Calgary, Alberta – OBSIDIAN ENERGY LTD. (TSX: OBE) (OTCQX: OBELF) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) is pleased to report strong production results for the second quarter of 2021, supported by our nine-well first half 2021 development program now on stream. Based on preliminary estimates, we expect second-quarter production to average approximately 24,650 boe/d, an increase from 23,225 boe/d in the first quarter. We will discuss our full-year 2021 guidance in conjunction with our second-quarter results, which are expected to be released before markets open on Friday, July 30, 2021.
2021 DEVELOPMENT PROGRAM UPDATE
Our nine-well first half 2021 program was successfully completed ahead of schedule and within budget estimates in our high economic return Willesden Green Cardium area. Cost control of the program has been solid with estimated per well costs of $3.3 million (inclusive of construction, drilling, completions, equipping and tie-in costs to lease edge), representing a two percent decrease from our 2020 program average while increasing lateral length by 10 percent. These cost improvements resulted from continuous progress in field execution as demonstrated by our first half drilling program that included a Company-pacesetter Cardium well with intermediate casing (11.1 days and 5,349 m from spud to rig-release), and a new Company record length for a Cardium well of 5,576 m (3,503 m horizontal length).
Initial production rates for the nine commissioned Willesden Green Cardium wells were as follows:
|4-35 Pad – Crimson Lake|
|102/12-33-043-08W5||910 boe/d (87% oil)||748 boe/d (74% oil)||538 boe/d (65% oil)|
|102/04-33-043-08W5||849 boe/d (80% oil)||662 boe/d (65% oil)||510 boe/d (58% oil)|
|100/03-25-043-08W5||690 boe/d (91% oil)||713 boe/d (73% oil)||519 boe/d (62% oil)|
|13-19 Pad – Crimson Lake|
|102/02-32-043-08W5||57 boe/d (91% oil)||154 boe/d (81% oil)||n/a|
|102/16-29-043-08W5||460 boe/d (75% oil)||311 boe/d (66% oil)||n/a|
|6-21 Pad – East Crimson|
|100/12-33-042-07W5||491 boe/d (92% oil)||n/a||n/a|
|103/03-09-042-07W5||639 boe/d (92% oil)||n/a||n/a|
|100/11-33-042-07W5||273 boe/d (91% oil)||n/a||n/a|
|100/15-28-042-07W5||473 boe/d (91% oil)||n/a||n/a|
We began our second half 2021 drilling program approximately two weeks earlier than anticipated in June due to favourable spring ground conditions. Our second well at the East Crimson 1-33 two-well pad was rig released on July 10, and the 1-33 pad is expected to be on stream at the end of August. We also started drilling in our Central Pembina region, spudding the first well on the 7-17 three-well pad on July 9.
A two-rig continuous drilling program is being utilized to drill 23 wells (19.3 net) in the second half of 2021, predominantly in our Willesden Green and Pembina Cardium assets. Combined with the nine wells drilled in the first half of the year, we expect to bring 25 wells (22.8 net) on production in 2021, with the remaining seven wells (6.8 net) expected on production early in the first quarter of 2022. The Company has significant capability to scale our development drilling in response to changes in commodity prices.
The Company has the following financial oil and gas contracts in place on a weighted average basis:
|Term||Notional Volume||Pricing (CAD)|
|Oil – WTI|
|April 2021||5,525 bbl/d||$77.90/bbl|
|May 2021||5,956 bbl/d||$79.67/bbl|
|June 2021||6,350 bbl/d||$81.27/bbl|
|July 2021||6,129 bbl/d||$87.85/bbl|
|August 2021||500 bbl/d||$90.25/bbl|
|Natural Gas – AECO|
|April 2021||26,065 mcf/d||$2.83/mcf|
|May 2021||21,326 mcf/d||$2.68/mcf|
|June 2021||21,326 mcf/d||$2.67/mcf|
|July – October 2021||21,326 mcf/d||$2.57/mcf|
Additionally, the Company has the following physical contracts in place:
|Notional Volume||Term||Pricing (CAD)|
|Physical Oil Contracts1|
|WTI||571 bbl/d||Apr – Jun 2021||$59.04/bbl|
|Light Oil Differential2 3|
|1,245 bbl/d||Apr – Jun 2021||$5.51/bbl|
|1,280 bbl/d||Jul – Sep 2021||$5.82/bbl|
|Light Oil Differential – USD2|
|1,556 bbl/d||Apr – Jun 2021||US$4.00/bbl|
|1,539 bbl/d||Jul – Sep 2021||US$4.42/bbl|
|Heavy Oil Differential4|
|564 bbl/d||Jul – Sep 2021||$14.85/bbl|
|Heavy Oil Differential5 – USD|
|550 bbl/d||Jul – Sep 2021||US$26.00/bbl|
(1) WTI, differentials and foreign exchange hedged to lock-in positive net operating income on certain heavy oil properties.
(2) Differentials completed on a WTI – MSW basis.
(3) USD transactions completed on a US$ WTI – US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.281 in the second quarter of 2021 and $1.279 in the third quarter of 2021.
(4) Differentials completed on a WTI – WCS basis.
(5) Hedged on a USD basis and inclusive of WCS differential, quality and transportation charges.
SECOND QUARTER 2021 RESULTS RELEASE
We intend to release our second quarter 2021 financial and operational results before North American markets open on Friday, July 30, 2021. In addition, the second quarter management’s discussion and analysis and the unaudited consolidated financial statements will be available on our website at www.obsidianenergy.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov on or about the same date.