• Generated funds flow from operations of $87.4 million during the quarter, resulting in free cash flow of $43.0 million
• Achieved robust production results from 11 new wells drilled on the western side of our Viking play, reaching an average daily peak rate per well of 293 boe/d for the program
• Enhanced liquidity with a $40.0 million increase to our syndicated credit facility, providing us additional financial flexibility
• Commenced return of capital to shareholders via the repurchase of 2.2 million shares through our buyback program to date

Calgary, Alberta--(Newsfile Corp. - August 2, 2023) - OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("Obsidian Energy", the "Company", "we", "us" or "our") is pleased to report solid operating and financial results for the second quarter of 2023.

(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 funds flow from operations ("FFO"), net debt, 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 and cash flow from operating activities, as indicators of our performance.
(2) Supplementary financial measure. See "Non-GAAP and Other Financial Measures".
(3) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".
(4) Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".
(5) Please refer to the "Oil and Gas Information Advisory" section below for information regarding the term "boe".
(6) Before realized risk management gains/(losses).

Detailed information can be found in Obsidian Energy's unaudited interim consolidated financial statements and management's discussion and analysis ("MD&A") as at and for the three and six-month periods ended June 30, 2023 on our website at www.obsidianenergy.com, which will also be filed on SEDAR and EDGAR in due course.

KEY SECOND QUARTER 2023 RESULTS

Our first half 2023 drilling program was completed across our Peace River, Willesden Green, Pembina and Viking areas with all development wells on production by the end of the second quarter. Second quarter 2023 production averaged 31,042 boe/d and was impacted by approximately 2,100 boe/d of temporary production shut-ins in Peace River and Pembina because of the Alberta wildfires. Combined with significantly lower commodity prices, cash flow, FFO and net income decreased compared to the second quarter of 2022.

2023 Second Quarter Financial Highlights

• Solid Funds Flow - FFO was $87.4 million ($1.07 per basic share) for the second quarter of 2023 compared to $157.0 million ($1.91 per basic share) for the same period in 2022. Lower WTI prices of approximately US$35/bbl primarily drove the decrease, partially offset by realized hedging gains and improvements in heavy oil differentials in 2023. In addition, Alberta wildfires temporarily impacted our Peace River and Pembina operations in the second quarter, resulting in a production decrease of 2,100 boe per day and a corresponding FFO reduction of approximately $6.0 million for the period.

• Enhanced Liquidity - We successfully completed our objective of enhancing our liquidity through a $40.0 million increase to our syndicated credit facility, providing us more flexibility for our return of capital strategy. The amount available under our syndicated credit facility increased to $240.0 million from $200.0 million, with the revolving period and maturity dates remaining at May 31, 2024, and May 31, 2025, respectively. At the same time, our net debt decreased to $324.3 million at June 30, 2023, from $343.0 million at June 30, 2022.

• Commenced Share Buyback Program - In the second quarter of 2023, a total of 1,321,136 shares were repurchased and cancelled under the Company's normal course issuer bid ("NCIB") for proceeds of $10.5 million ($7.97 per share). Subsequent to June 30, 2023, we continued to execute our share buyback program, resulting in a total of 2,206,135 shares repurchased and cancelled for proceeds of approximately $18.2 million ($8.27 per share) to date.

• Repurchased Senior Unsecured Notes - During the second quarter of 2023, the Company repurchased $3.6 million principal amount of our senior unsecured notes for cancellation on the open market at an average price of $985.00 per $1,000.00 principal amount (initially issued at a price of $980.00 per $1,000.00 principal amount). Subsequent to June 30, 2023, an additional $0.5 million principal amount of senior unsecured notes were repurchased for cancellation at an average price of $990.00 per $1,000.00 principal amount, resulting in a total of $123.5 million of senior unsecured notes currently outstanding.

• Managed Net Operating Costs - Net operating costs were higher at $15.06 per boe in the second quarter of 2023 compared to $14.02 per boe in the second quarter of 2022. The increase was mainly due to higher power costs, lower production levels compared to the second quarter of 2022 due to the Alberta wildfires, and general inflationary pressures experienced across the industry.

• Higher G&A Costs - General and administrative ("G&A") costs were $1.85 per boe in the second quarter of 2023 compared to $1.64 per boe in the second quarter of 2022. The continued build-out of our Peace River development team combined with the production impact of the Alberta wildfires increased G&A costs on a per boe basis; we expect G&A costs to decrease to more normalized levels for the remainder of 2023.

• Positive Net Income - Despite the impact of lower commodity prices, solid netbacks contributed to $18.4 million ($0.22 per basic share) of net income for the second quarter of 2023 compared to $113.9 million in the same period in 2022 ($1.39 per basic share).

2023 Second Quarter Operational Highlights

• Completed First Half Program - Second quarter capital expenditures focused on the completion and tie-in of new wells and were $39.5 million (2022 - $40.3 million) with decommissioning expenditures of $4.9 million (2022 - $3.8 million). In the first half of 2023, 29 (28.8 net) operated wells were drilled (including four oilsands exploration wells) and 33 (32.6 net) wells were brought on production.

• Assessed Peace River Potential - Completed analysis of the well cores gathered from our four (4.0 net) oilsands exploration ("OSE") wells along with the results of the wells drilled at Walrus in the first quarter. This data provided valuable information that was used in the development of our second half Peace River capital program.

• Achieved Robust Viking Well Results - All 11 (11.0 net) wells were completed and placed on production on the western side of our Viking play, resulting strong initial production ("IP") rates and an average daily peak rate per well of 293 boe/d for the program.

• Solid Cardium Returns - Completed the first half Cardium development program in Willesden Green and Pembina with strong results, while beginning a major facility debottlenecking project to increase production.

• Safely Managed Response to Alberta Wildfires - Responded to threats from Alberta wildfires in central and northern Alberta, managing operations and protecting the health and safety of our employees and their families in and around our impacted operational areas.

UPDATED 2023 GUIDANCE

Our 2023 guidance is being revised in response to the impact of Alberta wildfires on our production (~525 boe/d annualized) and expenses in the second quarter, the timing of onstream production with deferral of our Willesden Green debottlenecking project from late July to early November to take advantage of higher, hedged winter gas pricing (~200 boe/d annualized), and the shut-in of a third-party facility affecting nine of our Pembina wells (~120 boe/d annualized). We are evaluating options to bring the Pembina wells back on production. With commodity prices expected to continue at lower levels than originally anticipated in early 2023, we have updated our commodity price assumptions for the year to account for realized price to date and our August 1 to December 31 pricing assumptions of WTI US$75.00/bbl and AECO $2.50/GJ.

Our first half program provided useful information for our Peace River area, which was used to optimize our second half 2023 program and will form the basis of our multi-year Peace River development plan. Our 2023 capital expenditures have been reduced slightly with total well count of 46 (45.5 net) wells under the revised 2023 guidance compared to the previous guidance of 49 (48.2 net) wells, including the four OSE wells. Our lower commodity price forecast combined with lower production (primarily due to the wildfire impact) reduces our funds flow from operations projection.

We expect to continue to generate strong free cash flow in the remainder of 2023 (including after cash used for our share buyback program) and will remain flexible to commodity prices, adjusting our plans accordingly to continue to create value for our stakeholders. Our revised full year 2023 guidance is presented below.

(1) Approximate mid-point of revised guidance range: 12,400 bbl/d light oil, 6,100 bbl/d heavy oil, 2,500 bbl/d NGLs and 65.3 mmcf/d natural gas. Average production volumes include a minimal amount of forecasted production associated with exploratory capital expenditures.
(2) Capital expenditures include approximately $25 million for exploration/appraisal well activity with minimal impact on forecasted production volumes.
(3) Pricing assumptions outlined in table are forecasted for August 1, 2023, to December 31, 2023. Full year pricing assumptions, including actuals realized thus far, result in WTI US$74.90/bbl, AECO $2.91/mcf and WCS differentials of US$17.15/bbl.
(4) Guidance FFO and free cash flow ("FCF") include risk management (hedging) adjustments up to August 1, 2023, and includes approximately $6 million of estimated charges for full year 2023 related to the deferred share units, performance share units and non-treasury incentive plan cash compensation amounts which are based on a share price of $9.00 per share. FFO per share is based on 80.3 million shares outstanding as of August 1, 2023, for revised 2023E guidance, and 82.4 million shares outstanding as of January 27, 2023, for 2023E original guidance.
(5) Net debt figures estimated as at December 31, 2023, and includes the impact of approximately $18.2 million of share purchases under the NCIB to August 1, 2023.Due to changes in the timing of our capital program, our expected working capital deficiency at December 31, 2023, increased by $15.0 million in our 2023E revised guidance.

(1) Includes risk management (hedging) adjustments up to July 31, 2023.

2023 UPDATE AND SECOND HALF DEVELOPMENT PROGRAM

With most of our drilling activity for the first half development program completed in the first quarter, the second quarter focused on the completion and tie-in of new wells, planned facility turnaround maintenance, assessing data from exploratory/appraisal wells and managing operations safely in and around our operating areas and local communities due to the Alberta wildfires.

In May, a state of emergency was declared for areas in central and northern Alberta due to uncontrolled wildfires with numerous mandatory evacuation orders impacting parts of the Grande Prairie, Kaybob and Peace River regions. Some of Obsidian Energy's operated and non-operated production was temporarily shut-in during the quarter due to wildfires, evacuation orders and third-party constraints in Peace River and Pembina. There was no significant damage to our assets due to the wildfires and all production was restored in the quarter as access to well pads permitted and power was regained to certain sites. In total, the impact of the wildfires resulted in a production decrease of approximately 2,100 boe per day with a corresponding FFO reduction of approximately $6.0 million for the period.

We are pleased with the results of our first half development and exploration/appraisal program which added production across our Peace River, Willesden Green and Viking areas. During the second quarter, 12 (12.0 net) wells were placed on production from wells drilled earlier in the year. The table below provides our wells drilled and on production by area for the first half of 2023:

(1) Rig released well totals do not include 11 wells (10.7 net) rig released in 2022 and put on production in 2023, or the eight (2.4 net) non-operated development wells participated in during the first half, one of which was a water injection well.

Our updated 2023 development and exploration/appraisal program is outlined below for wells rig released during the year:

(1) Three (2.9 net) wells were spud in 2022 and rig released in 2023; they are included in these totals.
(2) 34 (33.5 net) wells rig released in 2023 are expected to be brought on production by the end of 2023 with eight (8.0 net) wells expected in early 2024.

Peace River

We are pleased with the results of our first half program at Peace River, which provided the first step in unlocking the additional substantial potential across our acreage and established a new development area at Walrus. During the quarter, our Peace River team analyzed the encouraging results from our first half exploration/appraisal drilling program, including the four vertical OSE wells, the Dawson 12-33 Pad well (1.0 net) and data from two other vertical peer wells drilled in the area. Placed strategically across our Peace River acreage, these wells further assessed the development potential of our extensive land base in multiple formations and was used to optimize our second half 2023 program. The data is also key to the development of our multi-year Peace River development plan and to improve future well design. We expect to rollout a multi-year development and appraisal plan for the Bluesky and Clearwater formations in Peace River in September of 2023.

Peace River operations and production were impacted during the second quarter due to uncontrollable Alberta wildfires. To address this threat, Obsidian Energy temporarily shut-in the Peace River area fields at Harmon-Valley South ("HVS"), Seal, Walrus and Nampa periodically during the second quarter. Production was later restored but resulted in a production decrease of approximately 900 boe/d for the period.

Bluesky Development

With the completion of the first half 2023 Bluesky development program, we had seven (7.0 net) wells on production by the end of June after adding a second well to the 4-32 Pad, which offset the strong results from the three wells drilled at the HVS 6-31 Pad. Additional 30-day IP rates for the first half 2023 wells were as follows:

• 4-32 Pad - Two (2.0 net) wells were completed and are producing to permanent facilities with an average 30-day IP rate of 195 boe/d (100 percent oil) per well.

• 14-05 Pad - One (1.0 net) well is on production at an average 30-day IP rate of 60 boe/d (100 percent oil) per well, and peak rate of 172 boe/d (98 percent oil).

During the first half of 2023, the potential of our Walrus acreage was effectively delineated for future large-scale development by the drilling of two (2.0 net) exploration/appraisal wells. Located to the east of our successful HVS development field, the wells exceeded production expectations and provided key data on the Bluesky formation.

During the second quarter, Obsidian Energy focused on planned facility turnaround maintenance and prebuilt infrastructure, primarily well pads and access roads, needed for second half drilling to accelerate the addition of new well production.

In the second half of 2023, we currently plan to drill five (5.0 net) development wells targeting the Bluesky formation. Three (3.0 net) wells follow-up on the success of the Walrus 13-19 Pad exploration/appraisal well drilled during the first quarter that achieved peak production rate of 303 bbl/d (100 percent oil) and established a new development area for the Company. One (1.0 net) well at the Walrus 13-19 Pad will also test a deeper Bluesky zone. If successful, the results could add significant future well inventory and further expand our Bluesky play. The remaining two (2.0 net) wells will be drilled from existing pads in HVS and Cadotte where surface facilities are already in place. We began our second half development program drilling the first well at the HVS 4-32 Pad in July.

Clearwater Exploration/Appraisal

The core data analyzed from the OSE wells help to further delineate our land position in Peace River, providing detailed subsurface data for both Bluesky and Clearwater formations. Encouraged by these results, Obsidian Energy plans to drill three (3.0 net) exploration/appraisal wells targeting the Clearwater formation in the Dawson area. We believe there is strong potential for future development in this area.

Willesden Green

Obsidian Energy completed our first half development program at Willesden Green with all wells online, resulting in solid production additions to our core field. The final two (2.0 net) first half wells in the program at the 8-36 Crimson Pad exhibited strong results with an average 30-day IP rate of 310 boe/d (40 percent oil) per well.

Following spring break-up in the second quarter, Obsidian Energy began a major debottlenecking project in the East Crimson part of our Willesden Green area to both lower field pressures and expand facility capacity. In addition to increasing base production and reserves, this initiative will provide opportunities to accelerate new development locations. We anticipate that the project will be completed during the fourth quarter of 2023.

In the second half of 2023, we plan to drill seven (6.7 net) wells targeting the Cardium formation at Willesden Green. Three (2.7 net) wells are expected on production by the end of 2023 with the remainder in early 2024.

Pembina

During the second quarter of 2023, Obsidian Energy focused on planned facility turnaround maintenance and responding to the ongoing threat of the Alberta wildfires in the Pembina area. We temporarily shut-in approximately 11,100 boe/d of light oil weighted production in Pembina due to the wildfires, bringing it back on production by the end of the quarter. In total, the impact of the wildfires resulted in a production decrease of approximately 1,200 boe/d for the period.

We plan to drill two (2.0 net) wells in Pembina in the fourth quarter of 2023 as part of our second half development program.

Viking

Following up on the success of the 2022 step-out well on the western side of the play, we drilled and completed 11 (11.0 net) wells in our first half 2023 program by the end of April. All wells were on production in early May, showing robust average daily peak rate per well of 293 boe/d for the program, and daily cumulative rate of over 2,000 boe/d on multiple days.

The initial three (3.0 net) wells brought on production at the 4-22 Pad averaged a 30-day IP rate of 190 boe/d (87 percent light oil) per well. The four well 2-21 Pad and four well 13-16 Pad had average 30-day IP rates of 133 boe/d (86% oil) per well and 190 boe/d (75% oil) per well, respectively. Additionally, during the second quarter Obsidian Energy commissioned the new 13-16 battery in the Viking area to allow for continued growth in the expanded and delineated western region of the play.

HEDGING UPDATE

Earlier in 2023 the Company established AECO positions across 2023 and into early 2024 given our concerns on natural gas storage levels. With the recent strength in WTI prices and narrowing of WCS differentials, we put in place hedges for these commodities. In addition, we have begun to hedge power prices to help protect against their impact on net operating costs. Currently, the following contracts are in place on a weighted average basis:

Oil Contracts

AECO Natural Gas Contracts

(1) Percentage calculated based on annual expected pre-royalty natural gas production of 65.3 mmcf/d (midpoint of 2023E guidance).

Electricity Contracts

SENIOR UNSECURED NOTES FREE CASH FLOW OFFER

As part of the terms of our 11.95 percent July 2027 senior unsecured notes, we are required to provide a repurchase offer (the "Offer") on a semi-annual basis at a 103 percent of the principal amount to noteholders based on our FCF. The Offer is subject to the Company's projected leverage and liquidity of our syndicated credit facility, which is required to be at least $60.0 million post the Offer. The FCF available for the Offer based on the results for the first six months of 2023 was $23.5 million. Based on our anticipated available liquidity, we expect to make an Offer of $5.0 million to the noteholders in early August 2023.

FCF offers to noteholders are required until $63.8 million of notes have been repurchased. The purchases made to date of $4.1 million (average price of 98.5 percent) reduce the amount of the Offer, which is now $59.7 million.

UPDATED CORPORATE PRESENTATION

For further information on these and other matters, Obsidian Energy will post an updated corporate presentation later today on our website, www.obsidianenergy.com.

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.

TEST RESULTS AND INITIAL PRODUCTION RATES

Test results and initial production rates disclosed herein, particularly those short in duration, may not necessarily be indicative of long-term performance or of ultimate recovery. Readers are cautioned that short-term rates should not be relied upon as indicators of future performance of these wells and therefore should not be relied upon for investment or other purposes. A pressure transient analysis or well-test interpretation has not been carried out and thus certain of the test results provided herein should be considered preliminary until such analysis or interpretation has been completed.

NON-GAAP AND OTHER FINANCIAL MEASURES

Throughout this news release and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by 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. The Company's unaudited consolidated financial statements and MD&A as at and for the three and six months ended June 30, 2023 are available on the Company's website at www.obsidianenergy.com and under our SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The disclosure under the section "Non-GAAP and Other Financial Measures" in the MD&A is incorporated by reference into this news release.