Obsidian Energy Announces Closing of the Peace River Oil Partnership Acquisition

Source: www.gulfoilandgas.com 11/24/2021, Location: North America

Obsidian Energy has closed its previously announced acquisition of the remaining 45 percent interest in the Peace River Oil Partnership ("PROP") asset through a wholly-owned subsidiary (the "Acquisition").

"We're extremely pleased to have successfully completed this acquisition," said Stephen Loukas, Obsidian Energy's Interim President and CEO. "With full ownership and the current favorable commodity price outlook, we are executing a four well development drilling program that is expected to be on production by the end of January 2022."

Total consideration paid was $43.5 million prior to closing adjustments with an effective date of July 1, 2021 ($36.0 million after closing adjustments). The cash consideration for the Acquisition was funded by a $16.3 million limited-recourse loan secured by the additional 45 percent interest in PROP, and proceeds from our marketed public offering of subscription receipts (the "Subscription Receipts"), which closed on November 18, 2021 (the "Offering"). The Offering was priced at $4.40 per Subscription Receipt for aggregate gross proceeds of approximately $25.9 million, which included the full exercise of the over-allotment option granted to a syndicate of agents.

Concurrent with the completion of the Acquisition, the Subscription Receipts are being converted into Obsidian Energy common shares ("Common Shares") on November 24, 2021. The net proceeds from the Offering were released from escrow and used to facilitate the partial funding of the cash consideration payable under the Acquisition. Holders of Subscription Receipts are not required to take any action in order to receive the underlying Common Shares. Trading in the Subscription Receipts on the Toronto Stock Exchange is expected to be halted today and the Subscription Receipts delisted in due course.

In connection with the closing of the Acquisition, the Company has reduced the aggregate amount available under our senior credit facility ("Facility") by $25 million resulting in $415 million total available under the Facility. At September 30, 2021, the Company had $340 million drawn under the Facility. All other material terms of the Facility have remained the same with the next borrowing base redetermination scheduled for November 30, 2021, and a term out date of November 30, 2022. At the same time, the Company repaid approximately US$3.0 million of our Senior Notes, which leaves approximately US$43.3 million outstanding with a maturity date of November 30, 2022.

In 2022, we plan to refinance our debt facilities with the objective of incorporating senior and subordinated debt in the structure to provide the Company with a stable capital source that provides operational liquidity and a longer-term maturity profile.


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