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Msg  21726 of 21742  at  7/14/2022 8:18:26 AM  by

shiftsuper175607


OBE update on Q2

 
OBE Obsidian Energy Announces Preliminary Second Quarter 2022 Results and Extension to Our Syndicated Credit Facility
  • Stockwatch
    Jul 14 at 7:06 AM

    Obsidian Energy Announces Preliminary Second Quarter 2022 Results and Extension to Our Syndicated Credit Facility

    • Highest average quarterly production level since 2017 at 31,575 boe/d in the second quarter
    • First half development program completed with strong results

    Calgary, Alberta--(Newsfile Corp. - July 14, 2022) - OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("ObsidianEnergy", the "Company", "we", "us" or "our") announces our preliminary second quarter 2022 results and an extension to our syndicated credit facility to July 29, 2022, to accommodate timing associated with our debt refinancing.

    "We continued our enhanced level of activity during the second quarter with the completion of our accelerated first half development program," said Stephen Loukas, Obsidian Energy's Interim President and CEO. "Wells brought on-stream during the quarter resulted in strong production gains, achieving the highest average quarterly production level since 2017. We also drilled our eight-well program in our Viking area that is currently being completed; the wells are expected to start on production in late July with the last well on production by mid-August. Our second half drilling program in our Peace River area commenced this week and we anticipate our Cardium development activity to start later this month as ground conditions improve."

    PRELIMINARY SECOND QUARTER 2022 RESULTS

    Obsidian Energy is pleased to provide preliminary unaudited operating and financial results for the second quarter of 2022, all of which are approximate. During the quarter, we benefitted from higher commodity prices for both oil and natural gas, increasing our netbacks to $58.94 per boe in the second quarter of 2022 compared to $42.25 per boe in the first quarter of 2022 and $28.48 per boe in the second quarter of 2021. As a result of the cash flow generated by these higher netbacks and increased production, we continued to reduce debt outstanding under our syndicated credit facilities to $335.2 million at June 30, 2022, compared to $392.4 million at December 31, 2021 (a $57.2 million decrease).

    We successfully completed our accelerated first half development program with capital expenditures of approximately $40.3 million in the second quarter focused on various completion and tie-in activities from wells drilled earlier in the year along with the drilling of our new Viking wells. Second quarter 2022 production averaged 31,575 boe/d up from 29,407 boe/d in the first quarter of the year. Year-over-year, average production increased by approximately 7,000 boe/d or 28 percent compared to the second quarter of 2021 (24,651 boe/d) due to the strong results from our expanded development program and the acquisition of our partner's non-operated interested in the Peace River Oil Partnership ("PROP") in late 2021.

    Net operating costs averaged $14.02 per boe during the second quarter of 2022 compared to $13.71 per boe in the comparable period of 2021 and were impacted by general inflationary pressures. G&A expenditures in the second quarter 2022 decreased to $1.64 per boe from $1.69 per boe in the second quarter of 2021.



    Three Months Ended
    June 30


    Six Months Ended
    June 30


    2022E

    2021

    2022E

    2021
    FINANCIAL1
    (millions, except as marked and per share amounts)

























    Capital expenditures
    40.3

    21.5

    143.7

    51.0
    Decommissioning expenditures
    3.9

    0.5

    12.4

    3.8
    Netback3
    169.4

    63.9

    281.7

    113.6
    Total debt2
    335.2

    427.3

    335.2

    427.3
    G&A ($/boe)
    1.64

    1.69

    1.60

    1.69









    OPERATIONS







    Daily production







    Light oil (bbl/d)
    12,261

    10,836

    11,689

    10,427
    Heavy oil (bbl/d)
    6,174

    2,660

    5,982

    2,723
    NGL (bbl/d)
    2,406

    2,162

    2,419

    2,108
    Natural gas (mmcf/d)
    64

    54

    62

    52
    Total production4 (boe/d)
    31,575

    24,651

    30,497

    23,942




    Average sales price







    Light oil ($/bbl)
    139.88

    76.97

    129.49

    72.37
    Heavy oil ($/bbl)
    106.18

    48.58

    95.88

    44.46
    NGL ($/bbl)
    82.93

    39.31

    75.51

    38.77
    Natural gas ($/mcf)
    7.38

    3.21

    6.21

    3.21




    Netback3 ($/boe)







    Sales price
    96.44

    49.56

    87.17

    46.98
    Risk management loss
    (4.66)
    (0.52)
    (5.58)
    (1.44)
    Net sales price
    91.78

    49.04

    81.59

    45.54
    Royalties
    (15.53)
    (4.90)
    (13.53)
    (3.83)
    Net operating costs3
    (14.02)
    (13.71)
    (13.98)
    (13.62)
    Transportation
    (3.29)
    (1.95)
    (3.04)
    (1.87)
    Netback3
    58.94

    28.48

    51.04

    26.22
    1. We adhere to generally accepted accounting principles ("GAAP"); however, we also employ certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including netback and net operating costs. Additionally, other financial measures are also used to analyze performance. These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS") and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities, as indicators of our performance.
    2. Includes drawings under the Company's syndicated credit facility and outstanding amounts related to our outstanding senior secured notes and PROP limited recourse loan.
    3. Non-GAAP financial measure or non-GAAP ratio. See "Non-GAAP and Other Financial Measures".
    4. Please refer to the "Oil and Gas Information Advisory" section below for information regarding the term "boe".

    SYNDICATED CREDIT FACILITY UPDATE

    To accommodate timing associated with the Company's refinancing, we have entered into an agreement with our lenders to extend the revolving period and borrowing base redetermination date under our syndicated credit facility to July 29, 2022, from July 15, 2022. The maturity date of both the syndicated credit facility and non-revolving term loan remain unchanged at November 30, 2022.

    As part of the extension, Obsidian Energy has agreed to a $17.4. million reduction of the syndicated credit facility with the aggregate amount available now set at $340.7 million, consisting of a $260.0 million revolving syndicated credit facility and a $80.7 million non-revolving term loan. Obsidian Energy also made a US$2.0 million repayment on our senior secured notes, which reduced the Company's outstanding balance of these notes to US$34.7 million (maturity date of November 30, 2022). Upon completion of the refinancing, our debt structure is expected to provide the Company with a stable capital source that provides appropriate operational liquidity and a longer-term maturity profile.

    HEDGING UPDATE

    The Company is primarily focused on near term WTI positions to protect cash flow while building a solid foundation on summer AECO natural gas pricing. As at July 14, 2022, Obsidian Energy has the following financial oil and gas contracts in place on a weighted average basis:

    TermNotional Volume
    Pricing (CAD)
    Oil - WTI



    April 20228,183 bbl/d$121.81/bbl
    May 20228,347 bbl/d$135.63/bbl
    June 20222,833 bbl/d$139.06/bbl
    July 20226,216 bbl/d$138.77/bbl
    Natural Gas - AECO


    May - October 202226,065 mcf/d$4.74/mcf

    In addition, PROP Energy 45 Limited Partnership, our wholly owned limited recourse subsidiary that purchased 45 percent of PROP from a third party on November 24, 2021, entered into the following financial hedges in conjunction with the acquisition financing:

    TermNotional Volume
    Pricing (USD)
    Oil - WTI


    Q2 20221,121 bbl/d$65.11/bbl
    Q3 2022593 bbl/d$63.26/bbl
    Q4 2022606 bbl/d$62.30/bbl
    Heavy Oil - WCS Differential


    Q2 2022801 bbl/d
    ($15.43)/bbl

    SECOND QUARTER 2022 RELEASE DATE

    The Company expects to release its full second quarter 2022 financial and operating results before North American markets open on July 28, 2022. In addition, the second quarter 2022 management's discussion and analysis and the unaudited consolidated financial statements will be available on our website, on SEDAR, and on EDGAR on or about the same date.

    ADDITIONAL READER ADVISORIES

    OIL AND GAS INFORMATION ADVISORY

    Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value. Boe/d means barrels of oil equivalent per day.

    ABBREVIATIONS

    OilNatural Gas
    bbl/dBarrels per daymcfthousand cubic feet
    boe/dbarrels of oil equivalent per daymcf/dthousand cubic feet per day
    WCSWestern Canadian Selectmmcf/dmillion cubic feet per day
    WTIWest Texas IntermediateAECOAlberta benchmark price for natural gas

    NON-GAAP AND OTHER MEASURES



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