Obsidian Energy Announces Sale of Operated Pembina Assets for $320 Million in Cash, Equity and Assets
Obsidian Energy (TSX: OBE, NYSE: OBE) has announced a definitive agreement to sell its operated Pembina assets to InPlay Oil Corp. for approximately $320 million, comprising $220 million in cash, $85 million in InPlay shares, and InPlay's 34.6% interest in the Willesden Green Cardium Unit #2 field valued at $15 million.
The transaction will significantly reduce Obsidian's debt from $412 million to approximately $192 million. Post-transaction, Obsidian will maintain a production base of over 29,000 boe/d, with Peace River becoming its largest asset. The company will retain its non-operated holdings in Pembina Cardium Unit #11.
The deal represents approximately 2.7x 2024E net operating income and involves the sale of approximately 10,300 boe/d average production. The transaction is expected to close in early Q2 2025, subject to regulatory approvals and other conditions.
Obsidian Energy (TSX: OBE, NYSE: OBE) ha annunciato un accordo definitivo per vendere i suoi asset operativi di Pembina a InPlay Oil Corp. per circa 320 milioni di dollari, di cui 220 milioni in contante, 85 milioni in azioni InPlay e il 34,6% di interesse di InPlay nel campo Willesden Green Cardium Unit #2, valutato 15 milioni di dollari.
La transazione ridurrà significativamente il debito di Obsidian da 412 milioni a circa 192 milioni. Dopo la transazione, Obsidian manterrà una base di produzione di oltre 29.000 boe/d, con Peace River che diventerà il suo asset principale. L'azienda conserverà le sue partecipazioni non operative nella Pembina Cardium Unit #11.
Il contratto rappresenta circa 2,7 volte il reddito operativo netto previsto per il 2024 e comporta la vendita di una produzione media di circa 10.300 boe/d. Si prevede che la transazione si chiuda all'inizio del secondo trimestre del 2025, soggetta ad approvazioni normative e altre condizioni.
Obsidian Energy (TSX: OBE, NYSE: OBE) ha anunciado un acuerdo definitivo para vender sus activos operativos de Pembina a InPlay Oil Corp. por aproximadamente 320 millones de dólares, que incluye 220 millones en efectivo, 85 millones en acciones de InPlay y el 34,6% de participación de InPlay en el campo Willesden Green Cardium Unit #2 valorado en 15 millones de dólares.
La transacción reducirá significativamente la deuda de Obsidian de 412 millones a aproximadamente 192 millones. Tras la transacción, Obsidian mantendrá una base de producción de más de 29,000 boe/d, siendo Peace River su activo más grande. La empresa retendrá sus participaciones no operativas en Pembina Cardium Unit #11.
El acuerdo representa aproximadamente 2,7 veces el ingreso operativo neto proyectado para 2024 y implica la venta de una producción promedio de aproximadamente 10,300 boe/d. Se espera que la transacción se cierre a principios del segundo trimestre de 2025, sujeta a aprobaciones regulatorias y otras condiciones.
Obsidian Energy (TSX: OBE, NYSE: OBE)는 자사의 운영하는 펨비나 자산을 InPlay Oil Corp.에 약 3억 2천만 달러에 판매하기로 최종 계약을 체결했다고 발표했습니다. 이 금액은 현금 2억 2천만 달러, InPlay 주식 8천5백만 달러, 그리고 1천5백만 달러 가치의 Willesden Green Cardium Unit #2 유전에서 InPlay의 34.6% 지분을 포함합니다.
이번 거래는 Obsidian의 부채를 4억 1천2백만 달러에서 약 1억 9천2백만 달러로 크게 줄일 것입니다. 거래 후 Obsidian은 29,000 boe/d 이상의 생산 기반을 유지하며, Peace River가 가장 큰 자산이 될 것입니다. 이 회사는 Pembina Cardium Unit #11에 대한 비운영 지분을 유지합니다.
이번 거래는 2024년 예상 순영업소득의 약 2.7배에 해당하며, 평균 생산량 약 10,300 boe/d의 판매를 포함합니다. 거래는 2025년 2분기 초에 마무리될 것으로 예상되며, 규제 승인 및 기타 조건이 충족되어야 합니다.
Obsidian Energy (TSX: OBE, NYSE: OBE) a annoncé un accord définitif pour vendre ses actifs opérés de Pembina à InPlay Oil Corp. pour environ 320 millions de dollars, comprenant 220 millions en espèces, 85 millions en actions InPlay et 34,6 % d'intérêt d'InPlay dans le champ Willesden Green Cardium Unit #2, évalué à 15 millions de dollars.
La transaction réduira considérablement la dette d'Obsidian de 412 millions à environ 192 millions. Après la transaction, Obsidian maintiendra une base de production de plus de 29 000 boe/d, avec Peace River devenant son actif le plus important. L'entreprise conservera ses participations non opérées dans Pembina Cardium Unit #11.
L'accord représente environ 2,7 fois le revenu net d'exploitation prévu pour 2024 et implique la vente d'une production moyenne d'environ 10 300 boe/d. La transaction devrait être finalisée au début du deuxième trimestre 2025, sous réserve des approbations réglementaires et d'autres conditions.
Obsidian Energy (TSX: OBE, NYSE: OBE) hat eine endgültige Vereinbarung zur Veräußerung seiner betriebenen Pembina-Assets an InPlay Oil Corp. für etwa 320 Millionen Dollar bekannt gegeben, davon 220 Millionen in bar, 85 Millionen in InPlay-Aktien und InPlays 34,6% Anteil am Willesden Green Cardium Unit #2 Feld, das mit 15 Millionen Dollar bewertet ist.
Die Transaktion wird Obsidian's Schulden von 412 Millionen auf etwa 192 Millionen deutlich reduzieren. Nach der Transaktion wird Obsidian eine Produktionsbasis von über 29.000 boe/d aufrechterhalten, wobei Peace River sein größtes Asset wird. Das Unternehmen wird seine nicht betriebenen Anteile an Pembina Cardium Unit #11 behalten.
Der Deal entspricht etwa dem 2,7-fachen des voraussichtlichen Nettobetriebsergebnisses für 2024 und umfasst den Verkauf von etwa 10.300 boe/d durchschnittlicher Produktion. Die Transaktion wird voraussichtlich Anfang des zweiten Quartals 2025 abgeschlossen, vorbehaltlich regulatorischer Genehmigungen und anderer Bedingungen.
- Significant debt reduction of $220 million, improving balance sheet strength
- Transaction valued at 2.7x 2024E net operating income
- Reduces net operating costs by $2.20/boe on pro forma 2024E basis
- Increases ownership in Willesden Green Cardium Unit #2 to 99.8%
- Expected monthly dividend income of $0.8 million from InPlay shares
- Divestment of substantial production assets (10,300 boe/d)
- Six-month hold period restriction on InPlay shares
Insights
This transformative
The transaction metrics are compelling on multiple levels. The 2.7x multiple of 2024E net operating income represents fair value for mature Pembina assets, while the production multiple of
The strategic benefits extend beyond the immediate financial impact:
- Debt reduction from
$412 million to$192 million significantly improves financial flexibility and reduces interest burden - Increased focus on Peace River assets (42% of production post-deal) provides clear growth runway in high-return heavy oil plays
- Retention of non-operated PCU#11 interest maintains exposure to high-quality Pembina production without operational overhead
- Two board seats and
35% ownership in InPlay provides strategic optionality and ongoing exposure to Pembina upside
The timing of this transaction is particularly advantageous, allowing Obsidian to streamline its portfolio while commodity prices remain supportive. The resulting entity will be more focused, with improved cost structure and enhanced ability to execute on its Peace River growth strategy while maintaining optionality in its light oil business.
- Obsidian Energy to receive
$220 million in cash,$85 million in equity and a 34.6 percent interest in the Willesden Green Cardium Unit #2 Field, subject to adjustment in certain circumstances - Transaction results in significantly reduced debt and enhanced liquidity
- Positions Obsidian Energy to continue growth and delineation of Peace River asset with additional optionality from remaining light oil business
Calgary, Alberta--(Newsfile Corp. - February 19, 2025) - OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("Obsidian Energy", the "Company", "we", "us" or "our") is pleased to announce that the Company has entered into a definitive asset purchase and sale agreement (the "Agreement") with Calgary-based InPlay Oil Corp. ("InPlay") (TSX: IPO).
Under the terms of the Agreement, Obsidian Energy will divest our operated Pembina assets (the "Pembina Assets") but will retain our non-operated holdings in the Pembina Cardium Unit #11 ("PCU#11"). The Company will receive approximately
$220 million in cash (the "Cash Proceeds");$85 million of InPlay's common shares, (the "InPlay Shares"[1]; and, together with the Cash Proceeds, the "Non-Unit Consideration"); andInPlay's 34.6 percent working interest in the Willesden Green Cardium Unit #2 ("WGCU#2") oil field, bringing Obsidian Energy's ownership of WGCU#2 to 99.8[2] percent. The additional interest is estimated by Obsidian Energy to be valued at
$15 million .
Cash Proceeds are expected to be used to initially pay down debt, improving Obsidian Energy's balance sheet and overall liquidity. Pro forma year-end 2024 estimated ("2024E") net debt would be reduced to approximately
"The successful execution of our growth plan to date has put us in a position to rationalize our asset portfolio at a value that we believe to be accretive to our shareholders, while securing increased financial flexibility and meaningfully reducing asset retirement obligations," said Stephen Loukas, Obsidian Energy's President and CEO. "Upon Transaction close, we emerge as a significantly more focused company with an ability to accelerate our shareholder value creation strategy. Pro forma, Obsidian Energy will have a production base of over 29,000 boe/d (based on estimated fourth quarter 2024 production) with Peace River now becoming our largest asset, where we will continue to execute on our growth plan and further grow our Clearwater and Bluesky production. Our Willesden Green and Viking light oil assets will continue to generate stable production and free cash flow to support Peace River's development while maintaining optionality of growing both assets during periods when commodity prices and returns are conducive to doing so."
Mr. Loukas continued, "We also expect to secure additional future share price appreciation from our InPlay Share position as the addition of the Pembina Assets is both financially and strategically accretive to InPlay. During the second half of 2025, Obsidian Energy will consider different monetization options for our InPlay Share position with the goal of recycling that capital."
TRANSACTION HIGHLIGHTS
As a result of this transformative divestiture, Obsidian Energy will be well positioned to leverage our strong balance sheet and asset base to further build on our development and exploration/appraisal success at Peace River. Anticipated benefits of the Transaction for the Company include:
- Compelling Economics: Non-Unit Consideration of
$305 million for the Pembina Assets plus$15 million in value for the additional WGCU#2 working interest represents an approximate 2.7x 2024E net operating income. In terms of production volume and value, Obsidian Energy:- Sells approximately 10,300 boe/d average production (based on 2024E results), implying a production multiple of approximately
$31,000 per boe/d. - Reduces net operating costs by approximately
$2.20 /boe on a pro forma 2024E basis, improving the Company's total netback.
- Sells approximately 10,300 boe/d average production (based on 2024E results), implying a production multiple of approximately
- Streamlines Light Oil Assets: Allows the Company to focus our light oil development in Willesden Green, while maintaining our interest in our highly economic PCU#11 non-operated assets. At current commodity prices, these high return, quick payout assets generate meaningful free cash flow to help fund growth at Peace River.
- Willesden Green: The additional interest in WGCU#2 to 99.82 percent increases our production by approximately 150 net boe/d based on estimated fourth quarter 2024 results. Our net 2P booked locations increase to 30.5 in this underdeveloped portion of Willesden Green where we drilled our successful Open Creek 9-17 Pad Cardium formation wells. This Transaction streamlines the future development of the asset in parallel with the Belly River formation prospects in the area.
- Pembina: Obsidian Energy's remaining assets in Pembina will consist of our non-operated holdings in PCU#11, which had estimated fourth quarter 2024 average production of approximately 2,500 net boe/d[3].
- Viking: Our Viking assets continue to generate free cash flow and provide optionality to economically add light oil production to our production base.
- Increases Focus on Peace River Growth: Post-Transaction, our Peace River assets will account for over 42 percent of total production (estimated, fourth quarter 2024) and 33 percent of our total proved plus probable reserves (December 31, 2024), increasing our weighting towards our high-quality Bluesky and Clearwater heavy oil resource.
- Improves Leverage and Liquidity Position: Cash Proceeds from the Transaction will initially be used to repay bank indebtedness, reducing Obsidian Energy's outstanding obligations under the Credit Facility in aggregate by
$220 million , subject to closing and other adjustments and transaction costs. Obsidian Energy anticipates that leverage and liquidity going forward will also benefit from a reduction in asset retirement obligations. - Sets Up Credit Facility Plans: Obsidian Energy will complete our semi-annual borrowing base redetermination, anticipating that we will reduce our Credit Facility commitment amount to
$245 million (previously$300 million ) and extend our revolving and maturity periods by one year to May 31, 2026, and May 31, 2027, respectively, at Transaction close. The Transaction requires approval from our credit facility lenders, which is expected in due course. - Provides Future Optionality to Realize Value from InPlay Shares: Subject to a six-month hold period[4], the Company will evaluate various opportunities in the second half of 2025 to realize additional value for Obsidian Energy's shareholders.
- Until such time, Obsidian Energy will receive dividend income based on InPlay's expected policy, estimated at approximately
$0.8 million per month. - As part of the Transaction, Obsidian Energy will be entitled to two nominees on the InPlay Board of Directors at Transaction close and will have customary registration rights.
- Until such time, Obsidian Energy will receive dividend income based on InPlay's expected policy, estimated at approximately
TRANSACTION DETAILS AND METRICS
Transaction Metrics
| Non-Unit Consideration1: | |||
| Cash Proceeds | |||
| InPlay Shares - value | |||
| InPlay Shares - number2 | 54,838,709 | ||
| WGCU#2 estimated value | |||
| Average 2024E production3 | 10,300 boe/d | ||
| Implied 2024E production multiple4 | |||
| 2024E Net Operating Income ("NOI")5 | |||
| Implied 2024E NOI multiple6 | 2.7x |
(1) The Non-Unit Consideration assumes that InPlay is not required and/or does not elect to decrease the amount of InPlay Shares issued to Obsidian Energy and increase the amount of Cash Proceeds.
(2) Number of InPlay Shares is based on a price of
(3) Average 2024E production volumes for the Pembina Assets less volumes received for WGCU#2.
(4) Implied production multiple ratio calculated using
(5) Implied NOI is based on 2024E results and includes the additional interest in WGCU#2. The term NOI is a non-GAAP measure; please refer to the "Non-GAAP and Other Financial Measures" advisory section below for further detail.
(6) Implied NOI multiple ratio calculated using
The Pembina Assets to be sold to InPlay include 498 net sections of lands in the Pembina area of Central Alberta, including associated facilities and gathering systems. Through the additional interest in the WGCU#2 field, Obsidian Energy gains five net sections of land and 10.5 net booked locations. On a net disposition basis, the Transaction includes:
Proved developed producing ("PDP") reserves of 32.5 million boe resulting in a sale price of
$9.84 /boe;Proved ("1P") reserves of 52.2 million boe resulting in a sale price of
$6.13 /boe; andProved plus probable ("2P") reserves of 72.6 million boe resulting in a sale price of
$4.41 /boe.
Pro forma operating and financial details for the Company post-Transaction using 2024 information are found in the table below.
| Obsidian Energy | Obsidian Energy | |||||
| 2024 | 2024E Pro Forma | |||||
| Production1 | net boe/d | 37,474 | 27,150 | |||
| Liquids weighting1 | % | 68 | 69 | |||
| Total land | net sections | 1,817 | 1,324 | |||
| NOI1,2 | $ millions | 465 | 344 | |||
| Net operating costs1,2 | $/boe | 13.85 | 11.65 | |||
| Field netback1,2 | $/boe | 33.91 | 34.62 | |||
| Reserves3 | ||||||
| PDP | MMboe | 85.3 | 52.8 | |||
| 1P | MMboe | 151.1 | 98.9 | |||
| 2P | MMboe | 221.2 | 148.6 | |||
| NPV10, before tax (1P) | $ billions | 2.3 | 1.6 | |||
| RLI (1P) | years | 10.3 | 9.2 | |||
| FDC (2P) | $ billions | 1.7 | 1.1 | |||
| Booked locations (2P) | net | 458 | 328 | |||
| Total asset retirement obligation liabilities4 | $ millions | 747 | 359 | |||
| Inactive asset retirement obligation liabilities4 | $ millions | 332 | 145 | |||
| Tax pools5 | $ millions | 2,438 | 2,133 |
(1) Estimated average production, liquids weighting, NOI, net operating costs and field netback for 2024. Estimated production breakdowns:
a. 2024E: 13,463 bbl/d light oil, 9,016 bbl/d heavy oil, 3,077 bbl/d NGLs and 71.5 mmcf/d natural gas.
b. 2024E pro forma: 7,562 bbl/d light oil, 8,955 bbl/d heavy oil, 2,181 bbl/d NGLs and 50.7 mmcf/d natural gas.
(2) The terms NOI, net operating costs and field netback are non-GAAP measures; please refer to the "Non-GAAP and Other Financial Measures" advisory section below for further detail.
(3) All reserves data presented herein in respect of Obsidian Energy and the Pembina Assets derived from the reserve report prepared by Obsidian Energy's independent reserve engineer effective December 31, 2024 (the "Reserve Report"), which evaluated the oil, natural gas and natural gas liquids reserves attributable to Obsidian Energy and the Pembina Assets, respectively, and the net present value of future net revenue attributable to the reserves of Obsidian Energy and the Pembina Assets.
(4) Asset retirement obligation liabilities are as at December 31, 2024, and are shown on an undiscounted, uninflated basis.
(5) Tax pools are as at December 31, 2024, and are unaudited.
As part of the Transaction, Obsidian Energy has agreed to drill four wells on two pads in the Pembina area during the first quarter of 2025 at InPlay's expense. All rights for the wells and associated infrastructure will be transferred to InPlay upon Transaction close.
The effective date of the Transaction is December 1, 2024, and is expected to close early in the second quarter of 2025, subject to approval by InPlay shareholders, receipt of all necessary regulatory approvals and the satisfaction of other customary closing conditions. InPlay shareholders holding approximately 27 percent of the issued and outstanding InPlay Shares have entered into irrevocable voting support agreements with Obsidian Energy, pursuant to which they have agreed to, among other things, vote in favour of the issuance of the InPlay Shares to Obsidian Energy pursuant to the Transaction. InPlay is financing the Cash Proceeds through a combination of cash on hand, committed debt financing and a bought deal equity offering. A termination fee of up to
ADVISORS
RBC Capital Markets is acting as exclusive financial advisor and Burnet, Duckworth & Palmer LLP and Stikeman Elliott LLP are acting as legal counsel to Obsidian Energy on the Transaction.
HEDGING UPDATE
The following contracts were in place in January or are currently in place on a weighted average basis:
Oil Contracts
| Type | Remaining Term | Volume (bbl/d) | Swap Price (C$/bbl) | |
| WTI Swaps | January 2025 | 14,250 | ||
| WTI Swaps | February 2025 | 13,071 | ||
| WTI Swaps | March 2025 | 10,750 | ||
| WTI Swaps | April 2025 | 500 | ||
| WCS Differential | Jan. - March, July - Dec. 2025 | 6,000 | ( | |
| WCS Differential | April - June 2025 | 8,500 | ( | |
| MSW Differential | April - June 2025 | 1,250 | ( |
AECO Natural Gas Contracts
| Type | Remaining Term | Volume (mcf/d) | Swap Price (C$/mcf) | |||
| AECO Swap | January - March 2025 | 14,929 | ||||
| AECO Swap | April - October 2025 | 11,374 | ||||
| AECO Collars | January - March 2025 | 4,976 | ||||
| AECO Collars | April - October 2025 | 1,896 | $2.11 - | |||
FOURTH QUARTER AND FULL YEAR 2024 RESULTS AND FIRST HALF 2025 GUIDANCE RELEASE
Obsidian Energy intends to release our first half 2025 capital program and guidance with our fourth quarter and full year 2024 financial and operational results before North American markets open on February 25, 2025. In addition, the 2024 management's discussion and analysis ("MD&A") and the audited 2024 consolidated financial statements will be available on our website at www.obsidianenergy.com, the SEDAR+ website (www.sedarplus.ca), and the EDGAR website (www.sec.gov) on or about the same date.
UPDATED CORPORATE PRESENTATION
For further information on these and other matters, Obsidian Energy will post an updated corporate presentation after our year-end 2024 financial information has been released on February 25, 2025, on our website, www.obsidianenergy.com.
ADDITIONAL READER ADVISORIES
OIL AND GAS INFORMATION ADVISORY
Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.
In addition, this news release contains a number of oil and gas metrics, including "field netback", "NPV10" and "RLI", which do not have standardized meanings or standard methods of calculation and therefore such measures may not be comparable to similar measures used by other companies. Such metrics are commonly used in the oil and gas industry and have been included herein to provide readers with additional measures to evaluate the Company's performance; however, such measures are not reliable indicators of the future performance of the Company and future performance may not compare to the performance in previous periods.
Field netback is net operating income divided by weighted average production on a per boe basis.
NPV10 is the net present value of reserves discounted at 10 percent. This metric does not represent the fair market value of the Company's oil and gas reserves.
RLI is calculated as total Company gross reserves divided by GLJ's forecasted 2025 production for the associated reserve category. RLIs are not necessarily comparable between different companies as there may be variation in calculation methodology. Management views RLI as a useful measure of longevity and represents the length of time it would take to produce the reserves at the estimated rate of production.
Under NI 51-101, "Standards of Disclosure for Oil and Gas Activities" ("NI 51-101"), 1P reserves estimates are defined as having a high degree of certainty to be recoverable with a targeted 90 percent probability in aggregate that actual reserves recovered over time will equal or exceed proved reserve estimates. For 2P reserves under NI 51-101, the targeted probability is an equal (50 percent) likelihood that the actual reserves to be recovered will be greater or less than the proved plus probable reserve estimate. The reserve estimates set forth above are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual reserves may be greater than or less than the estimates provided herein.
DRILLING LOCATIONS
This news release discloses booked 2P drilling locations. Booked locations represent the summation of proved and probable locations, which are derived from the Reserve Report prepared by Obsidian Energy's independent reserve engineer effective December 31, 2024, which evaluated the oil, natural gas and natural gas liquids reserves attributable to the Transaction's assets and the net present value of future net revenue attributable to those reserves. There is no certainty that we will drill all of these drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations we drill will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors.
FUTURE-ORIENTED FINANCIAL INFORMATION
This news release contains future-oriented financial information ("FOFI") and financial outlook information relating among other things, the Company's 2024E net debt post-Transaction; expectations regarding the Company's post-Transaction InPlay Share position, including the anticipated dividend payments being received; expectations regarding for the Company's asset retirement obligations; and the anticipated financial metrics of the Transaction and our expectations for the pro forma financial details for the Company post-Transaction, which, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth under "Forward-Looking Statements". The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such FOFI, or if any of them do so, what benefits the Company will derive therefrom. The Company has included this FOFI in order to provide readers with a more complete perspective on the Company's business following the completion of the Acquisition and such information may not be appropriate for other purposes. This FOFI is prepared as of the date of this news release.
PRELIMINARY FINANCIAL INFORMATION
The Company's expectations for our net operating costs, net debt, net operating income (see "Non-GAAP Financial Measures") and tax pools following the completion of the Transaction are based on, among other things, Obsidian Energy's anticipated financial results for the year ending December 31, 2024. The Company's anticipated financial results are unaudited and preliminary estimates that: (i) represent the most current information available to management as of the date of hereof; (ii) are subject to completion of audit and/or review procedures that could result in significant changes to the estimated amounts; and (iii) do not present all information necessary for an understanding of the Company's financial condition as of, and the Company's results of operations for such periods. The anticipated financial results are subject to the same limitations and risks as discussed under "Forward-Looking Statements" below. Accordingly, Obsidian Energy's anticipated financial results for such periods may change upon the completion and approval of the financial statements for such periods and the changes could be material.
NON-GAAP AND OTHER FINANCIAL MEASURES
Throughout this news release and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow, some of which may not be prepared using generally accepted accounting principles ("GAAP"). These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income and cash flow from operating activities as indicators of our performance. The Company's consolidated financial statements and MD&A as at and for the three and nine months ended September 30, 2024, and as at and for the year ended December 31, 2023, are available on the Company's website at www.obsidianenergy.com and under our SEDAR+ profile at www.sedarplus.ca and EDGAR profile at www.sec.gov. The disclosure under the section "Non-GAAP and Other Financial Measures" in the MD&A is incorporated by reference into this news release.
Non-GAAP Financial Measures
The following measures are non-GAAP financial measures: net debt, net operating costs and net operating income. These non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three and nine months ended September 30, 2024, and for the year ended December 31, 2023, for an explanation of the composition of these measures, how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures and reconciliations to the measures most directly comparable measure in Obsidian Energy's financial statements. Net operating income is the absolute value of production revenues plus sales of commodities purchased from third parties less commodities purchased from third parties (sales), less royalties, net operating costs and transportation expenses and is used to determine the profitability of our assets.
Non-GAAP Ratios
The following measures are non-GAAP ratios: net operating costs ($/boe), which uses net operating costs as a component; implied production multiple ($/boe); implied NOI multiple; and field netback ($/boe), which uses net operating income as a component. These non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three and nine months ended September 30, 2024, and for the year ended December 31, 2023, for an explanation of the composition of these non-GAAP ratios, how these non-GAAP ratios provide useful information to an investor, and the additional purposes, if any, for which management uses these non-GAAP ratios. Implied production multiple ratio is calculated using the consideration in the Transaction, which includes the Non-Unit Consideration and value associated with the additional WGCU#2 working interest, divided by the 2024E weighted average production. The implied production multiple ratio is used to assess the value the Company received in the Transaction. Implied NOI multiple ratio is calculated using the consideration received in the Transaction, which includes the Non-Unit Consideration and value associated with the additional WGCU#2 working interest of
ABBREVIATIONS
| Oil | Natural Gas | |||
| bbl | barrel or barrels | AECO | Alberta benchmark price for natural gas | |
| bbl/d | barrels per day | GJ | gigajoule | |
| boe | barrel of oil equivalent | mcf | thousand cubic feet | |
| boe/d | barrels of oil equivalent per day | mcf/d | thousand cubic feet per day | |
| MSW | Mixed Sweet Blend | mmcf/d | million cubic feet per day | |
| WTI | West Texas Intermediate | |||
| WCS | Western Canadian Select | |||
| Reserves | ||||
| NPV10 | net present value discounted at 10 percent | |||
| RLI | reserve life index | |||
| FDC | future development capital | |||
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "budget", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "objective", "aim", "potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: the Transaction, including the conditions thereof, the anticipated benefits to be derived therefrom and the anticipated timing thereof; expectations that the Cash Proceeds from the Transaction will be used to initially paydown outstanding debt and the anticipated benefits to be derived therefrom; the Company's 2024E net debt post-Transaction; expectations that the Credit Facility would be drawn at approximately
With respect to forward-looking statements contained in this document, the Company has made assumptions regarding, among other things: that the tariffs that have been publicly announced by the U.S. and Canadian governments (but which are not yet in effect) do not come into effect, but that if such tariffs do come into effect, the potential impact of such tariffs, and that other than the tariffs that have been announced, neither the U.S. nor Canada: (i) increases the rate or scope of such tariffs or imposes new tariffs on the import of goods from one country to the other, including on oil and natural gas; and/or (ii) imposes any other form of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil and natural gas; the ability of InPlay and Obsidian Energy to close the Transaction; in connection with the Transaction, the assumptions set forth above under "Underlying Assumptions"; the receipt of all required regulatory approvals in respect of the Transaction; Obsidian Energy's view with respect to its financial condition and prospects, the stability of general economic and market conditions, currency exchange rates and interest rates; that the Company does not dispose of or acquire material producing properties or royalties or other interests therein other than as stated herein (provided that, except where otherwise stated, the forward-looking statements contained herein do not assume the completion of any transaction); that regional and/or global health related events will not have any adverse impact on energy demand and commodity prices in the future; global energy policies going forward, including the continued ability of members of OPEC+, Russia and other nations to agree on and adhere to production quotas from time to time; risks and uncertainties related to oil and gas interests and operations on Indigenous lands; our ability to qualify for (or continue to qualify for) new or existing government programs created as a result of new pandemics or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial condition; our ability to comply with applicable terms and conditions under the Company's debt agreements; the existence of alternative uses for Obsidian Energy's cash resources and compliance with applicable laws; our ability to execute our plans as described herein and in our other disclosure documents, including our three-year growth plan, and the impact that the successful execution of such plans will have on our Company and our stakeholders; future capital expenditure and decommissioning expenditure levels; future net operating costs and G&A costs; future crude oil, natural gas liquids and natural gas prices and differentials between light, medium and heavy oil prices and Canadian, WTI and world oil and natural gas prices; future hedging activities; future crude oil, natural gas liquids and natural gas production levels, including that we will not be required to shut-in production due to low commodity prices or the further deterioration of commodity prices; future exchange rates, tariffs and interest rates; future debt levels; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including extreme weather events, such as extreme cold, wild fires, flooding and drought, infrastructure access (including the potential for blockades or other activism) and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully to current and new customers; our ability to obtain financing on acceptable terms, including our ability (if necessary) to continue to extend the revolving period and term out period of our Credit Facility; our ability to maintain the existing borrowing base under our Credit Facility if the Transaction is not completed and reduce it if the Transaction is completed; our ability (if necessary) to replace our syndicated bank facility and our ability (if necessary) to finance the repayment of our senior unsecured notes on maturity or pursuant to the terms of the underlying agreement; the accuracy of our estimated reserves volumes; our ability to add production and reserves through our development and exploration/appraisal activities; the expectation that InPlay will receive shareholder approval and all other necessary approvals for closing the Transaction; the expectation that the Company will receive the approval of its lenders under the Credit Facility for closing the Transaction; that all conditions of closing the Transaction will be met; that the Transaction will close on the timeline anticipated; and that the Company will achieve all the anticipated benefits of the Transaction.
Although the Company believes that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions, or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the risk that (i) negotiations between the U.S. and Canadian governments are not successful and one or both of such governments implements announced tariffs, increases the rate or scope of announced tariffs, or imposes new tariffs on the import of goods from one country to the other, including on oil and natural gas, (ii) the U.S. and/or Canada imposes any other form of tax, restriction or prohibition on the import or export of products from one country to the other, including on oil and natural gas, and (iii) the tariffs imposed by the U.S. on other countries and responses thereto could have a material adverse effect on the Canadian, U.S. and global economies, and by extension the Canadian oil and natural gas industry and the Company; liabilities inherent in oil and natural gas operations; uncertainties associated with estimating oil and natural gas reserves; competition for, among other things, capital, acquisitions of royalty reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of transactions, including the Transaction; Obsidian Energy's future capital requirements; general economic and market conditions; demand for Obsidian Energy's products; unforeseen legal or regulatory developments and other risk factors detailed from time to time in Obsidian Energy reports filed with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission; the possibility that we change our budget in response to internal and external factors, including those described herein; the possibility that the Company will not be able to continue to successfully execute our business plans and strategies in part or in full, and the possibility that some or all of the benefits that the Company anticipates will accrue to our Company and our stakeholders as a result of the successful execution of such plans and strategies do not materialize; the possibility that the Company is unable to complete one or more of the potential transactions being pursued, on favorable terms or at all; the possibility that the Company ceases to qualify for, or does not qualify for, one or more existing or new government assistance programs implemented in connection regional and/or global health related events or otherwise, that the impact of such programs falls below our expectations, that the benefits under one or more of such programs is decreased, or that one or more of such programs is discontinued; the impact on energy demand and commodity prices of regional and/or global health related events, and the responses of governments and the public to any pandemic, including the risk that the amount of energy demand destruction and/or the length of the decreased demand exceeds our expectations; the risk that there is another significant decrease in the valuation of oil and natural gas companies and their securities and the decrease in confidence in the oil and natural gas industry generally whether caused by a pandemic, the worldwide transition towards less reliance on fossil fuels and/or other factors; the risk that the financial capacity of the Company's contractual counterparties is adversely affected and potentially their ability to perform their contractual obligations; the possibility that the revolving period and/or term out period of our Credit Facility and the maturity date of our senior unsecured notes is not further extended (if necessary), that the borrowing base under our Credit Facility is reduced, that the Company is unable to renew or refinance our Credit Facility on acceptable terms or at all and/or finance the repayment of our senior unsecured notes when they mature on acceptable terms or at all and/or obtain new debt and/or equity financing to replace one or all of our credit facilities and senior unsecured notes; the possibility that we breach one or more of the financial covenants pursuant to our agreements with our lenders and the holders of our senior unsecured notes; the possibility that we are forced to shut-in production, whether due to commodity prices failing to rise or other factors; the risk that OPEC and other nations fail to agree on and/or adhere to production quotas from time to time that are sufficient to balance supply and demand fundamentals for crude oil; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; the risk that wars and other armed conflicts adversely affect world economies and the demand for oil and natural gas, including the ongoing war between Russian and Ukraine and/or hostilities in the Middle East; industry conditions, including fluctuations in the price of crude oil, natural gas liquids and natural gas, price differentials for crude oil and natural gas produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; fluctuations in foreign exchange or interest rates; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed (including extreme cold during winter months and hot during the spring and summer months, wild fires and flooding); the possibility that fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to hydrocarbons and technological advances in fuel economy and renewable energy generation systems could permanently reduce the demand for oil and natural gas and/or permanently impair the Company's ability to obtain financing on acceptable terms or at all, and the possibility that some or all of these risks are heightened as a result of the response of governments and consumers to public opinion and/or special interest groups; the risk that InPlay may not receive shareholder approval and all other necessary approvals for closing the Transaction; the risk that the Company's lenders under the Credit Facility may not consent to the Transaction; the risk that all conditions of closing the Transaction may not be met; the risk that the Transaction may not close when anticipated, or at all; the risk that the Company may not achieve all of the anticipated benefits of the Transaction; the risk that the Company may not grow its Clearwater and Bluesky production as anticipated; the risk that the Company's asset retirement obligations may be greater than anticipated; the risk that the Cash Proceeds from the Transaction may not be used as anticipated; the risk that the Company's 2024E net debt post-Transaction may be greater than anticipated; the risk that the Company's financial and operating results post-Transaction may not be consistent with its expectations; the risk that the Company may not realize the benefits anticipated from its InPlay Share position post-Transaction; the risk that the results of the Company's semi-annual borrowing base redetermination post-Transaction may not be consistent with its expectations; and the risk that the that the Company may not release its updated corporate presentation, first half 2025 capital program and guidance or other year end documents when anticipated. Additional information on these and other factors that could affect Obsidian Energy, or its operations or financial results, are included in the Company's Annual Information Form (see "Risk Factors" and "Forward-Looking Statements" therein) which may be accessed through the SEDAR+ website (www.sedarplus.ca), EDGAR website (www.sec.gov) or Obsidian Energy's website. Readers are cautioned that this list of risk factors should not be construed as exhaustive.
Unless otherwise specified, the forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly update or revise any forward-looking statements. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.
Obsidian Energy shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American in the United States under the symbol "OBE".
All figures are in Canadian dollars unless otherwise stated.
CONTACT
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
E-mail: investor.relations@obsidianenergy.com
[1] Under the terms of the Agreement, in certain circumstances InPlay: (i) will be required to decrease the amount of InPlay Shares issued to Obsidian Energy by up to
[2] Numbers may not add due to rounding.
[3] PCU#11 Q4 2024E: 1,799 bbl/d light oil, 299 bbl/d NGLs and 2,521 mmcf/d natural gas.
[4] Hold period may be shortened in certain circumstances.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/241527
FAQ
What is the total value of Obsidian Energy's Pembina asset sale to InPlay Oil?
How much will OBE's debt be reduced after the Pembina asset sale?
What production volume is OBE selling in the Pembina asset deal?
When is the OBE Pembina asset sale expected to close?
What dividend income will OBE receive from the InPlay shares?
