Group 1 - Obsidian Energy Ltd. (NYSE:OBE) is involved in the exploration, development, and production of oil and natural gas, with a diverse asset portfolio including light oil, heavy oil, and natural gas properties [1][2] - On September 8, 2023, Obsidian Energy announced significant progress in its second half 2025 program, having drilled 13 wells with early production exceeding expectations, contributing to record output in Peace River [2] - The company improved its financial position by selling InPlay Oil shares, redeeming $30 million in debt, and completing its share buyback plan, which reduced its year-end debt forecast to $213 million [2] Group 2 - BMO Capital maintained an Outperform rating for Obsidian Energy with a price target of C$10 following its guidance for the second half of the year [1] - Despite the positive developments, Jim Cramer expressed caution regarding smaller-cap energy companies like OBE, particularly in light of declining oil prices [1]

Group 1 - Obsidian Energy Ltd. has significantly reduced its net debt through the sale of its stake in InPlay Oil Corp [2] - The company has been repurchasing/redeeming its 11.95% unsecured debt [2] - The focus of the investment group Distressed Value Investing is on value opportunities and distressed plays, particularly in the energy sector [2]

Core Points - Obsidian Energy has completed a partial redemption of $30 million of its outstanding Senior Unsecured Notes, which have an interest rate of 11.95% and are due on July 27, 2027 [1][2] - Following the redemption, the company has $80.8 million of Notes remaining outstanding, with a maximum semi-annual free cash flow offer of $17.0 million required under the trust indenture governing the Notes [2] Company Overview - Obsidian Energy is an intermediate-sized oil and gas producer with a diversified portfolio of high-quality assets, primarily located in the Peace River, Willesden Green, and Viking areas of Alberta [3] - The company's operations focus on exploring, developing, and holding interests in oil and natural gas properties, along with related production infrastructure in the Western Canada Sedimentary Basin [3] - The company's shares are listed on both the Toronto Stock Exchange and the NYSE American under the symbol "OBE" [4]

Core Viewpoint - Obsidian Energy has announced a partial redemption of $30 million of its outstanding Senior Unsecured Notes, reflecting a strong balance sheet and liquidity position, which will help reduce future interest expenses [1][2]. Group 1: Redemption Details - The redemption date is set for August 29, 2025, with a redemption price of $1,029.88 per $1,000 principal amount of the redeemed Notes, equating to 102.988 percent of the principal amount, plus accrued interest [2]. - After the redemption, Obsidian Energy will have $80.8 million of Notes outstanding, and the maximum semi-annual free cash flow offer required under the trust indenture will be $17.0 million [2]. Group 2: Company Overview - Obsidian Energy is an intermediate-sized oil and gas producer with a diverse portfolio of high-quality assets, primarily located in Alberta's Peace River, Willesden Green, and Viking areas [5]. - The company focuses on exploring, developing, and holding interests in oil and natural gas properties and related production infrastructure within the Western Canada Sedimentary Basin [5][6].

Obsidian Energy Completes Offer to Purchase $1.4 Million of Our Outstanding Senior Unsecured Notes August 15, 2025 7:00 AM EDT | Source: Obsidian Energy Ltd. Calgary, Alberta--(Newsfile Corp. - August 15, 2025) - OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("Obsidian Energy", the "Company", "we", "us" or "our") today announced completion of our previously announced offer (the "Offer") to purchase for cash, up to an aggregate amount of $48.4 million of our outstanding 11.95 percent Senior Unsecured ...

Core Viewpoint - Obsidian Energy has entered into a definitive agreement to sell its common share position in InPlay Oil Corp, consisting of approximately 9.14 million shares, for a total of $91.4 million at a price of $10.00 per share [1][4]. Group 1: Transaction Details - The Disposition Transaction is expected to close in the first half of August 2025, pending customary closing conditions [2]. - The purchase price will be adjusted based on certain filing fees and potential dividends, with specific conditions outlined for adjustments if the transaction closes after August 12, 2025 [3][19]. - Following the transaction, Obsidian Energy will no longer hold any InPlay Shares but will retain 20,834 restricted awards, which represent 0.07% of the outstanding shares [4]. Group 2: Company Background - Obsidian Energy is an intermediate-sized oil and gas producer with a diverse portfolio of assets primarily located in Alberta [9]. - The company focuses on exploring, developing, and holding interests in oil and natural gas properties within the Western Canada Sedimentary Basin [9][10].

Corporate Overview - Obsidian Energy's Q2 2025 production was 28,943 boe/d, with 71% oil and liquids[9] - The company's 2P reserves at year-end 2024 were 149 Mmboe[9] - Obsidian Energy has $2.2 billion in tax pools as of Q2 2025[9] - The company's market capitalization is $575 million, with net debt at $270 million as of Q2 2025[10] Operational Highlights - Obsidian Energy plans H2 2025 capital expenditures between Peace River and Willesden Green, totaling $110-$120 million[26] - The company purchased and cancelled approximately 7.1 million shares for $51.1 million up to July 29, 2025[26] - H2 2025 average production is guided between 27,100 and 28,300 boe/d[27] Strategic Initiatives - Obsidian Energy completed the Pembina Disposition, reducing net debt to $270 million as of June 30, 2025[26] - The company is negotiating to sell its InPlay share position, valued at approximately $96 million, acquired through the Pembina Disposition[10, 26] - Obsidian Energy renewed its credit facility, extending the $235 million facility into 2027[26] Reserves and Valuation - Pro forma reserves post-Pembina Disposition are 149 Mmboe[79] - Pro forma net asset value per share ranges from $8.57 to $28.57, depending on WTI pricing scenarios[81]

The Offer is being made pursuant to the terms and conditions contained in the Offer to Purchase, related letter of transmittal and notice of guaranteed delivery. Copies of these documents may be obtained from Computershare Investor Services Inc., the tender agent for the Offer, by telephone at 1-800-564-6253 or email at corporateactions@computershare.com. This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitatio ...

[Financial and Operational Highlights](index=1&type=section&id=Financial%20and%20Operational%20Highlights) [Quarterly Financial Summary](index=1&type=section&id=Quarterly%20Financial%20Summary) Obsidian Energy's Q2 2025 production revenues and net income declined significantly due to lower production volumes following an asset disposition Q2 2025 vs Q2 2024 Financial and Production Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Production revenues | $136.3M | $208.4M | -34.6% | | Funds flow from operations | $65.8M | $115.2M | -42.9% | | Net income | $15.3M | $37.1M | -58.8% | | Total production (boe/d) | 28,943 | 35,773 | -19.1% | | Light oil (bbl/d) | 6,314 | 13,782 | -54.2% | | Heavy oil (bbl/d) | 12,041 | 7,026 | +71.4% | [Cash Flow Analysis](index=2&type=section&id=Cash%20Flow%20Analysis) Funds flow from operations and free cash flow decreased in Q2 2025, driven by lower revenues from weaker commodity prices and asset sales Cash Flow Summary (in millions) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Cash flow from operating activities | $55.2 | $77.9 | $151.9 | $136.6 | | Funds flow from operations | $65.8 | $115.2 | $165.9 | $199.6 | | Free Cash Flow | $21.6 | $52.0 | $(13.3) | $12.0 | - The decrease in cash flow and FFO was mainly driven by lower commodity prices and reduced production following the disposition of the operated Pembina assets at the start of Q2 2025[10](index=10&type=chunk) [Business Overview and Strategy](index=2&type=section&id=Business%20Overview%20and%20Strategy) [Pembina Disposition](index=2&type=section&id=Pembina%20Disposition) The company closed the disposition of its Pembina assets, using the cash proceeds to strengthen its balance sheet by paying down debt - The disposition of Pembina assets closed on April 7, 2025, with total consideration including **~$211 million in cash**, 9,139,784 InPlay common shares, and a $15 million property interest swap[11](index=11&type=chunk) - Cash proceeds were used to pay down debt on the syndicated credit facility, and the company is now in exclusive negotiations to sell its entire InPlay share position[12](index=12&type=chunk) [Business Strategy](index=3&type=section&id=Business%20Strategy) The company's strategy now focuses on a balanced portfolio, growing Peace River production, and enhancing shareholder returns via its share buyback program - The company aims to grow production in the Peace River area, where it has a significant land base of **over 700 net sections**, focusing on Clearwater and Bluesky formations[14](index=14&type=chunk) - The company is continuing its return of capital initiative via its Normal Course Issuer Bid (NCIB), having repurchased approximately **16.7 million common shares** (about 20% of outstanding shares) for $140.2 million since the program's inception in 2023[15](index=15&type=chunk) [Business Environment and Commodity Prices](index=3&type=section&id=Business%20Environment%20and%20Commodity%20Prices) The business environment in Q2 2025 was characterized by lower WTI oil prices and weaker AECO natural gas prices compared to the prior year Benchmark Price Averages | Benchmark | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | WTI oil ($US/bbl) | $63.74 | $71.42 | $80.57 | | WCS (CAD$/bbl) | $73.89 | $84.04 | $91.82 | | AECO 5A (CAD$/mcf) | $1.69 | $2.17 | $1.18 | - WTI prices increased late in Q2 2025, driven by the Iran-Israel conflict and potential supply risk[21](index=21&type=chunk) - AECO natural gas prices were suppressed by increased supply and higher inventory levels, with prices hitting a quarterly low of **$0.80 per mcf** in June[23](index=23&type=chunk) [Hedging Activities](index=4&type=section&id=Hedging%20Activities) The company maintains an active hedging program with significant WTI, WCS, and AECO swap contracts extending into 2026 to mitigate price volatility Selected Outstanding Hedges | Type | Volume | Term | Price | | :--- | :--- | :--- | :--- | | WTI Swap | 12,375 bbls/d | July 2025 | $86.29/bbl | | WTI Swap | 4,000 bbls/d | Dec 2025 | $90.23/bbl | | WCS Differential | 7,750 bbls/d | Q3 2025 | $(18.83)/bbl | | AECO Swap | 25,118 mcf/d | Jul-Oct 2025 | $2.24/mcf | [Results of Operations](index=5&type=section&id=Results%20of%20Operations) [Production](index=5&type=section&id=Production) Total production decreased 19% year-over-year due to the Pembina Disposition, though heavy oil production surged 71% from Peace River development Daily Production by Type (Q2 2025 vs Q2 2024) | Product | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Light oil (bbl/d) | 6,314 | 13,782 | (54)% | | Heavy oil (bbl/d) | 12,041 | 7,026 | 71% | | NGL (bbl/d) | 2,189 | 3,193 | (31)% | | Natural gas (mmcf/d) | 50 | 71 | (30)% | | **Total (boe/d)** | **28,943** | **35,773** | **(19)%** | - Production from the Cardium area **fell 44% YoY** in Q2 2025, while Peace River production **grew by 78%** over the same period[29](index=29&type=chunk) - In the first six months of 2025, the company drilled **37 (32.6 net) wells** and brought 39 (34.6 net) wells on production[27](index=27&type=chunk) [Average Sales Prices and Revenues](index=5&type=section&id=Average%20Sales%20Prices%20and%20Revenues) The company's weighted average sales price and production revenues fell due to a 26% decline in total liquids prices and lower production volumes Average Sales Prices (Q2 2025 vs Q2 2024) | Product | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Light oil (per bbl) | $91.09 | $107.61 | (15)% | | Heavy oil (per bbl) | $61.27 | $79.73 | (23)% | | Total liquids (per bbl) | $68.11 | $91.64 | (26)% | | Natural gas (per mcf) | $2.00 | $1.33 | 50% | | **Weighted avg (per boe)** | **$51.83** | **$64.11** | **(19)%** | - Production revenues and gross revenues were lower in 2025 compared to 2024, mainly due to lower realized oil prices and lower production volumes from the Pembina Disposition[37](index=37&type=chunk) [Netbacks](index=6&type=section&id=Netbacks) The corporate netback decreased to $27.13 per boe, primarily due to lower realized sales prices and higher transportation costs from growing Peace River production Netback per boe | Component (per boe) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Sales price | $51.83 | $64.11 | | Royalties | $(6.03) | $(8.34) | | Transportation | $(4.49) | $(4.15) | | Net operating costs | $(13.54) | $(13.83) | | **Netback** | **$27.13** | **$38.99** | - The decrease in netback was driven by lower oil prices, while transportation costs were higher due to increasing Peace River production[32](index=32&type=chunk) [Expenses](index=8&type=section&id=Expenses) [Operating and Transportation Costs](index=8&type=section&id=Operating%20and%20Transportation%20Costs) Net operating costs decreased due to the lower production base, while transportation costs rose year-to-date with increased Peace River production - Q2 2025 net operating costs were lower than Q2 2024 mainly due to the lower production base following the Pembina Disposition[44](index=44&type=chunk) - Higher production from new wells in the Peace River area resulted in higher transportation costs in the first six months of 2025 compared to the 2024 period[45](index=45&type=chunk) [Financing Costs](index=9&type=section&id=Financing%20Costs) Financing expenses decreased in Q2 2025 due to lower interest charges resulting from reduced debt following the Pembina Disposition - Interest charges were lower in 2025 due to reduced drawings on the syndicated credit facility after the Pembina Disposition proceeds were used for debt repayment[46](index=46&type=chunk) - The company has a **$235.0 million** syndicated credit facility maturing in May 2027 and **$112.2 million** in senior unsecured notes due July 2027[47](index=47&type=chunk)[48](index=48&type=chunk) - The company expects to make a **$48.4 million** Repurchase Offer for its senior unsecured notes in August 2025, based on its free cash flow and liquidity[50](index=50&type=chunk) [Share-Based Compensation](index=9&type=section&id=Share-Based%20Compensation) Share-based compensation recorded a recovery in Q2 2025, driven by a mark-to-market gain on liability-based awards due to a lower share price Share-Based Compensation (in millions) | Component | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Liability based incentive plans | $(2.6) | $(1.4) | | Equity based incentive plans | $2.4 | $2.3 | | **Total** | **$(0.2)** | **$0.9** | - The change in share price affects the mark-to-market valuation of PSU and DSU obligations, with the share price closing at **$7.58** on June 30, 2025, down from $10.24 a year prior[55](index=55&type=chunk) [General & Administrative (G&A) Expenses](index=10&type=section&id=General%20%26%20Administrative%20(G%26A)%20Expenses) Gross G&A expenses remained stable, but G&A costs per boe increased due to lower production volumes following the Pembina Disposition G&A Expenses | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Gross G&A (millions) | $9.9 | $10.0 | | Gross G&A (per boe) | $3.78 | $3.06 | - On a per boe basis, G&A costs were higher in 2025 due to the impact of the Pembina Disposition on production volumes[57](index=57&type=chunk) [Depletion, Depreciation and Impairment (DD&I)](index=10&type=section&id=Depletion%2C%20Depreciation%20and%20Impairment%20(DD%26I)) D&D expense decreased due to the disposition of the Pembina assets, which also resulted in a non-cash impairment loss of $15.4 million - D&D expense decreased in 2025 because the Pembina Assets were classified as held for sale in Q1 and then sold early in Q2, reducing production levels[58](index=58&type=chunk) - A **non-cash, pre-tax impairment loss of $15.4 million** was recorded on the Pembina Assets in 2025 when they were reclassified as held for sale[59](index=59&type=chunk) - A **$14.2 million impairment reversal** was recorded in the Legacy cash generating unit (CGU) during the first six months of 2025 due to a reduction in the decommissioning liability[60](index=60&type=chunk) [Net Income](index=11&type=section&id=Net%20Income) Net income for Q2 2025 decreased significantly to $15.3 million, driven by lower production revenues from weaker oil prices and reduced volumes Net Income Summary | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net income (millions) | $15.3 | $37.1 | | Diluted per share | $0.21 | $0.46 | - The decrease in net income was a result of lower production revenues, which was partially offset by lower depletion and depreciation expense following the Pembina Disposition[62](index=62&type=chunk) [Capital Management and Liquidity](index=11&type=section&id=Capital%20Management%20and%20Liquidity) [Capital Expenditures and Drilling](index=11&type=section&id=Capital%20Expenditures%20and%20Drilling) Capital expenditures were moderated in Q2 2025 in response to lower commodity prices, with a focus on bringing previously drilled wells on production Capital Expenditures (in millions) | Category | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Drilling and completions | $14.6 | $37.7 | $102.4 | $129.0 | | Well equipping and facilities | $25.0 | $21.2 | $58.8 | $43.9 | | **Total Capital Expenditures** | **$40.2** | **$59.2** | **$168.6** | **$173.5** | - Capital spending was moderated in Q2 2025 in response to lower and more volatile commodity prices[63](index=63&type=chunk) - In the first six months of 2025, the company drilled **37 gross (33 net) wells**, of which 35 were oil wells[65](index=65&type=chunk) [Liquidity and Capital Resources](index=12&type=section&id=Liquidity%20and%20Capital%20Resources) [Net Debt](index=12&type=section&id=Net%20Debt) Net debt decreased by $141.5 million to $270.2 million, driven by the use of cash proceeds from the Pembina Disposition to pay down debt Net Debt Calculation (in millions) | Component | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Syndicated credit facility | $114.0 | $225.0 | | Senior unsecured notes | $112.2 | $114.2 | | **Total Long-term debt** | **$222.8** | **$335.4** | | Working capital deficiency | $47.4 | $76.3 | | **Net debt** | **$270.2** | **$411.7** | - The decrease in net debt was a result of lower drawings on the credit facility after applying the **~$211 million in cash proceeds** from the Pembina Disposition[70](index=70&type=chunk) [Investment in InPlay](index=13&type=section&id=Investment%20in%20InPlay) The company received over 9.1 million InPlay shares from the Pembina Disposition and is now in exclusive negotiations to sell the entire position - The company received **9,139,784 InPlay shares** as part of the Pembina disposition and has classified this investment as held for sale[73](index=73&type=chunk) - Subsequent to June 30, 2025, a third party made a non-binding offer to acquire the company's entire InPlay share position at a premium to the market price[75](index=75&type=chunk) [Financial Instruments and Risk Management](index=14&type=section&id=Financial%20Instruments%20and%20Risk%20Management) The company utilizes financial instruments to manage commodity price risk, recording a realized loss of $1.7 million and an unrealized gain of $8.8 million in Q2 2025 Risk Management Results (in millions) | Component | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total realized gain (loss) | $(1.7) | $4.0 | | Total unrealized gain (loss) | $8.8 | $3.0 | | **Total risk management gain** | **$7.1** | **$7.0** | - The company has provided sensitivities indicating that a **US$1.00 change in WTI price** would impact annual funds flow from operations by **$8.1 million**[81](index=81&type=chunk) [Contractual Obligations and Commitments](index=15&type=section&id=Contractual%20Obligations%20and%20Commitments) The company has total contractual obligations of $450.9 million, with significant payments for long-term debt and decommissioning liabilities due through 2027 and beyond Summary of Contractual Obligations (in millions) | Obligation | 2025 (6 months) | 2026 | 2027 | Thereafter | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt | $48.4 | $- | $177.8 | $- | $226.2 | | Transportation | $8.6 | $15.7 | $12.9 | $17.8 | $67.0 | | Decommissioning liability | $14.9 | $13.0 | $12.0 | $65.6 | $105.5 | | **Total** | **$82.9** | **$50.5** | **$220.3** | **$97.4** | **$450.9** | [Equity Instruments](index=16&type=section&id=Equity%20Instruments) As of July 29, 2025, the company had 67.1 million common shares outstanding, reflecting repurchases under its buyback program Changes in Equity Instruments | Instrument | As at June 30, 2025 | As at July 29, 2025 | | :--- | :--- | :--- | | Common shares | 67,708,673 | 67,102,203 | | Options outstanding | 2,461,908 | 2,451,768 | | RSUs outstanding | 1,877,838 | 1,793,000 | [Supplemental and Other Information](index=17&type=section&id=Supplemental%20and%20Other%20Information) [Supplemental Production Disclosure](index=17&type=section&id=Supplemental%20Production%20Disclosure) This section details production by area, highlighting the decline in the Cardium area and significant heavy oil growth from the Peace River area Q2 2025 Daily Production by Area (boe/d) | Area | Light Oil (bbl/d) | Heavy Oil (bbl/d) | Total (boe/d) | | :--- | :--- | :--- | :--- | | Cardium | 5,568 | 24 | 14,462 | | Peace River | 11 | 11,910 | 12,827 | | Viking | 663 | 79 | 1,338 | | Legacy | 72 | 28 | 316 | [Non-GAAP and Other Financial Measures](index=18&type=section&id=Non-GAAP%20and%20Other%20Financial%20Measures) The company uses non-GAAP measures like funds flow from operations and net debt to provide additional insight into its financial performance - The report employs non-GAAP measures including funds flow from operations, netback, sales, gross revenues, net operating costs, net debt, and free cash flow[3](index=3&type=chunk)[92](index=92&type=chunk) - Reconciliations for key non-GAAP measures like Funds Flow from Operations, Free Cash Flow, Net Debt, and Netbacks are provided within their respective sections of the MD&A[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) [Forward-Looking Statements](index=20&type=section&id=Forward-Looking%20Statements) This section outlines assumptions, risks, and uncertainties related to forward-looking statements concerning production growth, development plans, and financial strength - Forward-looking statements in the report include expected production growth in Peace River, future development pace, plans to maintain financial strength, and monetization of the InPlay share position[112](index=112&type=chunk) - Key assumptions include commodity prices, production levels, exchange rates, and the ability to execute capital programs and obtain financing[114](index=114&type=chunk) - The report lists numerous risks and uncertainties, such as trade tariffs, commodity price volatility, geopolitical events, and industry conditions, that could impact future results[117](index=117&type=chunk)[118](index=118&type=chunk)

Financial Performance - The company reported cash flow from operating activities of $55.2 million for Q2 2025, down from $77.9 million in Q2 2024 [2] - Funds flow from operations (FFO) was $65.8 million ($0.94 per share) compared to $115.2 million ($1.51 per share) in the same quarter last year [8] - Net income for Q2 2025 was $15.3 million ($0.22 per share), a decrease from $37.1 million ($0.48 per share) in Q2 2024 [8] - Capital expenditures totaled $40.2 million in Q2 2025, down from $59.2 million in Q2 2024 [8] - Net debt decreased to $270.2 million as of June 30, 2025, from $432.5 million a year earlier [8] Operational Highlights - Average daily production was 28,943 barrels of oil equivalent (boe) per day, compared to 35,773 boe per day in Q2 2024 [2] - The company successfully brought 20 wells into production during Q2 2025, primarily in the Peace River area [12] - The average sales price for light oil was $91.09 per barrel, while heavy oil averaged $61.27 per barrel [2] - The company closed the disposition of its Pembina assets on April 7, 2025, which contributed to a reduction in decommissioning liabilities [5] Share Buyback Program - The company repurchased and canceled approximately 5.4 million shares for $36.6 million during Q2 2025, representing about 7% of outstanding shares [4] - Since the inception of the share buyback program in 2023, the company has repurchased and canceled approximately 20% of its shares, totaling around 16.7 million shares [5][11] Future Outlook - The company plans to continue its capital development program in the second half of 2025, with three rigs currently operating in Peace River and plans to add another rig in Willesden Green [10] - The Clearwater waterflood pilot project is set to begin water injection in Q3 2025 [12] - The company anticipates further operational success based on encouraging initial production rates from recent wells [12]