Mr. Stephen Loukas reports

OBSIDIAN ENERGY ANNOUNCES INCREASE IN 2023 RESERVES ACROSS ALL CATEGORIES

Obsidian Energy Ltd. has released the results of its independent reserves evaluation for the year ended Dec. 31, 2023, prepared by GLJ Ltd.

"Our 2023 reserves reflect the high level of activity and success of our capital program with volume increases across all categories and asset areas," said Stephen Loukas, Obsidian's president and chief executive officer. "The performance of our underlying asset base, coupled with a capital program that incorporated all areas of our portfolio, resulted in reserve additions that more than replaced production in all reserve categories -- signifying the seventh year in a row that we achieved such gains in total proved and total proved plus probable reserves. In addition, the efficiency of our capital program is demonstrated by lower finding and development costs per [barrel of oil equivalent] compared to 2022, resulting in strong recycle ratios despite the impact of lower commodity prices in 2023."

Stephen Loukas continued: "While the reserves consultants' commodity price forecasts were lower in 2023 compared to 2022, our active share buyback program helped to largely counteract the decrease in reserve values on a per-share basis. Over 2023, we repurchased and cancelled 6 per cent of our shares outstanding."

Highlights

Obsidian's high level of activity and successful capital program resulted in solid production and reserves additions across all three main asset areas (Willesden Green/Pembina (Cardium), Peace River and Viking) in 2023. Focused on unlocking the significant potential across its heavy oil business at Peace River while maintaining production in its light oil business, it increased its reserve base through extensions, establishing new development fields and new exploration/appraisal drilling over the year.

• Obsidian replaced 124 per cent of 2023 production on a proven developed producing basis, 157 per cent on a proven basis and 217 per cent on a proven plus probable basis:
  • The impact of drilling field extensions from its 2023 capital program combined with positive technical revisions was the major contributing factor to increased reserves.
• Reserves before-tax net present value discounted at 10 per cent decreased from 2022 levels largely due to the impact of lower commodity prices as follows:
  • PDP: 6-per-cent decrease to $1.5-billion (no change on a per-share basis);
  • 1P: 10-per-cent decrease to $1.9-billion (4-per-cent decrease on a per-share basis);
  • 2P: 8-per-cent decrease to $2.6-billion (2-per-cent decrease on a per-share basis).
• Future development capital was added to appropriately adjust the undeveloped reserves and generate a five-year program of approximately $286-million per year:
  • The 2023 reserve report's FDC is weighted to the Cardium formation and booked lower than the anticipated spending in its three-year growth plan due to the level of FDC attributed to Peace River. Reserve booking rules and guidelines stipulate how far reserves can be booked from existing production, which particularly impacted its Peace River asset. Its oil sands evaluation wells define its asset and provide reservoir validation, but do not produce; therefore, they do not directly translate into offset booked locations. As such, FDC associated with its Peace River asset is well below its spending plans. It expects to add additional locations to its booked reserves in Peace River over the coming years as it continues to appraise and further develop this asset.
• Improvements from between four to 17 per cent in both finding and development and finding, development and acquisition costs year over year show the stability of its reserve book and its ability to bring new production on stream more efficiently:
  • F&D costs including changes in FDC were $19.35 per boe for PDP, $22.42 per boe for 1P and $18.37 per boe for 2P.
  • FD&A costs including changes in FDC were $19.32 per boe for PDP, $22.35 per boe for 1P and $18.28 per boe for 2P.
• The strength and profitability of its assets were demonstrated through 2023 recycle ratios of 1.8 times for PDP, 1.6 times for 1P and 1.9 times for 2P, based on its expected 2023 operating netback of $35.38 per boe and F&D costs (including changes in FDC).
• Its total corporate decline rates improved to 21 per cent on a PDP basis from 24 per cent in 2022 despite the impact of increased development:
  • On a three-year average basis, PDP decline rates decreased to 17 per cent from 19 per cent.
• Its total undeveloped 2P reserve locations increased by over 30 new net locations to 343 total net locations booked (including 237 net locations in the Cardium, 42 net locations in the Bluesky, 11 net locations in the Clearwater, 48 net locations in the Viking, one net location in the Devonian and four net locations in the Mannville):
  • These locations were booked with a highly achievable total 2P five-year FDC of $1.4-billion (approximately $286-million per year).
  • New booked Cardium locations replaced wells drilled during 2023, further validating the inventory of light oil locations in its growth plan.
  • Peace River locations more than doubled due to the success of its 2023 capital program, adding 29 net 2P locations over the year.
• Obsidian maintains a strong reserve life index, increasing slightly from 2022 to approximately 7.2, 10.1 and 13.5 years on a PDP, 1P and 2P basis, respectively.

Summary of 2023 reserves

GLJ conducted an independent reserves evaluation of 100 per cent of Obsidian's reserves, effective Dec. 31, 2023, using a four-consultant average of forecast commodity prices and assumptions at Dec. 31, 2023. This evaluation was prepared in accordance with definitions, standards and procedures set out in the Canadian oil and gas evaluation handbook and National Instrument 51-101 (Standards of Disclosure for Oil and Gas Activities). Reserves included herein are company share gross reserves, which are the company's total working interest reserves before the deduction of any royalties and excluding any royalty interests payable to the company. The numbers in the attached tables may not add due to rounding.

The financial and operating information in this news release is based on estimates and is unaudited. Additional reserve information as required under NI 51-101 will be included in its annual information form as at Dec. 31, 2023, which will be filed on SEDAR+ and EDGAR, and posted to its website once it files its year-end 2023 financial documents, which is anticipated on Feb. 22, 2024.

Fourth quarter and full-year 2023 results release

It intends to release its fourth quarter and full-year 2023 financial and operational results before North American markets open on Feb. 22, 2024. In addition, the 2023 management's discussion and analysis and the audited 2023 consolidated financial statements will be available on its website, the SEDAR+ website and the EDGAR website on or about the same date.

Obsidian shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American in the United States under the symbol OBE.

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