the alternative could be much worse for them.

"To me it looks like a warning flare — if we don't get this thing settled, the alternative is zero: default," he said in an interview. "It's getting that message across to the lenders. But unfortunately it's also going to the shareholders."

Penn West shares fell 21 per cent on the TSX on Monday, closing at 82 cents. They have fallen by 67 per cent in the past year.

During the recently completed quarter, Penn West posted a loss of $100 million in the first three months of the year, and pumped out just over 77,000 barrels of oil per day during the quarter — down from 94,000 during the same time last year.

The numbers also show the company has $1.86 billion in long term debt. That's almost four times as much as what the company is worth on the TSX.

The company recently sold its oil and gas interests in the Slave Point area, which produce almost 4,000 barrels of oil equivalent per day, to raise $148 million.

Pelletier said Penn West is not the only company in the oil patch to have too much debt on their books, and could be a sign of things to come.

"Are there other companies facing such a crunch?" he said. "For some, the current rebound in oil prices is not enough, it's too late.

"The next six months are crucial."