Obsidian Energy Announces First Half 2025 Capital Program and Guidance
Press Release
Calgary, Alberta–( February 25, 2025) – OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) is pleased to announce our first half 2025 capital plan and financial guidance that builds on the success of our 2024 program. With six drilling rigs currently in operation, the majority of our first half 2025 program is focused on Peace River with a significant component dedicated to exploration/appraisal drilling to further delineate our land position.
“Our recently announced agreement to dispose of our operated Pembina assets (the “Transaction“) to InPlay Oil Corp. (“InPlay“) has not changed our stated strategy for the Company: to drive heavy oil production growth at Peace River to approximately 25,000 boe/d in 2026 through delineation and development activities, while utilizing the stable cash flow from our light oil assets for reinvestment,” commented Stephen Loukas, Obsidian Energy’s President and CEO. “By focusing our Peace River exploration/appraisal activities largely in the first quarter, we can more effectively assess areas that are winter-only access to obtain key data that will help shape our future development plans. We have also planned an expanded Peace River development program for the first half of the year and will be following up on our strong 2024 drilling results at our Dawson field. Our Clearwater production grew substantially in 2024 from an average of 447 boe/d in January 2024 to average over 4,500 boe/d in December 2024 through organic development and a bolt-on acquisition. Additionally, we are initiating our first Clearwater waterflood pilot during the first half of 2025. We expect that the combination of these activities will result in higher future production levels, lower decline rates and increased recovery factors, furthering the continued development of our Peace River asset.”
Mr. Loukas continued, “The decision to enter into an agreement to sell our operated Pembina assets through the Transaction further focuses our Company and provides us with significantly enhanced liquidity and future optionality to add shareholder value. As such, we are evaluating our development plans for the second half of the year and expect to provide full-year guidance in June.”
FIRST HALF 2025 GUIDANCE
The Company plans between $185 and $195 million in capital expenditures (including approximately $24 million for exploration/appraisal drilling and $11 million for waterflood projects) plus an additional $11 to $12 million in decommissioning expenditures in the first half of 2025. First half production is expected to average approximately 33,800 boe/d (midpoint of guidance) – a three percent decrease from 35,006 boe/d in the first half of 2024, primarily due to the disposition Transaction1 that results in the net sale of approximately 10,000 boe/d of production. Peace River average production is expected to remain relatively flat over the first half of 2025 as many of our wells will not be onstream until the second quarter and several exploration wells will be shut in after evaluation due to seasonal access constraints. As a result, the majority of 2025 production gains will be realized during the second half of the year.
In the first half of 2025, net operating costs per boe are expected to be higher than 2024 levels due to increased trucking costs associated with our Peace River development and the benefit of reduced operating costs from the Transaction not occurring until the second quarter. Our 2025 guidance is based on lower commodity prices than in 2024, consisting of US$71.00/bbl WTI, US$5.00/bbl MSW differential, US$14/bbl WCS differentials and $2.00/GJ AECO natural gas. Our plan anticipates FFO of approximately $180 million, and a net debt to FFO ratio of approximately 0.7 times (based on annualized first half FFO and excluding any value for the InPlay share position from the Transaction). The Company’s net debt position will benefit from the enhanced liquidity provided by the Transaction. Our first half 2025 guidance is presented below.
| H1 2025E Guidance | ||||||||||||
| Production1 | boe/d | 33,300 – 34,300 | ||||||||||
| % Oil and NGLs | % | 72 | ||||||||||
| Capital expenditures2 | $ | millions | 185 – 195 | |||||||||
| Decommissioning expenditures | $ | millions | 11 – 12 | |||||||||
| Net operating costs3 | $ | /boe | 14.15 – 14.60 | |||||||||
| General & administrative | $ | /boe | 1.75 – 1.85 | |||||||||
| Based on midpoint of above guidance | ||||||||||||
| WTI (Mar – June)4 | US$/bbl | 71.00 | ||||||||||
| MSW Differential (Mar – June)4 | US$/bbl | 5.00 | ||||||||||
| WCS Differential (Mar – June)4 | US$/bbl | 14.00 | ||||||||||
| AECO (Mar – June)4 | $ | /GJ | 2.00 | |||||||||
| FFO3,5 | $ | millions | 180 | |||||||||
| FFO/share6 | $ | /share | 2.44 | |||||||||
| FCF3,5 | $ | millions | (22 | ) | ||||||||
| FCF/share6 | $ | /share | (0.29 | ) | ||||||||
| Net debt (prior to NCIB)7 | $ | millions | 240 | |||||||||
| Annualized net debt (prior to NCIB) to FFO7 | times | 0.7 | ||||||||||
| Asset level information | Heavy Oil | Light Oil | ||||||||||
| Average production | boe/d | 12,900 | 20,900 | |||||||||
| Capital expenditures2 | $ | millions | 142 | 45 | ||||||||
| Net operating costs3 | $ | /boe | 17.25 | 12.35 | ||||||||
| Netback3 | $ | /boe | 34.00 | 31.50 | ||||||||
| Net operating income3 | $ | millions | 80 | 120 | ||||||||
| Asset level FCF | $ | millions | (62 | ) | 75 | |||||||
| (1) Approximate mid-point of guidance range: 9,440 bbl/d light oil, 12,200 bbl/d heavy oil, 2,530 bbl/d NGLs and 57.8 mmcf/d natural gas. Average production volumes include a minimal amount of forecasted production associated with exploration/appraisal capital expenditures. (2) Capital expenditures include approximately $34 million for Peace River exploration/appraisal and enhanced oil recovery waterflood activities with minimal impact on forecasted production volumes. Asset level capital does not include $3 million in corporate capital. (3) We adhere to generally accepted accounting principles (“GAAP“); however, we also employ certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including the terms FFO, FCF, net debt, netback, net operating costs and net operating income. Please refer to the ‘Non-GAAP and Other Financial Measures’ advisory section below for further detail. (4) Pricing assumptions outlined are for the first half of 2025 and include risk management (hedging) adjustments as of February 24, 2025. WTI and AECO pricing as well as MSW and WCS differentials assumptions for the first half 2025E are forecasted for March to June 30, 2025. H1 2025E pricing assumptions, including actuals realized from January 1, 2025, to February 18, 2025, result in WTI of US$71.82/bbl, MSW differentials of US$4.93/bbl, WCS differentials of US$13.41/bbl, AECO of $2.00/GJ, and FX of 1.42x CAD/USD. (5) FFO and FCF includes approximately $1 million of estimated charges for the first half of 2025 related to the deferred share units and performance share units cash compensation amounts, which are based on a share price of $7.66 per share. (6) Per share calculations are based on an estimated 73.7 million weighted average shares outstanding for the six months ended June 30, 2025. (7) Net debt figures estimated as at June 30, 2025. Figures do not include the impact of the $85 million in value of InPlay Oil Corp. common shares, which are to be received as part of the Transaction. If included, net debt would be reduced to $155 million with a 0.4x net debt (prior to NCIB) to FFO ratio. NCIB is the Company’s normal course issuer bid program. |
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| Guidance Sensitivity Table | ||||||
| Variable | Range | Change in H1 2025E FFO ($ millions) | ||||
| WTI (US$/bbl) | +/- $1.00/bbl | 2.9 | ||||
| MSW light oil differential (US$/bbl) | +/- $1.00/bbl | 1.0 | ||||
| WCS heavy oil differential (US$/bbl) | +/- $1.00/bbl | 0.8 | ||||
| Change in AECO ($/GJ) | +/- $0.25/GJ | 1.0 | ||||
H1 2025 CAPITAL AND OPERATING PROGRAM
Our first half capital program is well underway with five rigs active in Peace River drilling in the Clearwater and Bluesky formations, and a sixth rig drilling the four-well commitment in the Pembina area as part of the Transaction. The breakdown of operated wells expected to be rig released during the first half of 2025 is as follows:
| H1 2025 Gross (Net) Wells |
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| DEVELOPMENT WELLS | |||||
| Heavy Oil Assets | |||||
| Peace River (Bluesky) | 13 (11.4 | ) | |||
| Peace River (Clearwater) | 14 (14.0 | ) | |||
| Light Oil Assets | |||||
| Pembina (Cardium)2 | 4 (4.0 | ) | |||
| 31 (29.4 | ) | ||||
| EXPLORATION/APPRAISAL WELLS | |||||
| Peace River (Bluesky) | 3 (3.0 | ) | |||
| Peace River (Clearwater) | 4 (4.0 | ) | |||
| 7 (7.0 | ) | ||||
| TOTAL OPERATED WELLS3,4 | 38 (36.4)1 | ||||
| (1) Three (3.0 net) wells rig released in 2024 were placed on production in the first quarter of 2025; they are excluded from the total. (2) Capital expenditures for the Pembina wells are for the account of InPlay and will be included in the statement of adjustments for the Transaction. (3) Excluding injection or disposal wells. (4) In addition, Obsidian Energy expects to participate in a total of five non-operated (2.2 net) wells in the first half of 2025. |
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HEAVY OIL ASSETS (PEACE RIVER)
Over the first half of 2025, we will continue to delineate and appraise the broader Peace River land base of approximately 700 sections with a focus on expanding development drilling in successful fields from the additional 107 new follow-up Clearwater and Bluesky locations identified in 2024 (2P, booked locations). Exploration/appraisal drilling and new field delineation is a priority during the beginning of the year as winter conditions allow quick access to certain new fields, reducing capital costs. In 2025, we are using whipstock2 wells for exploration/appraisal purposes instead of oilsands exploration wells as they allow testing to delineate and de-risk an area, while at the same time providing new production as seasonal access allows. The Company is currently evaluating the technical results from recent whipstock drilling and well cores across Peace River to identify and assess new opportunities for future development.
Our first half Peace River capital program also includes enhanced oil recovery waterflood projects of approximately $11 million for a new Clearwater enhanced oil recovery and waterflood pilots with integrated producer and injection wells in Dawson and for additional injector conversions in the field. Peer waterfloods in the Clearwater formation have proven highly encouraging in increasing reservoir recovery and production, while mitigating decline rates at compelling returns.
Clearwater Formation
Obsidian Energy substantially grew our Clearwater production over the past year from 447 boe/d in January 2024 to average over 4,500 boe/d in December 2024, surpassing internal expectations due to high production rates from organic development as well as a strategic acquisition. During the first quarter of 2025, we plan to rig release a total of 18 (18.0 net) development and exploration/appraisal wells targeting the Clearwater formation.
IBF4
