Obsidian Energy Announces Launch of an Offer to Purchase up to $2.0 Million of our Outstanding Senior Unsecured Notes

Rhea-AI Summary

Obsidian Energy Ltd. announces a cash offer to purchase up to $2.0 million of its outstanding Senior Unsecured Notes due 2027, with a total of $116.2 million outstanding. The offer expires on March 11, 2024, offering $1,030 per $1,000 principal amount of Notes, plus accrued interest.

Insights

Financial Analyst

Obsidian Energy's announcement of a tender offer to repurchase a portion of its outstanding Senior Unsecured Notes could signal a strategic move to manage its debt profile and optimize its capital structure. By offering to buy back these notes at a premium, the company may be aiming to reduce future interest expenses, which can improve net income and potentially enhance shareholder value. Additionally, the non-conditional nature of the offer suggests confidence in the company's liquidity and financial flexibility.

The decision to repurchase notes before maturity can be influenced by a variety of factors including interest rate forecasts, balance sheet considerations and overall market conditions. The premium offered over the principal amount indicates an incentive for note holders to participate, which could lead to a successful tender offer. However, investors should consider the potential impact on the company's cash reserves and whether the repurchase aligns with long-term strategic financial planning.

Debt Market Analyst

The specific structure of the tender offer, with a fixed maximum purchase consideration, implies that Obsidian Energy is targeting a manageable level of debt repurchase, likely to avoid significant disruption to its liquidity. The pro rata acceptance condition in case of oversubscription is a common feature in such offers, ensuring fairness and transparency in the allocation process. This approach could also be indicative of a disciplined capital management strategy.

For the debt market, this offer might affect the secondary trading of Obsidian's notes. A successful buyback could lead to a contraction in the available float of these securities, potentially influencing their market price. The premium offered might set a temporary floor for the notes' trading price, but post-offer trading levels will depend on remaining market supply and demand dynamics.

Market Research Analyst

From a market perspective, Obsidian Energy's actions could be interpreted by investors as a positive signal regarding the company's operational performance and outlook. By reducing debt, the company could be seen as strengthening its financial position. This could, in turn, impact investor sentiment and the company's stock market performance, subject to broader market conditions.

It is also important to analyze the timing of such a tender offer. If the offer is perceived as taking advantage of favorable market conditions to reduce high-cost debt, it could reflect positively on management's acumen. Conversely, if the market interprets the repurchase as a necessity due to unfavorable debt terms, it could raise concerns about the company's past financing decisions.

Calgary, Alberta--(Newsfile Corp. - February 26, 2024) - OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("Obsidian Energy", the "Company", "we", "us" or "our") today announced that we have commenced an offer (the "Offer") to purchase for cash, up to an aggregate amount of $2.0 million (the "Maximum Purchase Consideration") of our outstanding 11.95 percent Senior Unsecured Notes due July 27, 2027, ISINs CA674482AA25 (Restricted), CA674482AB08 (144A) and CA674482AC80 (Regulation D), CUSIP Nos. 674482AA2 (Restricted), 674482AB0 (144A) and 674482AC8 (Regulation D) (the "Notes"), as disclosed in our year-end 2023 results. As of February 26, 2024, $116.2 million aggregate principal amount of Notes were outstanding. The Offer is being made pursuant to an offer to purchase (the "Offer to Purchase") and a related letter of transmittal, each dated February 26, 2024, and a notice of guaranteed delivery. The Offer will expire at 5:00 p.m., Eastern Daylight Time, on March 11, 2024, unless extended. Tendered Notes may be withdrawn at any time before the expiry of the Offer.

Subject to possible proration as described in the Offer to Purchase, holders of Notes that are validly tendered and accepted at or prior to the expiry of the Offer, or who deliver to the tender agent a properly completed and duly executed notice of guaranteed delivery and subsequently deliver such Notes, each in accordance with the instructions described in the Offer to Purchase, will receive total cash consideration of $1,030 per $1,000 principal amount of Notes, plus any accrued and unpaid interest up to, but not including, the settlement date, which is expected to occur on March 14, 2024.

The consummation of the Offer and the Company's obligation to accept for purchase, and to pay for, Notes validly tendered (and not validly withdrawn) pursuant to the Offer are subject to the satisfaction of or waiver of certain conditions as set forth in the Offer to Purchase. The Offer is not conditional on any minimum amount of Notes being tendered. Obsidian Energy may amend, extend or terminate the Offer, or increase the Maximum Purchase Consideration, at its sole discretion. If the aggregate purchase price for Notes validly tendered (and not validly withdrawn) pursuant to the Offer would result in an aggregate purchase price in excess of the Maximum Purchase Consideration, the Company intends to accept the Notes for purchase on a pro rata basis such that the aggregate principal amount of Notes accepted for purchase pursuant to the Offer is no greater than the Maximum Purchase Consideration.

The Offer is being made pursuant to the terms and conditions contained in the Offer to Purchase, related letter of transmittal and notice of guaranteed delivery. Copies of these documents may be obtained from Computershare Investor Services Inc., the tender agent for the Offer, by telephone at 1-800-564-6253 or email at corporateactions@computershare.com.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

ADDITIONAL READER ADVISORIES

FORWARD-LOOKING STATEMENTS

This news release contains forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable Canadian and U.S. securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this news release contains forward-looking statements and information concerning: the consummation of the Offer described above, the Maximum Purchase Consideration and the terms and timing of the Offer.

The forward-looking statements and information are based on certain key expectations and assumptions made by Obsidian Energy. Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward-looking statements and information because Obsidian Energy can give no assurance that they will prove to be correct. By its nature, such forward-looking statements and information are subject to various risks and uncertainties, which could cause the actual results and expectations to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include but are not limited to: risks related to the successful consummation of the Offer; the risk of a downgrade in the Company's credit ratings and the potential impact on the Company's access to capital markets and other sources of liquidity; fluctuations in currency and interest rates; and changes in or interpretation of laws or regulations. Readers are cautioned that the foregoing list of factors is not exhaustive. Readers are cautioned that the assumptions used in the preparation of such forward-looking statements and information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on such forward-looking statements and information. Obsidian Energy gives no assurance that any of the events anticipated will transpire or occur, or, if any of them do, what benefits Obsidian Energy will derive from them. The forward-looking statements and information contained in this news release are expressly qualified by this cautionary statement. Except as required by law, the Company does not undertake any obligation to publicly update or revise any forward-looking statements or information contained herein. Readers should also carefully consider the matters discussed that could affect Obsidian Energy, or its operations or financial results in Obsidian Energy's Annual Information Form (see "Risk Factors" and "Forward-Looking Statements" therein) for the year ended December 31, 2023, which is available on the SEDAR+ website (www.sedarplus.ca), EDGAR website (www.sec.gov) or Obsidian Energy's website.

Obsidian Energy shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American exchange in the United States under the symbol "OBE".

CONTACT

TENDER AGENT

Computershare Investor Services Inc.
Toll-Free: 1-800-564-6253
Email: corporateactions@computershare.com

OBSIDIAN ENERGY

Suite 200, 207 - 9th Avenue SW, Calgary, Alberta T2P 1K3
Phone: 403-777-2500
Toll Free: 1-866-693-2707
Website: www.obsidianenergy.com

Investor Relations:
Toll Free: 1-888-770-2633
Email: investor.relations@obsidianenergy.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/199141

FAQ

What is the offer announced by Obsidian Energy Ltd. regarding its Senior Unsecured Notes?

Obsidian Energy Ltd. has announced an offer to purchase up to $2.0 million of its outstanding 11.95 percent Senior Unsecured Notes due July 27, 2027.

When does the offer to purchase the Senior Unsecured Notes expire?

The offer to purchase the Senior Unsecured Notes expires at 5:00 p.m., Eastern Daylight Time, on March 11, 2024.

What is the total cash consideration per $1,000 principal amount of Notes offered by Obsidian Energy Ltd.?

Obsidian Energy Ltd. is offering a total cash consideration of $1,030 per $1,000 principal amount of Notes, plus any accrued and unpaid interest.

How can holders of the Notes participate in the offer?

Holders of the Notes can participate in the offer by validly tendering and accepting their Notes at or prior to the expiry of the Offer.

What happens if the aggregate purchase price exceeds the Maximum Purchase Consideration?

If the aggregate purchase price exceeds the Maximum Purchase Consideration, Obsidian Energy Ltd. intends to accept the Notes for purchase on a pro rata basis.