There is no denying that Penn West Petroleum Ltd. (TSX:PWT)(NYSE:PWE) has been suffering quite a bit. It has lost 90% of its market share over the past year, which has made it one of the worst investments someone could have. Despite all of this, I can’t help but feel that there is a small chance the company could actually turn around.

It’s important to understand, though, that this is a very small chance. The previous management really put the company in a dire situation by acquiring assets that didn’t really contribute to the company’s success. Further, that management borrowed a lot of money, so it is going to take quite a bit of luck to succeed.

Fortunately, the current management is looking to make the company much leaner. In April, it sold a significant chunk of land to Freehold Royalties Ltd. for $321 million. This was a lot more than investors had anticipated the company would be able to get for the assets.

These sorts of asset sales are necessary for Penn West to keep control of its debt. As of right now, the company has $2.4 billion in total debt. It is going to need to continue selling assets so that it will be able to survive. However, if the company sells too many assets, there won’t be significant production to generate any cash flow.

Penn West will also need the price of oil to return to a more lucrative price if it is to survive. Over the last quarter, the price of oil has gone from around US$45 up to around US$60. This increase puts Penn West in a slightly better situation to generate some cash flow. However, I believe the company really needs to be in the US$70-$80 range for it to really start to breathe.

So should you buy?

Penn West is never going to return to its glory days. Previous management really screwed up the financials and it is commendable that the current executives have been able to keep the operation going.

However, because the stock price has dropped so much, there could be a possibility for this to be a smaller, but still profitable operation at some point. If the company can get its debt in order—primarily from the price of oil rising and assets being sold—then there’s a decent chance the stock price will follow.

My play on this is to put a little money into the company if you can stomach the risk. The reward could be great, but the risk is just as great. I don’t believe Penn West is going to disappear, but no one can really predict when it will finally return to a comfortable place. However, if investing in risky oil companies isn’t your cup of tea, there are plenty of other places to put your funds.

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Fool contributor Jacob Donnelly has no position in any stocks mentioned.