Quarterly / Earnings Reports | Engineering & Construction | Second Quarter (2Q) Update | Initial Production Rates | Drilling Activity

Obsidian Sees Lower than Expected Output in Q2; Talks Latest Drilling Activity

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Obsidian Energy reported its Q2 2018 results.

Highlights:

• Second quarter production averaged 28,697 boe per day, a decrease of three percent relative to first quarter 2018. We planned major turnarounds in the quarter at our Crimson Lake and Lodgepole facilities, which were executed on time and on budget. Production was slightly behind overall estimates due to lower rates from our first quarter Mannville and PCU#9 programs.

• Invested $26 million of development capital expenditures, which focused on bringing wells on production from our first quarter development program, spending on our gas gathering infrastructure to satisfy the requirements under Alberta Energy Regulator (“AER“) Directive 84 in Peace River and lease construction for our second half development program. Remaining 2018 development capital is split approximately evenly between the third and fourth quarter.

Ops - Latest Drilling and Well Results

Our Willesden Green well brought on-stream in April is currently producing approximately 300 boe per day, with rates of 780 boe per day for the first 30 days of production and 580 boe per day for the first 60 days of production (60 percent liquids). The first three wells in our second half 2018 program are directly offsetting this well, and drilling commenced on July 30.

In Pembina, two wells in PCU#11 came on-stream in April. With rates of 200 boe per day per well (gross) for the first 30 days of production, these wells are meeting expectations. Our four well pad in PCU#9 came on production with expected total fluid rates but with higher water cuts. Pad production for July is behind expectations at approximately 375 boe per day, and infrastructure optimization work is ongoing to debottleneck the area. We are confident in the significant running room throughout our Pembina acreage and look forward to presenting the long term inventory potential of the assets.

While wet weather slowed the post breakup start in Willesden Green by a few days, we are currently running one rig in the area. We drilled our sole Mannville well on route south to our Cardium program, which was rig released on July 28and will be fracked in early-August. We also participated in a non-operated Mannville well which is expected to come online in the third quarter.

Our second half 2018 Willesden Green program is comprised of 15 horizontal drills off six multi-well pads. The average lateral length is approximately 1.5 miles per well, and all are within close proximity of our successful first half program. The first rig will drill a three well pad on the west side of the North Saskatchewan River in early August, moving to the eastern flank of the play later in the year. A second rig will begin drilling on the east side of the river in mid-September, and we plan to run both rigs until the 2019 break-up season. We plan to have 5 wells on production by the end of December, with the remaining wells coming on production early 2019.

In Peace River, our first half program continues to exceed expectations. The four wells had average peak rates above 500 bbl per day, and production over the first 90 days has averaged 400 bbl per day per well (gross). As a result of this performance and the economics of future wells in the current commodity price environment, we have elected to re-allocate capital from our scheduled Alberta Viking program to four additional Peace River wells. The wells will be drilled for approximately the same capital cost net to Obsidian Energy and are expected to come on production in the fourth quarter.