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]

Core Points - Obsidian Energy has launched an offer to purchase up to $48.4 million of its outstanding Senior Unsecured Notes, which have an interest rate of 11.95% and are due on July 27, 2027 [1][3] - As of July 31, 2025, the total outstanding principal amount of these Notes is $112.2 million [1] - The offer will expire on August 12, 2025, at 5:00 p.m. Eastern Daylight Time, unless extended [1] Offer Details - Holders of the Notes who validly tender them will receive cash consideration of $1,030 per $1,000 principal amount, plus any accrued and unpaid interest up to the settlement date, expected on August 15, 2025 [2] - The offer is not conditional on a minimum amount of Notes being tendered, and if the total purchase price exceeds the Maximum Purchase Consideration, the acceptance will be on a pro rata basis [3] Documentation and Contact - The offer is made pursuant to the terms in the Offer to Purchase, related letter of transmittal, and notice of guaranteed delivery, which can be obtained from Computershare Investor Services Inc. [4]

[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]

Industry Overview - The Zacks Oil and Gas - Exploration and Production - Canadian industry is facing challenges due to weaker commodity prices and a stronger Canadian dollar, which are eroding margins and cash flows [1][3] - Dividend growth and share buybacks are becoming unsustainable for many companies under current strip prices, leading to tighter capital spending [1][4] - The long-term impact of electric vehicle (EV) adoption and climate policies is contributing to a cautious outlook for the industry [1][6] LNG Breakthrough - Canada's first shipment of LNG to Asia marks a significant milestone, opening access to premium markets and reducing the natural gas discount [1][5] - The LNG Canada project, valued at $40 billion, is expected to ramp up exports to 14 million tonnes per annum (mtpa) and potentially double output in Phase 2, which will strengthen Canadian natural gas prices [5] Key Companies - **ARC Resources Ltd. (AETUF)**: The largest pure-play Montney operator in Canada, focusing on cost leadership and LNG market opportunities. It aims to triple free funds flow per share by 2028 and has a Zacks Consensus Estimate indicating 11% year-over-year earnings growth for 2025 [22][23] - **Ovintiv Inc. (OVV)**: A leading independent E&P company with a diverse portfolio. It has maintained a disciplined cost reduction approach and benefits from a proactive hedging program, with a trailing four-quarter earnings surprise of approximately 27.8% [27][28] - **Obsidian Energy Ltd. (OBE)**: Focused on oil-weighted assets, aiming to increase production from 34,000 boe/d to 50,000 boe/d by 2026. The company has a Zacks Consensus Estimate indicating 199.5% year-over-year earnings growth for 2025 [31][32] - **InPlay Oil Corp. (IPOOF)**: A junior upstream company with a focus on light oil development, expected to exceed production of 18,750 boe/d in the second half of the year. It prioritizes sustainability and shareholder returns [18][19] Market Performance - The Zacks Oil and Gas - Canadian E&P industry has underperformed compared to the S&P 500 and the broader Zacks Oil – Energy sector, declining 9.4% over the past year [11] - The industry's Zacks Industry Rank is 165, placing it in the bottom 33% of 245 Zacks industries, indicating challenging near-term prospects [7][8] Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 4.76, significantly lower than the S&P 500's 17.98 and slightly below the sector's 4.84 [15]

Core Viewpoint - Obsidian Energy has received a non-binding offer from a third party to acquire its entire common share position in InPlay Oil Corp, which consists of approximately 9,139,784 shares, representing about 32.7% of InPlay's outstanding shares, at a price exceeding the closing price on July 15, 2025 [1][2]. Group 1: Transaction Details - The negotiations regarding the potential acquisition (Disposition Transaction) are ongoing, and Obsidian Energy has agreed to engage exclusively with the third party until August 1, 2025 [1][2]. - The company will not proceed with its previously announced exchange offer to purchase approximately $10 million of its common shares from shareholders in Canada during this exclusivity period [1]. 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 [4]. - 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 [4]. Group 3: Market Position - Obsidian Energy is listed on both the Toronto Stock Exchange and NYSE American under the symbol "OBE" [5][13].

Core Viewpoint - Obsidian Energy has announced its capital program and financial guidance for the second half of 2025, focusing on production growth and strategic investments following the recent asset disposition and market conditions [1][2]. Capital Expenditures and Production Guidance - The company plans to allocate between $110 million and $120 million for capital expenditures, along with an additional $13 million to $15 million for decommissioning expenditures in the second half of 2025 [3][4]. - Average production is expected to remain roughly flat at approximately 27,700 barrels of oil equivalent per day (boe/d) in the second half of 2025, with a target exit rate of around 29,000 boe/d by year-end [6][8]. Operational Focus - The capital expenditures will be divided with approximately $62 million dedicated to Peace River and $52 million to Willesden Green, with a total of 28 net operated wells planned for drilling [4][14]. - Key development areas include Harmon Valley South and Dawson in Peace River, with a focus on the Clearwater and Bluesky formations [16][17]. Financial Metrics - The company anticipates funds flow from operations (FFO) of approximately $113 million, with a net debt to FFO ratio of about 1.3 times [8][9]. - Net operating costs are projected to be between $13.45 and $14.35 per boe, while general and administrative costs are expected to be between $2.00 and $2.10 per boe [9][10]. Shareholder Engagement - Obsidian Energy intends to launch a share exchange offer to acquire up to $10 million of its common shares in exchange for shares of InPlay Oil Corp, which the company holds a significant stake in [21][22]. - This exchange offer is part of a strategy to enhance liquidity and shareholder value while managing capital expenditures [2][21]. Market Conditions and Pricing Assumptions - The guidance assumes commodity prices of $65.00 per barrel for WTI, $3.50 per barrel for MSW differential, $11.50 per barrel for WCS differential, and $2.50 per GJ for AECO natural gas [8][9]. - The company has implemented hedging strategies to mitigate the impact of commodity price volatility [19].

Group 1 - Obsidian Energy has withdrawn its three-year growth plan, which aimed to increase production to 50,000 BOEPD by 2026, due to the sale of its Pembina asset [1] - The divestiture of the Pembina asset was completed on April 7 [1] - The article mentions Aaron Chow, a top-rated analyst with over 15 years of experience, who co-founded a mobile gaming company and has expertise in analytical and modeling skills [1] Group 2 - The investing group Distressed Value Investing focuses on value opportunities and distressed plays, particularly in the energy sector [1]

Core Insights - Obsidian Energy has successfully completed its first half 2025 capital program, achieving a new production high of 14,000 boe/d in the Peace River asset [4][5][6] - The company is focusing on enhanced oil recovery techniques and has initiated a Clearwater waterflood pilot project in the Dawson field, which is expected to increase reservoir recovery [7][8] - The macro-economic environment remains uncertain, prompting the company to adjust its capital allocation decisions for the second half of 2025 [2] Production Highlights - All 30 wells in the first half program were rig released by the end of May 2025, with all development wells now on production [1] - The Dawson Clearwater program has exceeded expectations, with all five waterflood pilot wells online [2] - Initial production rates from the Dawson field have significantly increased from 189 boe/d in Q4 2023 to over 3,000 boe/d in May 2025 [6] Development Program - The development drilling in the established fields of Harmon Valley South and Dawson has yielded strong production results [2][3] - The HVS field has seen successful results from the "waffle well" drilling design, enhancing initial production performance [6] - The company has identified follow-up locations for further drilling based on successful initial production rates from various pads [6] Waterflood Pilot Project - The Clearwater waterflood pilot project aims to test the potential for increased reservoir oil recovery in the Dawson field [7] - Successful execution of this project could lead to broader implementation of enhanced oil recovery techniques across Peace River assets [8] Light Oil Assets - Obsidian Energy participated in five non-operated wells at the Pembina Cardium Unit 11, achieving an average 30-day IP rate of 223 boe/d per well [9] - The wells were initially rate restricted due to gas takeaway capacity, with peak production rates ranging from 335 to 360 boe/d [9] Hedging Update - The company has added new oil and gas contracts to mitigate risks associated with potentially lower commodity prices [10] - Current oil contracts include WTI swaps and collars with varying volumes and prices, aimed at stabilizing revenue [10][12] Upcoming Events - Obsidian Energy will participate in the RBC Global Energy, Power and Infrastructure Conference on June 3-4, 2025, with a presentation by the President and CEO [14]