CALGARY, Jan. 15, 2018 /CNW/ - OBSIDIAN ENERGY LTD.
(TSX/NYSE – OBE) ("Obsidian Energy", the "Company",
"we", "us" or "our") is pleased to confirm
full year 2017 production ahead of guidance and provide an
operational update, including preliminary results from our four
well pad in Willesden Green.
David French, President & CEO
commented, "2017 was a great year for Obsidian Energy. We
repositioned the development portfolio, effectively responded to a
volatile commodity and currency environment, and exited the year
with clear operational momentum. There is much to be excited about
as we head into 2018. To supplement this update, we added a
video to our website which gives more colour to our progress and my
perspective on where the business is heading in 2018 and
beyond."
Second Half Program Drives Full Year 2017 Production Above
Guidance
Full year 2017 production was 31,700 boe/d, above the high end
of our guidance range of 30,500 – 31,500 boe/d. Ongoing waterflood
and our shallow base decline, combined with solid execution of our
second half development program drove the outperformance. This
marks another quarter of consistent production delivery and we look
forward to maintaining this momentum through 2018.
We experienced some unexpected production downtime in December
due to extreme cold weather in the last half of the month.
Additionally, third party pipeline curtailment delayed on-stream
timing of our four well pad in Willesden Green until early 2018.
These wells are now on production and are exhibiting strong initial
results as noted below.
Q4 2017 production was 31,400 boe/d, with an estimated liquids
weighting of 62%. To date in January, corporate production has
averaged over 32,000 boe/d despite continued cold weather related
downtime.
Increased Willesden Green Cardium Production by Over 30% with
New Four Well Pad
Our four well pad in Willesden Green Cardium was on-stream as of
January 3, 2018. The pad has averaged
approximately 2,800 boe/d since the wells came on production,
implying an average of 700 boe/d per well over that timeframe. As a
result, we expect to increase our entire Willesden Green Cardium
production by over 30% for the month of January. These strong well
results continue our successful approach to optimizing wellbore
placement in the bioturbated interval and proven completion
design.
Accelerated 2018 Cardium Program into December to Optimize
Rig Schedule and Bring Forward Volumes
With continued execution success and a focus on capital
efficiency, we decided to accelerate a portion of our 2018 capital
program into 2017. In December, we drilled two primary horizontal
wells in Willesden Green targeting the bioturbated interval. We
also drilled three of four horizontal producers from our PCU #9
pad, which employs a low capital, integrated waterflood approach to
mitigate declines. Accelerating these projects into 2017 maintained
our operational efficiency which will reduce well costs and save
approximately $0.5MM on the Cardium
program.
Willesden Green primary wells are expected to be on production
by mid-February, while the PCU #9 pad is expected to come on early
April. We offset the capital cost of bringing these wells forward
by delaying vertical injectors associated with our 2017 program
into 2018.
Any incremental capital available in the second half of the year
will likely go towards Cardium development.
Confirmed the Upside within the Heart of our Peace River
Acreage
Second half execution of our 12 well Peace River program was very strong, with
three of our wells exhibiting rates over 500 bbl/d per well,
including December average oil production of 618 bbl/d on one of
those wells. Our Peace River team
continues to deliver strong results as we develop our multi-year
inventory.
Some of our heavy crude oil in Peace
River is priced off Western Canadian Select (WCS), which has
recently muted some of the upside of higher US$ WTI pricing. To
mitigate the impact of wider WCS differentials, we utilize a
portfolio of sales and pricing terms, including rail
transportation, which reduces the price impact by approximately
half. This has helped reconfirm the attractive economics of our
2018 Peace River program and we plan to begin this program in the
coming weeks.
We look forward to updating the investment community with our
full 2017 financial and operating results in early March. A short
video featuring David French,
President & CEO, can be found under the Presentations &
Events section of our website or by using the following link:
https://www.obsidianenergy.com/investor-centre/presentations-events/
Forward-Looking Statements
Certain statements contained in this document constitute
forward-looking statements or information (collectively
"forward-looking statements"). Forward-looking statements are
typically identified by words such as "anticipate", "continue",
"estimate", "expect", "forecast", "budget", "may", "will",
"project", "could", "plan", "intend", "should", "believe",
"outlook", "objective", "aim", "potential", "target" and similar
words suggesting future events or future performance. In addition,
statements relating to "reserves" or "resources" are deemed to be
forward-looking statements as they involve the implied assessment,
based on certain estimates and assumptions, that the reserves and
resources described exist in the quantities predicted or estimated
and can be profitably produced in the future. In particular, this
document contains forward-looking statements pertaining to, without
limitation, the following: that there is lots of be excited about
as we head into 2018; that any incremental capital available in the
second half of the year will likely go towards Cardium development;
that we can mitigate the impact of wider WCS differentials through
a portfolio of sales and pricing terms to reduce the cost impact;
that we plan to begin the 2018 Peace River program due to the
reconfirmed attractive economics in the coming weeks; that we look
forward to maintaining the momentum of consistent production
delivery through 2018; the expected increase in production
for January in the Willesden Green Cardium; that accelerating
certain projects will reduce well costs and save the Cardium
program money; when production will come online for certain pads;
and that we will update the investment community with full 2017
financial and operational results in early March.
With respect to forward-looking statements contained in this
document, we have made assumptions regarding, among other things
that we do not dispose of any material producing properties; our
ability to execute our long-term plan as described herein and in
our other disclosure documents and the impact that the successful
execution of such plan will have on our Company and our
shareholders; that the current commodity price and foreign exchange
environment will continue or improve; future capital expenditure
levels; future crude oil, natural gas liquids and natural gas
prices and differentials between light, medium and heavy oil prices
and Canadian, WTI and world oil and natural gas prices; future
crude oil, natural gas liquids and natural gas production levels;
future exchange rates and interest rates; future debt levels; our
ability to execute our capital programs as planned without
significant adverse impacts from various factors beyond our
control, including weather, infrastructure access and delays in
obtaining regulatory approvals and third party consents; our
ability to obtain equipment in a timely manner to carry out
development activities and the costs thereof; our ability to market
our oil and natural gas successfully to current and new customers;
our ability to obtain financing on acceptable terms, including our
ability to renew or replace our syndicated bank facility and our
ability to finance the repayment of our senior notes on maturity;
and our ability to add production and reserves through our
development and exploitation activities.
Although we believe that the expectations reflected in the
forward-looking statements contained in this document, and the
assumptions on which such forward-looking statements are made, are
reasonable, there can be no assurance that such expectations will
prove to be correct. Readers are cautioned not to place undue
reliance on forward-looking statements included in this document,
as there can be no assurance that the plans, intentions or
expectations upon which the forward-looking statements are based
will occur. By their nature, forward-looking statements involve
numerous assumptions, known and unknown risks and uncertainties
that contribute to the possibility that the forward-looking
statements contained herein will not be correct, which may cause
our actual performance and financial results in future periods to
differ materially from any estimates or projections of future
performance or results expressed or implied by such forward-looking
statements. These risks and uncertainties include, among other
things: the possibility that we will not be able to continue to
successfully execute our long-term plan in part or in full, and the
possibility that some or all of the benefits that we anticipate
will accrue to our Company and our securityholders as a result of
the successful execution of such plans do not materialize; the
possibility that we are unable to execute some or all of our
ongoing asset disposition program on favourable terms or at all;
general economic and political conditions in Canada, the U.S. and globally, and in
particular, the effect that those conditions have on commodity
prices and our access to capital; industry conditions, including
fluctuations in the price of crude oil, natural gas liquids and
natural gas, price differentials for crude oil and natural gas
produced in Canada as compared to
other markets, and transportation restrictions, including pipeline
and railway capacity constraints; fluctuations in foreign exchange
or interest rates; unanticipated operating events or environmental
events that can reduce production or cause production to be shut-in
or delayed (including extreme cold during winter months, wild fires
and flooding); and the other factors described under "Risk Factors"
in our Annual Information Form and described in our public filings,
available in Canada at
www.sedar.com and in the United
States at www.sec.gov. Readers are cautioned that this list
of risk factors should not be construed as exhaustive.
The forward-looking statements contained in this document speak
only as of the date of this document. Except as expressly required
by applicable securities laws, we do not undertake any obligation
to publicly update any forward-looking statements. The
forward-looking statements contained in this document are expressly
qualified by this cautionary statement.
Obsidian Energy shares are listed on both the Toronto Stock
Exchange and New York Stock Exchange under the symbol "OBE". All
figures are in Canadian dollars unless otherwise stated.
SOURCE Obsidian Energy Ltd.