We always dream of getting in on a great stock. Truly great stocks, however, belong to those companies whose fundamentals are sound and whose business models remain solid, even when market conditions aren't stable. Or at the least, the company must have the ability to bounce back after going through a brief lull. Penn West Energy (NYSE: PWE) has demonstrated these qualities, as evidenced by its first quarter results this year.

Solid performance
Net income nearly tripled this quarter as compared to the year-ago quarter -- from $98 million in the year-ago quarter to a phenomenal $291 million in 2011. Even more so, the future potential growth that this stock carries makes it look an exciting prospect.

Looking back at these figures, I am not really surprised. High energy prices in the wake of the Libyan uprising have definitely boosted the company's revenues. What really matters, however, is the huge asset base that Penn West holds in Canada.

While year-over-year oil and natural gas sales rose by 5%, operating income did take a hit, due to unrealized hedging losses to the tune of $176 million. Still, if I'm to discount losses or gains made from these hedging activities, operating income stands at $128 million this quarter -- a fantastic jump from $30 million from the corresponding quarter last year. The company isn't alone in this. Fellow competitors like Noble Energy (NYSE: NBL) have recently undergone a similar fate thanks to sweeping macroeconomic conditions.

Thanks to a deferred tax recovery worth $351 million, the effect of this loss on Penn West did not reflect on the company's bottom line. This shows an astute sense of judgment on part of the management. With several companies recording net losses on account of derivatives and hedging, Penn West seemingly stands out as impact of these losses had been effectively offset.

A Foolish bottom line
With ever expanding resources in Western Canada's sedimentary reserves, Penn West's growth prospects look solid. With plans to scale up production to up to 177,000 barrels of oil equivalent per day (Boe/d) from the current 166,135 Boe/d, this will only serve the company well. It is imperative that underlying fundamentals must be sound in order to weather any kind of storm that oil companies may otherwise face in the ever uncertain energy market. Competition from EnCana Corp (NYSE: ECA) and Talisman Energy (NYSE: TLM) is only bound to increase as Canadian E&P companies look to cash in on the energy craze.