Obsidian Energy Announces 2026 Guidance and Provides an Operational Update
Press Release
- Capital expenditures guidance of $210 million (midpoint) resulting in 38 net operated wells drilled at both Peace River and Willesden Green including $22 million in waterflood spending
- Production guidance of 28,900 boe/d (midpoint) for 2026, approximately 55% weighted to our light oil assets and 45% weighted to our heavy oil assets
- Funds flow from operations of $225 million ($3.35 per basic share) based on WTI of US$58.00/bbl in H1 2026 and US$62.00/bbl in H2 2026
Calgary, Alberta–(– January 22, 2026) – OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) is pleased to announce our 2026 capital plan and guidance as well as provide an operational update on our successful 2025 development program.
OBE Announces 2026 Guidance and Provides an Operational Update
“Building off strong results in recent years, our 2026 capital program continues to advance the delineation and development of both our light and heavy oil assets and furthers our waterflood initiatives in Peace River,” commented Stephen Loukas, Obsidian Energy’s President and CEO. “In Willesden Green, the light oil program is centred on further development in Open Creek, predominately in the Belly River formation, as we benefit from new infrastructure in the area that we constructed in late 2025. In Peace River, our capital program is a combination of primary development in both the Bluesky and Clearwater formations while also progressing waterflood projects in both the Dawson and Nampa areas. While we are early in the execution of our enhanced oil recovery strategy in Peace River, we are encouraged by the results to-date, and we plan to expand efforts in the area in 2026 and beyond.”
Mr. Loukas continued, “We employed a disciplined approach to our 2026 plans given the current volatility in commodity prices, resulting in a small free cash flow positive budget for the year (prior to any potential share repurchases) while marginally growing production. We believe that the near-term pricing environment is likely to remain volatile, however, we anticipate a more constructive commodity price environment in the second half of the year and into 2027. As a result, the program is designed to maximize our 2026 production exit rate, with the waterflood spend driving a reduction to our projected 2027 decline rate. Additionally, we have significant optionality with drill ready projects, both in Peace River (Bluesky and Clearwater), and Willesden Green (Belly River and Cardium), allowing us to scale up quickly should higher commodity prices present themselves. Alternatively, if we see further commodity price weakness, we are also prepared to scale back our program with respect to primary drilling. Furthermore, we anticipate renewing our normal course issuer bid (“NCIB“) in March 2026. The pace at which we purchase shares may vary depending on a number of factors including the macro environment, as we maintain our financial flexibility and balance sheet strength.”
2026 GUIDANCE
Our 2026 capital budget is set at $190 to $230 million resulting in average production guidance of 27,900 to 29,900 boe/d (73% liquids). Capital expenditures are a combination of development in both our light and heavy oil assets, with $128 million allocated to Willesden Green/Pembina Cardium Unit #11 (“PCU #11“) and $80 million to heavy oil assets in Peace River. Included in the capital budget for Peace River is approximately $22 million focused on progressing waterflood initiatives in the area with a focus on the Dawson and Nampa areas. At the mid-point of production guidance, we estimate our sustaining capital (excluding waterflood capital) is approximately $175 million, which we expect to trend lower as future production decline rates benefit from current waterflood initiatives.
Our guidance levels assume WTI US$58.00/bbl for the first half of 2026 and WTI US$62.00/bbl for the second half of 2026 with full year AECO natural gas at $2.75/GJ. At these pricing levels we are forecasting to generate approximately $225 million of funds flow from operations (“FFO“) while generating ~$7 million of positive free cash flow (“FCF“). We anticipate net operating costs to average $14.00 – $15.00 boe/d as we focus on multiple cost reduction initiatives across our portfolio.
Further asset level details for our 2026 budget are as follows:
Heavy Oil (Peace River)
Our 2026 development activities will be split approximately evenly between our Bluesky and Clearwater formations. In addition to this primary development program, we plan to drill 8 (8.0 net) Clearwater waterflood injection wells, building on our waterflood projects in 2025. The program is strategically designed to prioritize Clearwater injector projects in the first half of the year, while focusing on Bluesky development drilling in the second half of the year when we anticipate that commodity prices will improve. Capital expenditures of $80 million (mid-point of guidance) have been allocated to our heavy oil assets for the year, with the following details:
- A total of 26 (26.0 net) wells planned, including multi-lateral, open hole producers as well as integrated horizontal waterflood injectors.
- Development in the Bluesky formation will continue in our Harmon Vally South (“HVS“) and Cadotte fields with 9 (9.0 net) wells planned, including one appraisal well.
- In the Clearwater formation 9 (9.0 net) producers anticipated.
- Continued emphasis on waterflood initiatives with $22 million of capital allocated including drilling 8 (8.0 net) injection wells in the first half of the year, across our Nampa, West Dawson and Dawson fields. By the end of 2026, the Company will have approximately 35% of our Clearwater production waterflood supported.
- We retain optionality to expand waterflood activities in the second half of the year to drill a further 9 (9.0 net) injectors at Dawson for $14 million, subject to continued positive results and commodity prices.
Light Oil (Willesden Green/ PCU#11)
In 2026, we will continue to focus development in both our Open Creek and Crimson areas, predominately delineating the Belly River formation where the 2025 drilling program experienced strong success. With the recent completion of a pipeline infrastructure project in Open Creek, we will benefit from lower equip and tie in costs as we expand our production base in the area. A total of $128 million of capital expenditures (mid-point of guidance) have been allocated to light oil assets for the year, which includes completion activities for wells drilled in late 2025 in Open Creek and PCU#11, and the following highlights:
- Development will consist of a one rig program, which includes a total of 12 (12.0 net) wells, consisting of 10 wells in Open Creek, with 6 (6.0 net) wells focused on the Belly River and 4 (4.0 net) wells on the Cardium. In Crimson 2 (2.0 net) wells will be drilled also focused on the Belly River.
- In Open Creek, the 11-28 Pad will be our first pad with both Cardium and Belly River development wells from the same surface location. This technique should result in significant efficiencies within our development program in future years.
- Our non-operated program at PCU #11 (~45 percent working interest) will remain active with a 10-well (4.5 net) program planned in 2026.
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