Slide 1: Obsidian Energy Ltd. Q2 Corporate Presentation
Obsidian Energy Ltd. Q2 Corporate Presentation August 2, 2023 TSX:/NYSE American: OBE
Slide 2: Advisory
ADVISORY OVERVIEW This presentation should be read in conjunction with the Company’s unaudited consolidated interim financial statements and Management’s Discussion and Analysis (“MD&A”) for the three and six months ended June 30, 2023. All dollar amounts contained in this presentation are expressed
Slide 3: Investment Highlights
INVESTMENT HIGHLIGHTS OVERVIEW Established light oil assets combined with heavy oil Peace River growth area provide strong shareholder upside PRODUCTION WILLESDEN GREEN & PEMBINA PEACE RIVER Low decline, oil-weighted asset base with Largest acreage holder in a world class, High-quality heavy oil Blu
Slide 4: Corporate Overview
CORPORATE OVERVIEW OVERVIEW World class assets and experienced team delivering value People, assets, discipline, return-focus and execution strength CORPORATE SUMMARY MARKET SUMMARY Q2 2023 Production 2023E ~32,000 boe/d Shares outstanding 80.3 million 31,042 boe/d YoY production growth* 4% Market c
Slide 5: Obsidian Energy Strategy
OBSIDIAN ENERGY STRATEGY STRATEGY We focus on superior execution throughout to deliver results Drive per share growth Use FCF from Increase scale and Target Net Debt Provide return via asset development Cardium asset to invest manage cost of $225 million of capital with and debt reduction in Peace R
Slide 6: Focusing on 2023
FOCUSING ON 2023 STRATEGY Balanced strategy with strong focus on accessing Peace River potential and optionality to adjust with commodity prices 2023 plans expected to deliver 4% production growth, solid FCF, debt reduction and return of capital to shareholders to maximize value OPERATIONS FINANCIAL
Slide 7: Updated 2023 Guidance
UPDATED 2023 GUIDANCE STRATEGY Balancing production growth, debt reduction and return of capital to shareholders ‣ Revised 2023E commodity price 2022 Actual Previous 2023E Revised 2023E assumptions are for August 1 to December 31, 2023 Average production 30,682 boe/d 32,000 – 33,500 boe/d 31,500 – 3
Slide 8: Delivering Results – Q2 2023
DELIVERING RESULTS – Q2 2023 RESULTS Strategy and execution create momentum for long-term value Q4 2022 Q1 2023 Q2 2023 Q1 2023 NETBACK ($/boe) Production 31,742 boe/d 33,153 boe/d 31,042 boe/d1 Q2 2023: $35.27 Net operating costs2 $14.63 /boe $14.57 /boe $15.06 /boe $32.43 Norm. average Netback2, 3
Slide 9: 2023 Development Program
2023 DEVELOPMENT PROGRAM ASSETS First half drilling program completed across all areas PEACE RIVER 46 (45.5 NET) WELL DRILLING PROGRAM ‣ Expected average production of ~32,000 boe/d, a 4% annualized production growth from 2022 ‣ Ability to alter program quickly in response to commodity prices ‣ Adju
Slide 10: Peace River – Growth Asset
PEACE RIVER – GROWTH ASSET ASSETS Ownership in high-quality heavy oil resource with resource with Bluesky and Clearwater upside Q2 2023 Peace River production 5,920 boe/d* ‣ Cold-flow heavy oil resource developed with multi-leg horizontal wells ‣ Large, contiguous, long-term land base of ~500 sectio
Slide 11: Peace River Bluesky Growth – New Walrus Field
PEACE RIVER BLUESKY GROWTH – NEW WALRUS FIELD ASSETS New development area established at Walrus field through expertise and technology ‣ 2023 program: 11 (11.0 net) wells, including 5 (5.0 net) Follow Up on Successful Field Delineation wells targeting Walrus field (rig released) ‣ H1: 6 Bluesky (6.0
Slide 12: Peace River Clearwater Potential
PEACE RIVER CLEARWATER POTENTIAL ASSETS Industry activity continues over emerging Clearwater formation play ‣ Leverage Bluesky operational experience ‣ Clearwater formation just above Bluesky ‣ Ability to use Bluesky infrastructure to reduce well costs ‣ Evaluate Clearwater potential while drilling
Slide 13: Leading Cardium Play Areas
LEADING CARDIUM PLAY AREAS ASSETS Our core foundation with ~25 years of drilling opportunities for future development FIELD HISTORY CARDIUM PRODUCTION (Q2 2023) Q2 2023 Cardium production 22,721 boe/d* ‣ One of North America’s most significant light oil fields 47% ‣ Development since the 1950’s; var
Slide 14: Willesden Green – Crimson Lake and East Crimson
WILLESDEN GREEN – CRIMSON LAKE AND EAST CRIMSON ASSETS Foundational asset with horizontal development providing strong returns and quick payouts ‣ Foundational asset providing highest IP rates in our Cardium CRIMSON LAKE portfolio ‣ Flexible, operated infrastructure allows ability to maximize produc
Slide 15: Pembina
PEMBINA ASSETS Low decline rate supports primary horizontal drilling and future growth through waterfloods ‣ Low decline, pressure-maintained development ‣ Existing wells and infrastructure allow growth in scale with reduced capital cost ‣ Ability to de-risk opportunities and add additional location
Slide 16: Viking – Significant Development Upside
VIKING – SIGNIFICANT DEVELOPMENT UPSIDE ASSETS Revitalizing light oil asset that provides highly economic returns ‣ Sweet, light oil development play with associated natural gas Q2 2023 Viking production 2,101 boe/d ‣ Significant drilling inventory, including both low risk infill and de-risked step-
Slide 17: Sustainability Highlights
SUSTAINABILITY HIGHLIGHTS CORPORATE RESPONSIBILITY Striving to make a difference to the environment, the community and for all stakeholders Environment Social Governance 40% REDUCTION IN GHG >10,500 WORKER 86% INDEPENDENT EMISSIONS SAFETY INITIATIVES BOARD MEMBERS (2018 – 2021 ) (2021) (5.9-year ave
Slide 18: Industry Leader in Asset Retirement Management
INDUSTRY LEADER IN ASSET RETIREMENT MANAGEMENT CORPORATE RESPONSIBILITY Our commitment to stakeholders includes responsible asset retirement as part of the full cycle of development 2019 – 2022: STRATEGY 989 Wells abandoned ‣ Committed to reducing environmental footprint 2,735 km Pipelines discontin
Slide 19: Considerable Future Value from Tax Pools
CONSIDERABLE FUTURE VALUE FROM TAX POOLS SUMMARY $2.4 billion of tax pools in unrecognized value Amount of Pools Illustrative Value of Tax Pools TAX POOL COMPOSITION Utilized by Year1 @ 8% Discount Rate2 (June 30, 2023) $200 million $349 million $4.11/share $0.3 billion $300 million $399 million $4.
Slide 20: Hedging Production to Preserve Cash Flow
HEDGING PRODUCTION TO PRESERVE CASH FLOW SUMMARY Continuing to build on our hedge position at constructive levels OIL HEDGES A E C O G A S H E D G E S ($, mcf/d) ‣ WTI swap: 4,000 bbl/d for August 2023 @ $3.48 $103.66/ bbl (US$78.64/bbl) 49,929 ‣ WCS differentials: $3.47 ‣ July – September 2023: 34,
Slide 21: Reserves Underpin Our Current and Future Value
RESERVES UNDERPIN OUR CURRENT AND FUTURE VALUE SUMMARY Obsidian Energy trading at substantial discount on booked reserves basis YEAR-END 2022 RESERVES SUMMARY N E T A S S E T V A L U E ( N A V ) P E R S H A R E (1) (C$ per share) US$65 WTI US$75 WTI US$85 WTI Proved developed Total Total proved prod
Slide 22: Why Invest in Obsidian Energy?
WHY INVEST IN OBSIDIAN ENERGY? SUMMARY Obsidian Energy offers upside potential for shareholders ‣ Compelling ~500 section Peace River area with established production, owned infrastructure and significant growth potential in both Bluesky and Clearwater ‣ Dominant Cardium land position and deep oppor
Slide 23: Appendix
Appendix TSX:/NYSE American: OBE
Slide 24: Viking – Exceptional Results from Western Wells
VIKING – EXCEPTIONAL RESULTS FROM WESTERN WELLS APPENDIX Developing western acreage following up 2022 step-out well that effectively delineated area OBE WELLS VERSUS AVERAGE AREA PRODUCING WELL ‣ High economic return wells (N= 233) ‣ 12 (12.0 net) wells drilled and on production in 2022 to 2023 200
Slide 25: Well Economics
WELL ECONOMICS APPENDIX Strong returns across areas despite pressure in the current commodity price environment Half Cycle Type Curve Economics1 Willesden Green Pembina Viking Peace River Formation Cardium Cardium W. Viking (Esther) Bluesky (Seal) Well Length 2.0 mile 1.75 mile 1.25 mile 10 leg DCET
Slide 26: Strong Reserve Growth Provides Drilling for Years
STRONG RESERVE GROWTH PROVIDES DRILLING FOR YEARS APPENDIX Lowest valuation compared to peers despite increase in reserves ‣ 311 net 2P locations: 236 net Cardium locations 49 net Viking locations 22 net Bluesky locations 1 net Devonian location Sixth Year 2 net Clearwater locations 1 net Mannville
Slide 27: 2022 Reserve Performance
2022 RESERVE PERFORMANCE APPENDIX Peer leading reserve adds at attractive economics ‣ Positioned in the top quartile of our peer group with respect to overall performance (comparing peer leading additions at an 2022 Additions vs Value attractive cost) 5.0 Weak Additions YGR Strong Additions ‣ Strong
Slide 28: Experienced Team with Strong Technical Skills
EXPERIENCED TEAM WITH STRONG TECHNICAL SKILLS APPENDIX Working together to build a top tier developer that provides solid returns to stakeholders ‣ ~270 employees EMPLOYEES FINANCIAL AND COMMERCIAL ‣ Management team: Deep experience in professions, Strong financial, commercial and capital representi
Slide 29: Endnotes
Endnotes TSX:/NYSE American: OBE
Slide 30: Endnotes
ENDNOTES ENDNOTES Slide 4: Corporate Overview Slide 7: Updated 2023 Guidance, cont. Market capitalization and enterprise value was determined with share price on the close of business on Guidance FFO and FCF include risk management (hedging) adjustments up to August 1, 2023, and July 31, 2023. Commo
Slide 31: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 17: Sustainability Highlights Slide 20: Hedging Production to Preserve Cash Flow, cont. GHG emission reduction is measured in tCO2e/year as a total of all emission including flared, fugitive, In accordance with policies approved by our Board of Directors, the Company
Slide 32: Endnotes (cont.)
ENDNOTES (CONT.) ENDNOTES Slide 22: Why Invest in Obsidian Energy Slide 27: 2022 Reserve Performance Forecast long-term debt level target based on mid-point of 2023E prices and production. Reserves refer to gross working interest basis; F&D costs include changes in future development capital. Slide
Slide 33: Definitions and Industry Terms
DEFINITIONS AND INDUSTRY TERMS ENDNOTES 2023E means the expected 2023 results, based on internal Debt is bank debt and senior notes. NYSE American means the New York Stock Exchange, American assumptions and estimates Decommissioning means decommissioning expenditures Payout means the time it takes t
Slide 34: Non-GAAP Measures Advisory
NON-GAAP MEASURES ADVISORY ENDNOTES Throughout this presentation and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed
Slide 35: Oil and Gas Information Advisory
OIL AND GAS INFORMATION ADVISORY ENDNOTES Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion Test Results and Initial Production Rates ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy Readers are ca
Slide 36: 2022 Reserves Disclosure and Definitions
2022 RESERVES DISCLOSURE AND DEFINITIONS ENDNOTES Unless otherwise noted, any reference to 2022 reserves in this presentation are based on the report (the “2022 Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories: Reserves Report”) prepared
Slide 37: Forward-Looking Information Advisory
FORWARD-LOOKING INFORMATION ADVISORY ENDNOTES Certain statements contained in this document constitute forward-looking statements or information (collectively With respect to forward-looking statements and FOFI contained in this document, the Company has made "forward-looking statements") within the
Slide 38: Forward-Looking Information Advisory (cont.)
FORWARD-LOOKING INFORMATION ADVISORY (CONT.) ENDNOTES Although the Company believes that the expectations reflected in the forward-looking statements and FOFI and/or term out period of our credit facility and the maturity date of our notes is not further extended (if necessary), contained in this do