CALGARY -- Penn West Petroleum Ltd. is reclassifying some $80 million of its capital budget this year as operating expenses after a review of accounting irregularities that found hundreds of millions in past expenses had been incorrectly categorized.

Penn West said Thursday the change means the company's 2014 capital budget will be $820 million instead of $900 million, however it noted the change will not affect its development plans.

The company restated its financial reports for 2012, 2013 and the first quarter of 2014 after its new chief financial officer found inadequate documentation last spring to support how some of its operating expenses were classified in the past.

Penn West found some expenses were incorrectly classified as property, plant and equipment costs instead of operating expenses, while others were incorrectly classified as royalties instead of operating expenses.

The net result of the changes cut the company's 2012 net income by $24 million or 16 per cent, but increased its 2013 net income by $29 million or three per cent. Penn West's net income for the first quarter of 2014 was increased by $7 million or seven per cent.

Shares in the company were up almost 10 per cent, or 75 cents, to $8.48 in morning trading on the Toronto Stock Exchange.

The company said Thursday its audit committee reviewed the accounting practices going back to and including 2007.

Penn West said it has taken steps to prevent further irregularities and that the senior finance and accounting personnel who were involved in the practices that led to the restatement are no longer with the company.

"What is very clear is that our production and operations have not been impacted, and the financial health of the company continues to improve," president and CEO Dave Roberts said in a news release.

Also Thursday, Penn West reported a second-quarter profit of $143 million, or 29 cents per share, compared with a loss of $53 million, or a loss of 11 cents per share, in the same quarter last year.

Revenue totalled $650 million, down from $745 million a year ago.

The company delayed its second-quarter earnings for the period ended June 30 due to the restatement of past financial reports.

Penn West, which saw its shares tumble after it first disclosed the review, is facing several lawsuits over the restatements.