UPDATE 1-Non-cash charges mask jump in Penn West results

TORONTO, Aug 7 (Reuters) - Penn West Energy Trust (PWT_u.TO: Quote, Profile, Research, Stock Buzz) said on Thursday its second-quarter net loss deepened due to hefty non-cash charges related to oil and gas hedging, but operating results improved as production rose on a big acquisition and oil prices climbed to a record.

The net loss for Penn West, the No. 2 Canadian energy trust, was C$323 million ($308 million), or 86 Canadian cents a unit, widening from a year-earlier loss of C$186 million, or 77 Canadian cents a unit.

The most recent figure included an C$837 million non-cash charge to account for the marked-to-market value of its forward oil and gas sales contracts. Onetime charges in the second quarter of 2007 totaled C$326 million.

The company, which closed its C$3.6 billion acquisition of Canetic Resources trust at the beginning of the year, said its funds flow, from which it pays distributions to unitholders, surged 130 percent to C$753 million from C$326 million. On a per-unit bases, funds flow climbed 46 percent to C$2 a unit.

Results at Penn West and its oil-industry peers have been buoyed by crude prices that soared 90 percent to a record quarterly average of $123.80 a barrel. Natural gas prices in Canada also surged, averaging C$9.68 per gigajoule, a 44 percent gain from 2007.

Penn West's production averaged 190,515 barrels of oil equivalent a day in the quarter, an increase of 50 percent percent from 126,599 a year earlier.

It said its output was held back by about 8,000 barrels of oil equivalent a day in the quarter due to a maintenance shutdown at the Spectra Energy McMahon gas plant in northeastern British Columbia and other plant outages.

The trust's revenue more than doubled to C$1.3 billion from C$608 million.

Penn West units rose 21 Canadian cents to C$30.53 on the Toronto Stock Exchange.

($1=$1.05 Canadian) (Reporting by Jeffrey Jones; editing by Rob Wilson)