Calgary, Alberta – OBSIDIAN ENERGY LTD. (TSX: OBE) (OTCQX: OBELF) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) is pleased to provide an update on our continued strong second half development program with two drilling rigs active in our Cardium asset and announce it has also extended Stephen Loukas’ contract as Interim President and CEO to December 31, 2021.
As a result of the solid execution and performance of our program combined with our focus on optimizing base volumes, we anticipate that our full-year 2021 production will be near the high end of our previously increased guidance range while staying within planned capital expenditures.
“We’re extremely pleased with the results of our 2021 development program to date,” said Stephen Loukas, Obsidian Energy’s Interim President and CEO. “Our successful drilling results, from both a production and cost reduction basis, is both a testament to the technical strength of our team, as well as the quality of our asset base.”
2021 DEVELOPMENT PROGRAM UPDATE
With an improved economic environment and higher funds flow from operations (“FFO“), our 2021 capital plan was modestly increased in July and we expect to drill 25 wells (22.0 net) in our second half development program, predominantly in our Crimson Willesden Green and Pembina Cardium assets. Of these wells, 18 (15 net) are planned to be on production prior to year-end with the remaining seven gross/net wells on production early in 2022. Below are our recent drilling results and planned activity.
- Crimson: We rig-released five gross/net Willesden Green Cardium wells and one gross/net liquids-rich gas well to capitalize on strong AECO natural gas pricing, targeting the Spirit River formation. Three of our Cardium wells are now on production while the remaining two wells have been fractured, flow-tested, and are expected to be brought on production by the end of September. The Spirit River well is expected to be stimulated in mid-September and brought on production in early October.Drilling will continue with six gross/net additional wells prior to the end of the second half program: four gross/net wells at the 6-22 pad in East Crimson and two gross/net wells at the 4-17 pad in Crimson Lake. These final second half Crimson wells are expected to be brought on production in January 2022.
- Pembina: We rig-released all three gross wells (2.7 net) on the 7-17 pad; completions are planned for the third week of September with production expected in early October. Also in September, drilling will begin on two gross/net vertical oil wells, which will be followed by five gross (4.6 net) wells at our 2-15, 16-9 and 12-17 Pembina pads to complete the second half Pembina program. All wells are expected to be on production by year-end except for the final well at the 12-17 pad, which will be brought on production in January 2022.
Production rates for the wells on stream in the 2021 development programs to date are as follows:
|Second Half Program|
|3-29 Pad – Crimson Lake|
|100/08-31-042-07W5||240 boe/d (90% oil)||n/a||n/a|
|1-33 Pad – Crimson Lake|
|103/14-03-042-06W5||317 boe/d (69% oil)||n/a||n/a|
|3-3 Pad – Crimson Lake|
|100/03-05-044-08W5||Final 24 hrs of flowback: 1,162 bbl/d light oil and 537 boe/d natural gas|
|102/03-05-044-08W5||Final 24 hrs of flowback: 636 bbl/d light oil and 274 boe/d natural gas|
|First Half Program|
|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)||123 boe/d (74% oil)|
|102/16-29-043-08W5||460 boe/d (75% oil)||311 boe/d (66% oil)||193 boe/d (59% oil)|
|6-21 Pad – East Crimson|
|100/12-33-042-07W5||489 boe/d (92% oil)||348 boe/d (85% oil)||310 boe/d (83% oil)|
|103/03-09-042-07W5||638 boe/d (95% oil)||341 boe/d (93% oil)||295 boe/d (93% oil)|
|100/11-33-042-07W5||272 boe/d (91% oil)||177 boe/d (89% oil)||n/a|
|100/15-28-042-07W5||471 boe/d (91% oil)||376 boe/d (77% oil)||327 boe/d (75% oil)|
ALBERTA SITE REHABILITATION PROGRAM
As part of our commitment to reducing our environmental footprint, we are pleased to announce that we have been allocated an additional $6.9 million of Alberta Site Rehabilitation Program (“ASRP) support through Periods 7 and 8 allocations, bringing total support from the ASRP to over $35 million. Obsidian Energy will utilize the funds as part of our ongoing decommissioning activities of suspended or abandoned assets.
The Company has the following financial oil and gas contracts in place on a weighted average basis:
|Term||Notional Volume||Pricing (CAD)|
|Oil – WTI|
|July 2021||6,419 bbl/d||$88.07/bbl|
|August 2021||3,750 bbl/d||$90.62/bbl|
|September 2021||2,258 bbl/d||$87.39/bbl|
|Natural Gas – AECO|
|August – October 2021||23,695 mcf/d||$2.70/mcf|
|November 2021 – March 2022||21,326 mcf/d||$4.46/mcf|
Additionally, the Company has the following physical contracts in place:
|Notional Volume||Term||Pricing (CAD)|
|Light Oil Differential1 2|
|1,230 bbl/d||Jul – Sep 2021||$5.82/bbl|
|Light Oil Differential – USD1|
|1,539 bbl/d||Jul – Sep 2021||US$4.42/bbl|
|Heavy Oil Differential3|
|564 bbl/d||Jul – Sep 2021||$14.85/bbl|
|Heavy Oil Differential4 – USD|
|550 bbl/d||Jul – Dec 2021||US$26.00/bbl|
(1) Differentials completed on a WTI – MSW basis.
(2) USD transactions completed on a US$ WTI – US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.279 in the third quarter of 2021.
(3) Differentials completed on a WTI – WCS basis.
(4) Hedged on a USD basis and inclusive of WCS differential, quality, and transportation charges.
PETERS & CO. ENERGY CONFERENCE PRESENTATION
Obsidian Energy is pleased to be participating at the Peters & Co. 25th Annual Energy Conference from September 14th to 16th, 2021 in Toronto, Ontario. Aaron Smith, Senior Vice President, Development and Operations, will discuss the Company at 11:20 a.m. ET (9:20 a.m. MT) on Thursday, September 16, 2021; an associated presentation will be posted at that time on our website, www.obsidianenergy.com.