• Seal 9-15 gas plant acquired in Peace River area
• Second half capital program well underway in Cardium and Peace River
Obsidian Energy announces the full repayment of the $30.0 million non-revolving term loan (the “Term Loan“) from free cash flow from our operations. The Term Loan was part of our new syndicated credit facilities with initial borrowing capacity of $205.0 million that was entered into with our debt refinancing completed in July 2022. With the repayment of the Term Loan, our remaining debt consists of a $175.0 million revolving syndicated credit facility with a term-out period of July 27, 2024, and $127.6 million of senior unsecured notes due July 27, 2027.
OBE Announces Term Loan Repayment, Operations Update and Facility Acquisition
“We are in a substantially stronger financial position from where the Company was a year ago,” said Stephen Loukas, Obsidian Energy’s Interim President and CEO. “With the recent refinancing and our repayment of the Term Loan, we are on track to reach our 2022 guidance range of net debt to funds flow from operations of less than 0.6x.”
OPERATIONS UPDATE
Our second half 2022 development program is well underway in our core areas with several of the newly drilled wells rig-released and expected to be on production by mid-October. Approximately nine (9.0 net) wells have been rig-released thus far in the third quarter: four (4.0 net) Cardium wells in Pembina and Willesden Green, four (4.0 net) Bluesky wells in Peace River, and one (1.0 net) Mannville gas well in Willesden Green. In addition, all eight (8.0 net) Viking wells are on production with initial results in line with forecast as they clean up. A significant aspect of the Viking program is the step-out well drilled to test the western extent of the play, which displayed a peak 10-day initial production rate of 218 boe/d (86 percent oil) and opens up additional development and reserves in the area.
ACQUISITION OF SEAL 9-15 GAS PLANT IN PEACE RIVER
Obsidian Energy also announces that we purchased the Seal 9-15 gas plant within our core Peace River asset. The acquisition keeps with our established approach of owning the majority of required processing capacity in our operating areas. With this addition, Obsidian Energy owns a dominant infrastructure position in the Peace River area that includes 70 percent of the total area gas processing capacity, of which the Seal gas plant contributes approximately 10 mmcf/d. Obsidian Energy currently delivers less than 1 mmcf/d of gas to the facility, leaving ample room for our near term and future development.
The acquisition also supports the Company’s commitment to protect the environment through our ongoing work to reduce flaring. In the context of the Alberta Energy Regulator’s Directive 84 and 60 gas conservation regulations for Peace River, ownership of the gas plant provides us with takeaway capacity in an area that is anticipated to see increased future Clearwater and Bluesky development.
Stephen Loukas continued, “The Seal 9-15 gas plant is a key piece of infrastructure in the Peace River area. Given our intention to begin drilling our significant Clearwater holdings and expanding our Bluesky development, we took the opportunity to expand our facility ownership in this important area that is key to our future growth plans.”
HEDGING UPDATE
The Company has continued to hedge WTI in order to protect cash flow as we execute on our capital program and repay debt. We expect to expand our commodity hedge position over the coming months as we solidify our 2023 plans.
