OBSIDIAN ENERGY LTD.

Closed $175.0 million of 8.125% five-year senior unsecured notes due December 2030 and used part of the proceeds to redeem the remaining $80.8 million of 11.95% notes due 2027, with the rest paying down the revolver. The unsecured coupon falls from 11.95% to 8.125%; the $235 million facility was left with about $8 million drawn.

debt financing

Thirteen of the 28 wells in the second-half programme were rig-released, and the six that reached 30 days of production were well ahead of pre-drill expectations, supporting a record seven-day Peace River average of about 14,500 boe/d. Water injection started at the Bluesky and Clearwater pilots, and $30 million of senior notes were redeemed in August using InPlay proceeds.

drilling progress report

Closed the InPlay share sale to Delek at $91.37 million after a small fee adjustment, leaving Obsidian with no InPlay shares and 20,834 restricted awards. The equity half of the Pembina consideration became cash in four months, and the proceeds go to repaying debt.

asset acquisition disposition

Agreed to sell its whole InPlay holding - 9,139,784 shares, about 32.7% of InPlay - to Delek Group for $10.00 a share, $91.4 million in total, against the $85 million of stock taken as part of the Pembina consideration four months earlier.

asset acquisition disposition

The Pembina sale closed with an effective date of 1 December 2024. Cash came in at $211 million after interim adjustments rather than $220 million, alongside 54.8 million InPlay shares at $1.55 and InPlay's 34.6% of Willesden Green Cardium Unit #2. Proceeds pay down debt while the company concentrates on growing Peace River.

asset acquisition disposition

Agreed to sell its operated Pembina assets to InPlay Oil for about $320 million - $220 million cash, $85 million of InPlay shares, and InPlay's 34.6% of the Willesden Green Cardium Unit #2, which takes Obsidian to 99.8% of that field. The non-operated Pembina Cardium Unit #11 interest is kept. Cash goes to debt first, funding the shift of weight from Cardium light oil to Peace River heavy oil.

asset acquisition disposition

2024 production averaged about 37,450 boe/d, above the top of guidance and roughly 16% up on 2023, with the fourth quarter around 40,000 boe/d. The first wells in the new Peavine and Gift Lake areas of Peace River worked: the Peavine 8-13 pad averaged 302 boe/d per well of 100% oil over its first 30 days, and the two-well 12-19 Pembina pad was producing over 1,100 boe/d combined.

drilling progress report

The $30.0 million term loan was repaid in full out of free cash flow seven weeks after it was drawn, leaving a $175.0 million revolver and the $127.6 million of 2027 notes. Nine wells were rig-released in the third quarter - four Cardium, four Peace River Bluesky and one Mannville gas well - and all eight Viking wells were on production in line with forecast. Obsidian also bought the Seal 9-15 gas plant in Peace River.

debt financing

The refinancing closed: $127.6 million of 11.95% five-year senior unsecured notes due July 2027, plus a new $175.0 million revolving facility and a $30.0 million term loan from RBC, BMO and Canadian Western Bank. Proceeds repaid everything falling due on 30 November 2022 - US$35.8 million of senior secured notes, $227.2 million of bank debt and a $6.6 million Peace River limited-recourse loan. Long-term debt afterwards is $287.6 million, with $130 million drawn on the revolver; the unsecured coupon is 11.95%.

debt financing

First-quarter production of 29,407 boe/d, with current production already at 33,000 boe/d on new wells; 19 wells rig-released in the quarter from a four-rig programme and 14 on production. Funds flow was $101.3 million excluding $22.7 million of share-based compensation charges, and guidance went up again to 30,300-31,300 boe/d.

drilling progress report

All 2021 wells and eight of the first-half 2022 wells were on production, with guidance raised 1,000 boe/d to 30,100-31,100 boe/d against about 29,400 boe/d in the first quarter. Obsidian also bought 14 sections of Peace River land prospective for the Bluesky and Clearwater, and struck a commercial agreement with Whitecap Resources over Pembina Cardium Unit No. 11.

drilling progress report

Obsidian set a 2022 capital programme of $143-149 million with four rigs running: 19 Cardium wells in Willesden Green and Pembina plus ten in Peace River, four of them Clearwater appraisal wells. It forecast free cash flow of $166 million at US$75 WTI.

drilling progress report

A pre-agreed one-time adjustment cut the syndicated facility from $415.0 million to $366.8 million effective 31 December, deliberately capping undrawn availability at $35.0 million and directing any borrowing capacity above that into repaying the term loan and the senior notes. $321.5 million was drawn. The structure routes free cash flow to debt reduction rather than to the drill bit.

debt financing

Closed an oversubscribed $25.9 million offering of subscription receipts at $4.40 each, with the 15% over-allotment exercised in full, to fund the purchase of the remaining 45% of the Peace River Oil Partnership. Because the offering was oversubscribed the whole purchase price is paid in cash and no shares go to the vendor.

capital raising announcement

Third-quarter funds flow of $59.3 million and net debt down to $428.1 million, with the second-half drilling programme running well. The larger news came after the quarter: Obsidian agreed to buy the remaining 45% of the Peace River Oil Partnership from its partner, taking full ownership of the asset it had failed to sell in 2019.

drilling result

Second-quarter production averaged 24,651 boe/d, 6% above the first quarter and ahead of plan, lifting full-year guidance to 24,000-24,400 boe/d. Net income of $322.5 million was almost entirely a $311.5 million reversal of earlier Cardium impairments on higher price forecasts and better drilling results, not cash. Net debt fell to $435.7 million and three more wells were added to the second-half programme.

drilling progress report

All nine first-half wells were on stream, at $3.3 million each, 2% below the 2020 average with 10% more lateral length, and second-quarter production came in around 24,650 boe/d against 23,225 in the first. The release gives the full decline: the best well ran 910 boe/d over ten days, 748 over thirty and 538 over ninety - the ninety-day rate is roughly 60% of the ten-day rate, which is the honest number for valuing this kind of Cardium well.

drilling progress report

First-quarter results with the first-half drilling programme complete: nine Cardium wells, funds flow of $36.3 million, net income of $23.2 million against a $747.6 million loss a year earlier, production of 23,225 boe/d and net debt down 12% to $455.0 million. The 4-35 pad was the standout - its three wells came in at 910, 849 and 690 boe/d over the first ten days and 748, 662 and 714 boe/d over thirty. One 13-19 well started at 57 boe/d because frac fluid took time to recover and was at 220 boe/d by the release.

drilling progress report

The extension that mattered: both the credit facility and the senior notes were pushed out to 30 November 2022. Availability of $440 million was split into a $225 million revolver and a $215 million non-revolving term loan carved out of amounts already drawn - so the drawn portion becomes term debt that cannot be redrawn.

debt financing

Obsidian never recovered the US$1.00 price and the NYSE suspended trading; United States trading moved to the OTCQB under OBELF on 2 April, with the Toronto listing unaffected. Six price notices in four and a half years ended in delisting. The company put the saving at about $1 million a year and said it would seek the OTCQX if the shares averaged over US$0.25.

listing compliance notice

Noteholders agreed to align every senior note maturity on 30 November 2021 - pulling the 2022 and 2025 notes forward as well as extending the 2020 ones - and agreed in principle to loosen the leverage covenants as oil collapsed: senior debt to adjusted EBITDA capped at 3.5x to 30 June 2020, then 4.1x to 30 September, then 6.0x through to 30 June 2021. The ceiling rises through the year: this is downturn relief, not tightening.

debt financing

The facility was extended - revolving to 31 May 2021, term to 30 November 2021 - but availability was cut $10 million to $450 million and the lenders kept a June 2020 reconfirmation at which they could pull the revolving period back to 30 June 2020. The extension was conditional on US$27 million of senior notes maturing in March, May and December 2020 being pushed out to at least 30 November 2021.

debt financing

The Peace River sale collapsed. The consents needed to transfer the partnership units and the operatorship were never obtained and the agreement was terminated. Obsidian said it would pursue other routes out of the partnership while focusing on its Cardium light oil asset.

material agreement termination

Agreed to sell its 55% interest in the Peace River Oil Partnership for about $97 million - $85.8 million of it cash, the rest purchaser shares and the present value of assumed liabilities - subject to financing and to the partner's 30-day right of first refusal and 15-day tag-along right.

asset acquisition disposition

All 19 wells of the Cardium campaign begun in July 2018 were completed and on production at an average $3.8 million each to drill, complete, equip and tie in. The 14 wells drilled in 2018 averaged 540 boe/d over their first 30 days at 87% oil; the last three wells showed single-day peak rates above 1,000 boe/d per well, which is a peak-day figure and not comparable with a 30-day average.

drilling progress report

Settled with the SEC for US$8.5 million, without admitting or denying the allegations, plus an injunction against future violations and subject to court approval. The case continues against the former Penn West employees named in the complaint. Three years on, the company's own exposure to the 2014 restatement is closed.

financial restatement

The SEC sued the company - by then renamed Obsidian Energy - and two former officers in the Southern District of New York over the accounting practices Penn West itself had discovered and reported to the SEC in July 2014. The complaint alleges breaches of Sections 10(b) and 13(b) of the Exchange Act and seeks injunctive and financial relief.

financial restatement

Penn West replaced its old facility with a reserve-based revolving syndicated credit facility from nine lenders led by RBC and Scotiabank. The borrowing base is $550 million less outstanding pari passu senior notes, giving $410 million of availability against the $285 million drawn on the previous line at 30 April, with semi-annual redeterminations each May and November.

debt financing

Offered $448 million of cash to senior noteholders to prepay at par, pro rata, against about $576 million of notes outstanding - the note agreements allow asset sale proceeds to be used this way. The money came from 2016 sales other than Saskatchewan. Pro forma senior debt falls to about $470 million from $2.0 billion at the end of 2015, and senior debt to EBITDA to 2.0 times against a 4.5 times covenant.

debt financing

Closed the $975 million Saskatchewan sale. The net cash proceeds are to be offered to lenders and noteholders at par, pro rata, under the 2015 amending agreements. The CFO said the company expected full covenant compliance at quarter end and the removal of the going concern note from its accounts.

asset acquisition disposition

Agreed to sell all of its Saskatchewan assets - including the Dodsland Viking over which it had sold Freehold a royalty a year earlier - to Teine Energy, backed by the Canada Pension Plan Investment Board, for $975 million cash, alongside about $140 million of further Alberta sales. That takes 2016 disposals to roughly $1.3 billion and cuts pro forma net debt to about $600 million from $2.1 billion at the end of 2015, which Penn West said would leave it comfortably inside its covenants for the rest of the year.

asset acquisition disposition

Closed the Slave Point sale for about $148 million and roughly $50 million of the $80 million of other non-core sales, with a further $30 million under contract to close in the second quarter.

asset acquisition disposition

Agreed to sell the Slave Point properties in northern Alberta for $148 million plus about $80 million of other non-core assets, roughly $230 million in all. Slave Point had been one of Penn West's three core light oil areas alongside the Cardium and the Viking, but had no development capital planned for the rest of the year. Disposals since the start of 2015 now exceed $1 billion.

asset acquisition disposition

Penn West agreed to settle every investor class action in Canada and the United States arising from the July 2014 restatement announcement. The payment is fully funded by insurance, so it does not touch the company's cash, and carries no admission of liability. Court approval was still needed in Alberta, Ontario, Quebec and New York; the release does not state the amount.

financial restatement

Closed the Weyburn sale for about $205 million and confirmed the Mitsue sale had closed on 30 October for $193 million. Both sets of proceeds go to senior debt.

asset acquisition disposition

Agreed to sell its non-operated 9.5% working interest in the Weyburn Unit in southeast Saskatchewan for $205 million cash, taking the year's disposals to about $810 million and passing the $650 million target set with its noteholders.

asset acquisition disposition

Agreed to sell the Greater Mitsue properties in central Alberta for $192.5 million cash, taking 2015 disposition proceeds to about $605 million. Since mid-2013 Penn West had sold an estimated 34,000 boe/d of non-core production for about $1.7 billion and cut debt by roughly $1.4 billion, more than 40%.

asset acquisition disposition

Penn West suspended the dividend outright, cut board pay and reduced its workforce by 35%, capping capital spending at funds flow from operations. The 2015 budget fell to about $500 million, 40% below the $840 million guided in November 2014. Nine months earlier the dividend had been cut from $0.14 to $0.03; now it was gone.

dividend declaration

Definitive amending agreements with the bank syndicate and the noteholders were signed, formalising the covenant relief agreed in principle in March. The price of that relief is a commitment that any asset sale before 30 March 2017 funds repayment at par of $650 million of note principal, with pro rata repayment of drawn bank debt. Penn West had already lined up about $415 million of sales toward it, including $318 million of royalty transactions closed in early May.

debt financing

Sold Freehold Royalties an 8.5% gross overriding royalty over part of its Dodsland Viking working interests, plus assorted existing royalties and mineral title lands, for $321 million cash. That covers about half of the $650 million Penn West had committed to offer its noteholders at par out of disposition proceeds.

asset acquisition disposition

With crude collapsing, Penn West cut the 2015 capital budget from $840 million to $625 million and the quarterly dividend from $0.14 to $0.03 a share, retaining about $160 million, and suspended the dividend reinvestment plan. Its 2015 Canadian oil price assumption came down about 25% to $65 a barrel from the $86.50 used when the budget was set a month earlier.

dividend declaration

The formal record of the completed restatement announced on 18 September. The review went back to 2007 to set opening balances and found nothing beyond what had been disclosed. Two corrections: operating costs wrongly capitalised into property, plant and equipment, reversed at $66 million for 2012, $71 million for 2013 and $9 million for the first quarter of 2014, which does flow through to earnings via depletion, impairment and tax; and operating expenses wrongly classified as royalties, $101 million in each of 2012 and 2013 and $19 million in Q1 2014, which moves money between two lines of the income statement with no effect on net income at all.

financial restatement

Penn West confirmed the accounting practices under review had no effect on its independently evaluated reserves - 625 million barrels of oil equivalent proved plus probable at end-2013, about 66% proved and about 70% oil and liquids - or on their net present values. The accounting was wrong; the barrels in the ground were not.

financial restatement

Noteholders granted the matching waiver, extending their cure period to 14 October and allowing the defaults to be cured simply by delivering the restated and second-quarter accounts, after which the notes continue on existing terms. With both waivers in hand the capital structure was secured through the restatement.

debt default or forbearance

The restatement and the resulting delay to second-quarter filings put Penn West in default under both its bank facility and its senior notes - not on any financial covenant, but on the reporting obligations. Lenders granted a waiver extending the cure period to 14 October, leaving access to about $660 million of the facility with roughly $250 million drawn; noteholder waivers were still being negotiated. Alberta and Ontario regulators issued management cease trade orders barring directors and officers from dealing in the stock until the filings were made.

debt default or forbearance

Penn West's audit committee was running a voluntary internal review and the board had already concluded that historical financial statements and MD&A must be restated. The entries under examination appear to have reduced reported operating costs and increased reported capital expenditure and royalties without adequate supporting documentation, and were spotted by David Dyck, a chief financial officer three months into the job. The company said cash and debt balances, 2014 production guidance and operations were unaffected.

financial restatement

Closed the first phase of the divestment programme announced in November 2013: non-core assets producing about 10,800 boe/d sold for roughly $486 million, at about 5.5 times estimated 2014 net operating income and 1.1 times Penn West's own discounted proved plus probable producing reserve value. Proceeds repaid credit facility advances; 2014 guidance of 105,000-110,000 boe/d was left unchanged.

asset acquisition disposition

Penn West filed the arrangement agreement dated 10 November 2010 for its conversion from a trust into a corporation. The parties include the Trust, Penn West Petroleum Ltd. and subsidiaries from the Petrofund, Vault and Canetic deals. Unitholders and the Alberta court were to approve it, with entities amalgamating into a 'New Penn West'.

business combination

The Mitsubishi joint venture closed on 23 September 2010. Mitsubishi acquired a 50% interest in the Cordova shale gas and Wildboy gas assets (about 30 MMcf/d gross, 550,000 gross acres), and Penn West received about $250 million initial consideration, with Mitsubishi committed to spend $600 million of the first $800 million of development capital. This resolves the August 2010 announcement on the terms stated then.

joint venture update

On 24 August 2010 Penn West agreed to form a 50-50 joint venture with a subsidiary of Mitsubishi Corporation for its Cordova Embayment shale gas and Wildboy conventional gas assets in northeastern British Columbia, with Penn West as operator. Mitsubishi will pay about $250 million for the existing assets (about 30 MMcf/d, 550,000 gross acres) and fund about $600 million of the first $800 million of development spending. Closing is expected about 23 September 2010, subject to Mitsubishi board and regulatory approvals. This is a second partnership after the CIC deal.

joint venture update

The CIC joint venture and unit placement closed on 1 June 2010. Penn West contributed the Peace River bitumen assets (valued at about $1.8 billion) and keeps 55%; CIC took 45% for about $312 million paid in cash, plus a commitment to carry about $505 million of future costs. CIC also bought 23,524,209 trust units for about $435 million. Penn West will use the total of about $747 million for general corporate purposes. This resolves the May 2010 announcement.

joint venture update

On 13 May 2010 Penn West agreed with a subsidiary of China Investment Corporation (CIC) to form a joint venture for its Peace River bitumen assets, valued at about $1.8 billion (about 237,000 net acres, about 2,700 boe/d). Penn West keeps 55% and operates; CIC takes 45% for $817 million, being $312 million at closing and $505 million applied to Penn West's future capital and operating costs. CIC also agreed to buy 23,524,209 new units (about 5% of units) at $18.48 for about $435 million, with closing expected about 1 June 2010. This is a new partner and new equity issue; existing unitholders are diluted by about 5% through the placement.

joint venture update

The Reece acquisition was completed on 30 April 2009 at 0.125 of a Penn West unit per Reece share, as announced in March. Former Reece holders are first eligible for the distribution payable about 15 May 2009 (record date 30 April), and Reece shares were to be delisted from the TSX Venture Exchange. This completes the deal announced on 10 March.

business combination

On 10 March 2009 Penn West agreed to buy Reece Energy Exploration Corp. for 0.125 of a Penn West unit per Reece share (about 4.6 million new units), a total cost of about $92.2 million including Reece's debt. The release says it adds about 2,100 boe/d (67% light oil and liquids) and about 75,000 net undeveloped acres around Kindersley, Saskatchewan, next to Penn West's Dodsland oil play. Penn West says it will cut its 2009 capital programme by $40 million, the debt it expects to assume. Completion is expected in early May 2009, needing two-thirds Reece holder approval and regulatory approvals; a $2.5 million termination fee applies in certain conditions.

business combination

The Endev acquisition was completed on 22 July 2008, on the terms announced in May: 0.041 of a Penn West unit per Endev share. Former Endev holders are first eligible for the distribution payable about 15 August 2008 (record date 31 July) and Endev shares were to be delisted from the TSX. This completes the deal announced on 21 May.

business combination

On 21 May 2008 Penn West agreed to buy Endev Energy Inc. for 0.041 of a Penn West unit per Endev share (about 3.9 million new units), for a total cost of about $170 million including Endev's debt. The release says it adds about 3,500 boe/d (78% gas) and about 100,000 net undeveloped acres, mainly near Majorville in southeast Alberta; it needs two-thirds approval of Endev holders voting, plus regulatory approvals, with completion expected mid to late July 2008. A $5 million termination fee applies in certain conditions. This is a new acquisition following the Vault and Canetic deals.

business combination

On 30 April 2008 Penn West priced a private placement of notes: US$152.5m at 6.12% due 2016, US$278m at 6.30% due 2018, C$30m at 6.16% due 2018 and US$49.5m at 6.40% due 2020, expected to close about 29 May 2008. The notes are unsecured and rank equally with the bank facilities and the US$475m notes from May 2007; proceeds are to repay part of the syndicated bank facility advances. Treasury hedge contracts were settled for a gain of about US$2.4 million. This continues the 2007 pattern of replacing bank debt with long-term notes.

capital raising announcement

This business acquisition report says Penn West completed the Canetic Resources Trust acquisition on 11 January 2008. Canetic holders received 0.515 of a Penn West unit per unit (about 124.3 million units issued) plus a $0.09 per unit cash distribution (about $21.7 million), and Penn West assumed about $1.467 billion of Canetic bank debt plus convertible debentures. Concurrently Penn West put in place a $4 billion, three-year credit facility with 18 banks, used to retire its own bank debt and the debt assumed from Vault and Canetic. It acquired proved plus probable reserves of about 110.8 MMbbl light/medium oil and NGLs, 19.4 MMbbl heavy oil and 597.9 Bcf gas, and about 774,093 net undeveloped acres; the board gained four Canetic directors. This completes the Canetic merger agreed in October 2007 and greatly enlarges the trust and its debt.

business combination

The Vault acquisition closed on 10 January 2008, completing the deal announced in September 2007. Vault unitholders get 0.14 of a Penn West unit per Vault unit and warrant holders get $0.51 cash each, while Penn West takes on Vault's two convertible debenture series (now convertible into Penn West units) and must offer to repurchase them within 30 days. Former Vault holders are first eligible for the distribution payable around 15 February 2008.

business combination

Penn West filed the formal arrangement agreement, effective 30 October 2007, to merge with Canetic Resources Trust. It replaces an earlier original agreement between Penn West, its administrator and the two Canetic entities. The filing is the legal agreement; the excerpt shows conditions, a damages section and Canetic's $1.6 billion credit facility maturing 31 May 2009, but no exchange ratio or price. This is the first appearance of the Canetic deal in the story, and the exchange terms come only in the later closing report.

business combination

Penn West agreed on 25 September 2007 to buy Vault Energy Trust, exchanging 0.14 of a Penn West unit for each Vault unit (a 6% premium), with about 5.5 million new Penn West units issued and a total cost of about $380 million including Vault's debt. It is expected to add about 6,500 boe/d (65% gas, 35% light oil and NGLs) and about 120,000 net undeveloped acres; it still needs two-thirds approval of Vault holders plus court and regulatory approvals, with closing hoped for December 2007. A $10 million termination fee applies in certain conditions. This is a new acquisition, separate from the C1 Energy take-over that was finishing.

business combination

On 31 May 2007 Penn West's subsidiary closed the US$475 million private placement of notes announced in April, using the proceeds to repay part of its bank debt. The same filing announced a cash take-over bid for C1 Energy Ltd. at $0.20 per share, about $23 million in total including assumed debt and working capital deficiency, for assets in the Peace River Arch area near Penn West's Peace River Oil Sands project.

capital raising announcement

Penn West closed an oil and gas property acquisition on 11 April 2007 (first announced 9 February 2007), funded from its existing syndicated bank facility and a new $250 million unsecured demand facility expiring 31 December 2008. It also priced US$475 million of unsecured private placement notes (US$160m at 5.68% due 2015, US$155m at 5.80% due 2017, US$140m at 5.90% due 2019, US$20m at 6.05% due 2022), with proceeds meant to repay some bank debt. The release does not give the acquisition price.

capital raising announcement

Unitholders of both Penn West and Petrofund approved the merger on 28 June 2006, subject to court and regulatory approvals; Petrofund holders get 0.6 of a Penn West unit per unit plus a $1.10 special distribution. The ExploreCo spin-off was dropped, so its assets stay in the merged trust, which the release says will have about 234 million units, roughly 135,000 boe/d of capacity and an enterprise value of about $11 billion. This confirms the vote outcome flagged two days earlier.

business combination

The Penn West and Petrofund merger was completed on 30 June 2006 after all court and regulatory approvals were received. Penn West describes the result as the largest energy trust in North America, with an enterprise value of about $11 billion and debt under one times annualized forecast cash flow. Petrofund units were to be delisted, and the ExploreCo spin-off was not done. This is the 2006 merger that the company's later history builds on, including its Peace River oil sands and CO2 recovery assets.

business combination

Penn West Energy Trust reported that about 88% of proxies favoured its planned merger with Petrofund Energy Trust, but about 70% were against the private placement of shares tied to the proposed ExploreCo spin-off company (and about 66% favoured the option plan). Because the arrangement made ExploreCo conditional on those approvals, the release says the ExploreCo parts would not go ahead while the merger itself could proceed if the two-thirds votes were met at the meetings.

business combination