Calgary, Alberta – OBSIDIAN ENERGY LTD. (TSX: OBE) (OTCQX: OBELF) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) today announced that we have allowed our offer (the “Offer“) to purchase all of the issued and outstanding common shares (the “Bonterra Shares“) of Bonterra Energy Corp. (TSX: BNE) (“Bonterra“) to expire at 5:00 p.m. (Mountain Daylight time) on March 29, 2021.
“Our business and operational outlook has strengthened significantly as shown by our recently announced year-end 2020 results and positive future outlook,” said Stephen Loukas, Obsidian Energy’s Interim President and CEO. “In light of our strong financial and operating results combined with our currently forecasted significant free cash flow generation over 2021 and 2022, and our capital plan that restores production to approximate pre-COVID19 levels, we feel that combining at the proposed exchange ratio is no longer in the best interests of Obsidian Energy or our shareholders. The economic environment has changed substantially since we launched the Offer with significant improvement in commodity prices, making this combination less impactful to our shareholders’ value. We strongly believe in the benefit of industry consolidation and will continue to seek out opportunities that allow us to build scale, realize synergies and increase market relevance to deliver enhanced shareholder returns.”
Obsidian Energy’s recent operational and financial performance highlights our track record as one of the most efficient companies among industry peers. Our year-end 2020 results, 2021 drilling performance and significant free cash flow forecast for 2021 and 2022 are a clear indication of the superior execution of Obsidian Energy’s strategy for our asset base and the ability of our management team to deliver shareholder value.
We will continue to focus on delivering leading performance results by effectively and efficiently developing our asset base while increasing the quality and quantity of future drilling inventory. We are executing on our strategic priorities to create shareholder value, including: spending within cash flow while restoring production to pre-COVID19 levels; reducing debt levels; driving further cost efficiencies to free up additional cash flow for reinvestment; actively and prudently managing decommissioning liabilities; and identifying value accretive consolidation opportunities. We continue to believe in the benefits of consolidation, provided the opportunity creates value for our shareholders.
While the Offer would have delivered synergies to shareholders of both companies, the changing environment, impact of higher commodity prices and expected strength of our 2021 strategy no longer makes the proposed exchange ratio attractive for Obsidian Energy and our shareholders. As a result of the expiration of the Offer prior to the satisfaction of its conditions, no Bonterra Shares will be acquired and all Bonterra Shares that were tendered to the Offer will be promptly returned to the depositing Bonterra shareholders.