Obsidian Energy Announces Increase in 2023 Reserves Across All Categories

Source: www.gulfoilandgas.com 1/30/2024, Location: North America

Obsidian Energy is pleased to announce the results of our independent reserves evaluation for the year ended December 31, 2023 (the "2023 Reserve Report") prepared by GLJ Ltd. ("GLJ").

"Our 2023 reserves reflect the high level of activity and success of our capital program with volume increases across all categories and asset areas," said Stephen Loukas, Obsidian Energy's President and CEO. "The performance of our underlying asset base coupled with a capital program that incorporated all areas of our portfolio resulted in reserve additions that more than replaced production in all reserve categories - signifying the seventh year in a row that we achieved such gains in total proved and total proved plus probable reserves. In addition, the efficiency of our capital program is demonstrated by lower finding and development ("F&D") costs per boe compared to 2022, resulting in strong recycle ratios despite the impact of lower commodity prices in 2023."

Stephen Loukas continued, "While the reserves consultants' commodity price forecasts were lower in 2023 compared to 2022, our active share buyback program helped to largely counteract the decrease in reserve values on a per share basis. Over 2023, we repurchased and cancelled six percent of our shares outstanding."

HIGHLIGHTS
Obsidian Energy's high level of activity and successful capital program resulted in solid production and reserves additions across all three main asset areas (Willesden Green/Pembina (Cardium), Peace River and Viking) in 2023. Focused on unlocking the significant potential across our heavy oil business at Peace River while maintaining production in our light oil business, we increased our reserve base through extensions, establishing new development fields and new exploration/appraisal drilling over the year.

We replaced 124 percent of 2023 production on a PDP basis, 157 percent on a 1P basis and 217 percent on a 2P basis.

The impact of drilling field extensions from our 2023 capital program combined with positive technical revisions were the major contributing factors to increased reserves.

Reserves before-tax net present value discounted at 10 percent ("NPV10") decreased from 2022 levels largely due to the impact of lower commodity prices as follows:

PDP: 6 percent decrease to $1.5 billion (no change on a per share basis).
1P: 10 percent decrease to $1.9 billion (4 percent decrease on a per share basis).
2P: 8 percent decrease to $2.6 billion (2 percent decrease on a per share basis).

Future development capital ("FDC") was added to appropriately adjust the undeveloped reserves and generate a five-year program of approximately $286 million per year.

The 2023 Reserve Report's FDC is weighted to the Cardium formation and booked lower than the anticipated spending in our three-year growth plan (the "Growth Plan") due to the level of FDC attributed to Peace River. Reserve booking rules and guidelines stipulate how far reserves can be booked from existing production, which particularly impacted our Peace River asset. Our Oil Sands Evaluation wells define our asset and provide reservoir validation, but do not produce; therefore, they do not directly translate into offset booked locations. As such, FDC associated with our Peace River asset is well below our spending plans. We expect to add additional locations to our booked reserves in Peace River over the coming years as we continue to appraise and further develop this asset.

Improvements from between four to 17 percent in both F&D and Finding, Development and Acquisition ("FD&A") costs year-over-year show the stability of our reserve book and our ability to bring new production onstream more efficiently.

F&D costs including changes in FDC were $19.35/boe for PDP, $22.42/boe for 1P and $18.37/boe for 2P.

FD&A costs including changes in FDC were $19.32/boe for PDP, $22.35/boe for 1P and $18.28/boe for 2P.

The strength and profitability of our assets was demonstrated through 2023 recycle ratios of 1.8x for PDP, 1.6x for 1P and 1.9x for 2P, based on our expected 2023 operating netback of $35.38/boe and F&D costs (including changes in FDC).

Our total corporate decline rates improved to 21 percent on a PDP basis from 24 percent in 2022, despite the impact of increased development.

On a three-year average basis, PDP decline rates decreased to 17 percent from 19 percent.

Our total undeveloped 2P reserve locations increased by over 30 new net locations to 343 total net locations booked (including 237 net locations in the Cardium, 42 net locations in the Bluesky, 11 net locations in the Clearwater, 48 net locations in the Viking, one net location in the Devonian and four net locations in the Mannville).

These locations were booked with a highly achievable total 2P five-year FDC of $1.4 billion (approximately $286 million per year).

New booked Cardium locations replaced wells drilled during 2023, further validating the inventory of light oil locations in our Growth Plan.

Peace River locations more than doubled due to the success of our 2023 capital program, adding 29 net 2P locations over the year.

Obsidian Energy maintains a strong reserve life index ("RLI"), increasing slightly from 2022 to approximately 7.2, 10.1 and 13.5 years on a PDP, 1P, and 2P basis, respectively.

SUMMARY OF 2023 RESERVES
GLJ conducted an independent reserves evaluation of 100 percent of our reserves effective December 31, 2023, using a four-consultant average ("IC4") of forecast commodity prices and assumptions at December 31, 2023. This evaluation was prepared in accordance with definitions, standards, and procedures set out in the Canadian Oil and gas Evaluation Handbook and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Reserves included below are company share gross reserves which are the Company's total working interest reserves before the deduction of any royalties and excluding any royalty interests payable to the Company. The numbers in the tables below may not add due to rounding.


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