• Peace River Clearwater results yield robust early production rates, continuing to delineate the Dawson area
• Peace River Bluesky Walrus field results in a successful extension and deeper zone test, adding substantial inventory upside
• Strong performance resulted in 2023 average production at the top end of our guidance range of 32,500 boe/d
Obsidian Energy is pleased to provide an operational update on our second half 2023 development program with all drilling activity completed on schedule. We expect our full year 2023 average production to be approximately 32,500 boe/d based on preliminary estimates (at the top end of our 32,000 boe/d to 32,500 boe/d guidance range), which is a six percent increase over 2022. Including the impact of our share buyback program in 2023, this translates into 12 percent growth on a production per share basis based on shares outstanding at December 31, 2022, and 2023.
"In September, we announced our three-year growth plan that lays out a detailed roadmap of how we intend to grow our asset base to over 50,000 boe/d by 2026," commented Stephen Loukas, Obsidian Energy's President and CEO. "Our activities in the fourth quarter of 2023 represent the first stages of delivering on that plan, and our early results are very encouraging. We discovered a new Bluesky development area at Walrus during the first quarter of 2023, which was followed up with four (4.0 net) wells in the fourth quarter to further extend and delineate this important new area. The Company also continued to unlock the value of our Clearwater assets with the fourth quarter drilling of our most successful Clearwater wells to date, confirming our Dawson acreage as our first Clearwater development area."
Mr. Loukas continued, "While capital investment drives growth in our Peace River area, we continue to develop our light oil assets at Willesden Green/Pembina (Cardium) and Viking, which provide strong free cash flow and returns to underpin our growth plan through 2024 and 2025. We have begun our 2024 program and expect to release guidance for the year on January 25, 2024."
2023 DEVELOPMENT PROGRAM UPDATE
Obsidian Energy's drilling program accelerated in the fourth quarter of 2023 with four rigs in operation across our Peace River, Willesden Green/Pembina (Cardium) and Viking areas. During 2023 we rig released 59 operated (58.5 net) wells including four (4.0 net) oilsands exploration ("OSE") wells, of which 48 (47.5 net) wells were on production by the end of the year (including 15 (15.0 net) wells which were brought on in late December). The remaining seven (7.0 net) wells are expected to be on production in the first quarter of 2024. In addition, Obsidian Energy participated in 18 non-operated (6.7 net) wells during 2023, three (1.3 net) of which were water injector wells. The breakdown of operated wells that were rig released during 2023 is as follows:
As we place the remaining wells from our 2023 program onstream, the Company has started our 2024 first half development program with continued Peace River drilling in the Clearwater and Bluesky formations, and continued development in our Willesden Green/Pembina (Cardium) assets.
HEAVY OIL ASSETS
Peace River
Our focus at Peace River is to unlock the vast potential across our acreage from both a development and exploration/appraisal perspective. Since announcing our growth strategy in September 2023, the team has focused on execution of our plan and proving the potential of new development areas in both our Clearwater and Bluesky plays. We're extremely pleased with the results to date as the team applies recent technical advancements across our acreage.
Clearwater Development
We drilled and placed on production three (3.0 net) appraisal wells in the Dawson area in the fourth quarter of 2023. We are very excited about the initial results which delineates a significant portion of our Dawson asset and, combined with the 12-33 Pad well drilled earlier in the year, firmly establishes the Dawson asset as our first Clearwater development area.
The Dawson 7-13 Pad (1.0 net) well came online in November and showed a peak rate of 434 boe/d (100 percent oil) and an average initial production ("IP") 30-day rate of 312 boe/d (100 percent oil). The two (2.0 net) wells at the Dawson 13-23 Pad were brought onstream on December 19 with a pad peak rate of 558 boe/d (100 percent oil) and an average IP 13-day rate of 375 boe/d (100 percent oil) post clean-up. On an individual basis, IP 13-day rates were 228 boe/d (100 percent oil) and 147 boe/d (100 percent oil). As a result of this success, we have more than 20 follow-up Clearwater inventory locations (currently unbooked) identified in the Dawson area. The team is currently optimising an accelerated and expanded drilling program in the area for the second half of 2024.
In December 2023, Obsidian Energy was the successful bidder at the Alberta provincial land sale on 20 contiguous sections of highly prospective Clearwater rights in the Peace River area, augmenting our existing holdings. Identified as part of our broader ongoing technical analysis across the region, we intend to test this new land in the next winter drilling season. In total, Obsidian Energy now holds 525 sections of land in Peace River.
In early January 2024, we commenced our first quarter 2024 Clearwater exploration/appraisal plan that includes the drilling, coring and testing of two (2.0 net) wells in our Nampa area. The Company will also drill and core a further four (4.0 net) Clearwater OSE wells in other areas of our acreage to continue our detailed technical analysis of our holdings.
Bluesky Development
Obsidian Energy completed the drilling and rig release of all seven (7.0 net) wells targeting the Bluesky formation in our second half 2023 development program by mid-December. In total, six (6.0 net) wells were placed on production by the end of the year.
Of key importance is the strong IP results from the four (4.0 net) wells drilled at the Walrus 13-19 Pad during the second half of 2023. Following up on the initial test well in April (peak production rate of 303 boe/d, 100 percent oil), the new Walrus wells came in with peak rates between 365 and 581 boe/d per well, and an average pad 30-day production rate of 1,106 boe/d (100 percent oil) for all five (5.0 net) wells from the pad. One of the Walrus 13-19 Pad wells is successfully testing a lower Bluesky zone, which has the potential to add significant future well inventory and further expand this play. The well showed a peak rate of 486 boe/d (100 percent oil) and an average IP 30-day rate of 333 boe/d (100 percent oil). Obsidian Energy further benefits from this success as producing from stacked pay zones within the Bluesky formation leads to improved capital efficiencies as we can optimize pad and facility design with increased production well density. The greater Walrus field development is a cornerstone of our Bluesky three-year growth plan and as such, the strong, early well results along with success from the deeper formation test creates exciting momentum as we grow production in the field.
The remaining well in the second half 2023 program, the Seal 13-08 Pad (1.0 net) well, was rig released in mid-December 2023 and is expected onstream in January 2024. The Seal area was developed over a decade ago through single leg horizontal drilling and by applying new multi-leg horizontal drilling technology, we are further accessing the area's potential with new infill wells to capture incremental resource. These wells are highly economic as they are inexpensive to tie-in to existing facilities.
We are currently drilling the first of four wells prior to spring break-up at the offsetting Walrus 15-19 Pad, where we plan to further test the deeper Bluesky zone given the strong production performance at the Walrus 13-9 Pad test well. In addition, we expect to drill two development wells in our Harmon Valley South field in conjunction with drilling and coring of one Bluesky OSE well as we further delineate our Cadotte area and unlock additional inventory in this area.
LIGHT OIL ASSETS
In the fourth quarter of 2023, we continued our light oil development activity as we completed our second half 2023 development program: 30 operated (29.7 net) wells were rig released, of which 24 (23.7 net) are currently on production (including 13 (13.0 net) wells brought onstream in late December). The remaining six (6.0 net) wells will be brought on production in the first quarter of 2024. Initial indications are encouraging as the team works on cleaning up and optimizing production from recent well additions. Concurrently, we have initiated the 2024 development program to help maintain light oil production levels throughout our three-year plan.
Willesden Green
Obsidian Energy had a strong end to the year at Willesden Green with the rig release of seven (6.7 net) wells targeting the Cardium formation: four (3.7 net) wells were placed on production prior to the end of 2023, three of which came onstream in late December. A third (1.0 net) well on the three-well 4-18 Pad was spud in December 2023; the Pad is expected to be onstream in February 2024.
The well at the Open Creek 9-17 Pad continues its very strong performance with flat declines and high production rates. Spud in September 2023, the one (0.7 net) well is proving to be highly economic with an average IP 30-day rate of 491 boe/d (86 percent oil). Production declines have been minimal with an average IP 60-day rate of 473 boe/d (83 percent oil) and IP 90-day rate of 472 boe/d (78 percent oil). The results of this well have reinforced the value of the eastern acreage of Willesden Green and we plan to return to development in this area in 2024.
Pembina
Development work was continuous to the end of December in the Pembina area. Construction and drilling of the two (2.0 net) wells at the Paddy North 10-28 Pad were completed during the fourth quarter of 2023 with production onstream in late-December. The wells are currently being optimized. The four-well 7-36 Pad was constructed and spud in the fourth quarter: three (3.0 net) wells were rig released between November and December with the fourth (1.0 net) well expected to be rig released in January. Production from all four wells is expected to be onstream in February of 2024.
In 2023, Obsidian Energy also participated in the development of the non-operated Pembina Cardium Unit 11 ("PCU#11") (45 percent working interest). In total, 12 (5.4 net) wells were drilled over the year, including 3 (1.3 net) injection wells. The results of this program have been excellent with the first seven of nine producing wells providing average IP 30-day rates of 376 boe/d (94 percent oil). We expect that our partner will continue the development of the PCU#11 with a similarly sized program in 2024.
Viking
Following up on our previous success at Viking, Obsidian Energy efficiently constructed, drilled, rig released and placed all eight (8.0 net) wells on the 2-22 Pad on production by the end of December. The wells are in the process of cleaning up with strong production additions anticipated in early 2024, providing additional cash flow from this shallow, low-risk, highly economic resource play.
HEDGING UPDATE
We have recently added to our hedge positions, primarily through the addition of AECO swaps and collars.
