Obsidian Energy Announces Increased 2024 Production Guidance and Revised Capital Program

Calgary, Alberta–( – September 30, 2024) – OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) is pleased to provide an update to our 2024 guidance that includes ongoing strong second half 2024 drilling results that continue to exceed our initial expectations. As a result, we have further increased our 2024 production guidance range to 37,000 to 37,400 boe/d (midpoint of 37,200 boe/d) with associated adjustments to our funds flow from operations (“FFO“) and free cash flow (“FCF“).

OBE Announces Increased 2024 Production Guidance and Revised Capital Program

Considering the recent softness in commodity prices and market uncertainty due to global factors, Obsidian Energy has also revised our 2024 capital expenditures downwards by approximately $15 million, reallocating a portion of light oil spending towards incremental share buybacks through our normal course issuer bid (“NCIB“) and further debt reduction. In total, the reallocation of capital is only expected to impact average 2024 production by approximately 40 boe/d.

“The continued outperformance of our development program has led to a further increase to our 2024 production guidance,” said Stephen Loukas, Obsidian Energy’s President and CEO. “However, the recent volatility in both the broader oil and gas markets as well as with our share price has resulted in a dynamic whereby our equity valuation is significantly below new development economics within our light oil portfolio. Accordingly, Obsidian Energy’s Board of Directors has approved the postponement of our fourth quarter light oil program (excluding the drilling of our initial delineation well targeting the Belly River formation in our Willesden Green area) and capital reallocation into a combination of incremental share buybacks and additional debt repayment. Notwithstanding a minor impact to 2024 production, we believe that this decision will result in superior FFO and FCF per share metrics. Moreover, it will afford Obsidian Energy’s shareholders greater exposure to our growing Peace River play, preserving light oil inventory for more favourable market while still meeting our 50,000 boe/d 2026 production target.”

REVISED 2024 GUIDANCE

We have revised our 2024 guidance with annual production expected to be between 37,000 to 37,400 boe/d with a midpoint of 37,200 boe/d – a 15 percent increase from 32,275 boe/d in 2023 – and an approximate $15 million decrease to capital expenditures that will be reallocated to further share buybacks and debt reduction. Although we have lowered our WTI forecast to US$72.50/bbl for the remainder of 2024, our FFO increased by $5 million to $420 million, resulting in a 2024 net debt to FFO of approximately 0.9 times and a related increase to FCF by approximately $17 million to $69 million. Our revised 2024 guidance, incorporating key assumptions used by the Company, is as follows:

			2024 Guidance			Revised 2024 Guidance
Production1	boe/d		36,400 – 37,000			37,000 – 37,400
% Oil and NGLs	%		69%			69%
Capital expenditures2	$ millions		335 – 345			320 – 335
Acquisition3 Decommissioning expenditures	$ millions $ millions		85 23 – 24			85 23 – 24
Net operating costs	$/boe		13.75 – 14.25			13.75 – 14.25
General & administrative	$/boe		1.55 – 1.65			1.55 – 1.65
Based on midpoint of above guidance
WTI4	US$/bbl		75.00			72.50
MSW Differential4	US$/bbl		3.50			3.50
WCS Differential4	US$/bbl		15.00			15.00
AECO4	CAD$/GJ		1.50			1.50
FFO2, 5	$ millions		415			420
FFO/share6	$/share		5.44			5.51
FCF5	$ millions		52			69
FCF/share6	$/share		0.68			0.90
Net debt (prior to NCIB)7	$ millions		400			390
Net debt (prior to NCIB) to FFO7	times		1.0			0.9

(1) Approximate mid-point of 2024 Guidance range: 13,400 bbl/d light oil, 8,700 bbl/d heavy oil, 3,000 bbl/d NGLs and 69.6 mmcf/d natural gas with a minimal amount of forecasted production associated with exploration/appraisal capital expenditures

Approximate mid-point of Revised 2024 Guidance range: 13,500 bbl/d light oil, 8,900 bbl/d heavy oil, 3,000 bbl/d NGLs and 70.6 mmcf/d natural gas with a minimal amount of forecasted production associated with exploration/appraisal capital expenditures.

(2) Capital expenditures include approximately $21 million for Peace River exploration/appraisal activity with minimal impact on forecasted production volumes.

(3) Acquisition expenditures include $80.5 million for the Peace River Clearwater acquisition and approximately $4 million for other minor acquisitions completed to date in 2024.

(4) WTI and AECO pricing assumptions of 2024 Guidance were forecasted for September to December 31, 2024, while MSW and WCS differentials were forecasted for October to December 2024. Pricing assumptions include risk management (hedging) adjustments as of September 4, 2024. Full year pricing assumptions, including actuals realized from January 1, 2024, to August 28, 2024, result in WTI of US$77.36/bbl, MSW differentials of US$4.77/bbl, WCS differentials of US$15.36/bbl, AECO of $1.45/GJ, and FX of 1.36x CAD/USD.

WTI and AECO pricing assumptions of Revised 2024 Guidance are forecasted for October to December 31, 2024, while MSW and WCS differentials are forecasted for November to December 2024. Pricing assumptions include risk management (hedging) adjustments as of September 30, 2024. Full year pricing assumptions, including actuals realized from January 1, 2024, to September 27, 2024, result in WTI of US$76.28/bbl, MSW differentials of US$4.78/bbl, WCS differentials of US$15.36/bbl, AECO of $1.47/GJ, and FX of 1.36x CAD/USD.

(5) 2024 Guidance FFO and FCF included approximately $4.9 million of estimated charges for full year 2024 related to the deferred share units, performance share units and non-treasury incentive plan cash compensation amounts which were based on a share price of $9.27 per share.

Revised 2024 Guidance FFO and FCF includes approximately $1.8 million of estimated charges for full year 2024 related to the deferred share units, performance share units and non-treasury incentive plan cash compensation amounts which are based on a share price of $7.99 per share.

(6) Per share calculations are based on an estimated 76.3 million weighted average shares outstanding for the 12-months ended December 31, 2024, for both 2024 Guidance and Revised 2024 Guidance.

(7) Net debt figures estimated as at December 31, 2024. Revised 2024 Guidance includes the impact of approximately $28.5 million of share purchases to September 30, 2024, under the Company’s NCIB program in connection with repurchasing shares.

Guidance Sensitivity Table
Variable (October/November1 to December)	Range	Change in 2024 FFO ($ millions)
WTI (US$/bbl)	+/- $1.00/bbl	2.9
MSW light oil differential (US$/bbl)	+/- $1.00/bbl	1.5
WCS heavy oil differential (US$/bbl)	+/- $1.00/bbl	1.4
Change in AECO ($/GJ)	+/- $0.25/GJ	0.7

(1) WTI and AECO pricing assumptions of Revised 2024 Guidance are forecasted for October to December 2024, while MSW and WCS differentials are forecasted for November to December 2024.

UPDATED 2024 CAPITAL PROGRAM

Obsidian Energy adjusted our 2024 capital program for the decrease in capital expenditures while further optimizing our fourth quarter 2024 drilling program with the addition of three Clearwater development wells in the Peavine area and two exploration/appraisal wells at Gift Lake at Peace River, and our initial delineation well targeting the Belly River formation in our Willesden Green area. In total, we expect to rig release 68 (67.4 net) wells in our 2024 operated program by year-end. The updated breakdown of our expected wells to be rig released in 2024 program is as follows:

		H1 Gross (Net) Wells			H2 Gross (Net) Wells						2024E Gross (Net) Wells
					Q3E			Q4E
DEVELOPMENT WELLS
Heavy Oil Assets
Peace River (Bluesky)		8 (8.0	)		8 (8.0	)		9 (9.0	)		25 (25.0	)
Peace River (Clearwater)		7 (7.0	)		3 (3.0	)		3 (3.0	)		13 (13.0	)
Light Oil Assets
Willesden Green (Cardium/Belly River)		8 (7.7	)		–			1 (1.0	)		9 (8.7	)
Pembina (Cardium)		4 (3.7	)		5 (5.0	)		1 (1.0)2			10 (9.7	)
		27 (26.4	)		16 (16.0	)		14 (14.0	)		57 (56.4	)
EXPLORATION/APPRAISAL WELLS
Peace River (Bluesky)		–			–			–			–
Peace River (Clearwater)		2 (2.0	)		2 (2.0	)		2 (2.0	)		6 (6.0	)
Peace River (OSE)		5 (5.0	)		–			–			5 (5.0	)
		7 (7.0	)		2 (2.0	)		2 (2.0	)		11 (11.0	)
TOTAL OPERATED WELLS1		34 (33.4	)		18 (18.0	)		16 (16.0	)		68 (67.4	)

(1) Excluding injection or disposal wells. Currently, 47 (46.4 net) wells have come on production in 2024, including seven (7.0 net) wells rig released in 2023 that came on production in the first quarter of 2024. In total, Obsidian Energy expects to have 60 (59.3 net) wells on production by the end of 2024.

(2) Pembina well spud in the third quarter prior to the postponement of the fourth quarter 2024 light oil capital program.

HEDGING UPDATE

We currently have the following contracts in place on a weighted average basis:

Oil Contracts

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