Mr. Stephen Loukas reports

OBSIDIAN ENERGY ANNOUNCES FIRST QUARTER 2024 RESULTS

Obsidian Energy Ltd. has released strong operating and financial results for the first quarter of 2024.

Detailed information can be found in Obsidian Energy's interim consolidated financial statements and management's discussion and analysis (MD&A) as at and for the three-month period ended March 31, 2024, on its website, which will also be filed on SEDAR+ and EDGAR in due course.

First quarter 2024 overview

Obsidian Energy completed the majority of its first-half 2024 drilling program during the first quarter with five rigs in operation across its Peace River and Willesden Green/Pembina (Cardium) assets. In total, 25 (24.4 net) operated wells were rig released and 11 (11.0 net) operated wells were brought on production in the quarter. Initial results from the company's development and exploration/appraisal activities are encouraging, with strong production additions from an additional 17 (17.0 net) operated and four (1.3 net) non-operated wells that came on production subsequent to quarter-end.

First quarter 2024 production increased by 3 per cent (11 per cent on a per-share basis) to 34,238 barrels of oil equivalent/day from 33,153 boe/d in the first quarter of 2023. During the first quarter of 2024, FFO (funds from operations) was $84.4-million ($1.09 per share), which was a 10-per-cent decrease (5 per cent on a per-share basis) compared with the same period in 2023. Higher average production combined with lower net operating costs helped to partially offset lower natural gas prices, wider light oil differentials and higher share-based compensation (SBC) due to the appreciation of Obsidian's share price during the period. The SBC units issued directly to employees under the company's compensation plans several years ago (when its share price was significantly lower) have now all vested and are no longer outstanding. As a result, the expected future impact of a $1 per share price change on SBC (and corresponding impact to FFO) is expected to decrease to approximately $2.4-million from $3.7-million previously. In the first quarter of 2024, Obsidian renewed its normal course issuer bid (NCIB) for a second year and remained active with its share buyback program through the repurchase and cancellation of 1.05 million shares for $10.5-million ($9.94 per share).

"We are extremely pleased with the progress of our first-half 2024 capital program across both our heavy and light oil operations," commented Stephen Loukas, Obsidian Energy's president and chief executive officer. "Our first-half development program is yielding strong initial results at or above our expectations. Within our Peace River program, our recent strong results at Harmon Valley South (HVS) unlocks incremental future Bluesky inventory within the area. Additionally, we are continuing development at our Walrus field with the drilling of a six-well pad, while also fast-tracking our first Clearwater formation development field at Dawson."

Mr. Loukas continued: "Lastly, our Willesden Green/Pembina (Cardium) program has delivered strong results, allowing us to sustain stable volumes and cash flow within our light oil segment to continue to fund growth within our heavy oil segment as well as additional share buybacks. In summary, we remain confident in our ability to deliver our 2024 to 2026 three-year corporate growth plan which we believe will create significant value for our stakeholders."

2024 first quarter corporate highlights:

• Solid funds flow -- the company generated FFO of $84.4-million ($1.09 per share basic) compared with $94.3-million ($1.15 per share basic) in the first quarter of 2023.
• Capital development growth -- Obsidian began the execution of the first-year capital program under its growth plan, laying the foundation for future value realization. With five drilling rigs operating, the company's higher activity level focused on development in Peace River and Willesden Green/Pembina (Cardium) as well as further testing of its Peace River asset through exploration/appraisal and oil sands exploration (OSE) wells. First quarter capital expenditures totalled $114.3-million in 2024 (2023 -- $107.1-million), while decommissioning expenditures totalled $10.1-million (2023 -- $8.7-million).
• Short-term increase to net debt -- net debt levels increased to $386.3-million at March 31, 2024, compared with $351.4-million at March 31, 2023, largely due to higher drawings under the company's syndicated credit facility for its development program. During the second quarter of 2024, Obsidian's net debt level is expected to decrease as the combination of new wells coming on production and lower capital spending levels result in free cash flow generation.
• Increased credit facility borrowing base -- the company completed its semi-annual borrowing base redetermination of its credit facility in April, increasing the aggregate amount available under the syndicated credit facility by $20-million to $260-million. In association with the redetermination, the revolving period and maturity dates were extended to May 31, 2025, and May 31, 2026, respectively.
• Active and renewed share buyback program -- in the first quarter of 2024, a total of 1.05 million shares were repurchased and cancelled under the company's NCIB for $10.5-million ($9.94 per share):
  • The company renewed its NCIB with the Toronto Stock Exchange during the first quarter of 2024, allowing the purchase of up to 7,564,767 common shares over a period of 12 months from Feb. 29, 2024, to Feb. 28, 2025.
• Repurchased senior unsecured notes -- during the first quarter of 2024, the company repurchased and cancelled $1.2-million of its outstanding 11.95 per cent senior unsecured notes on the open market at an average price of $1,016 per $1,000 principal amount. It also completed its semi-annual free cash flow offer, which resulted in the repurchase and cancellation of $2-million principal of notes at an average price of $1,030 per $1,000 principal amount and $114.2-million of notes outstanding.
• Decreased net operating costs -- net operating costs were lower at $13.91 per boe in the first quarter of 2024 compared with $14.57 per boe in 2023 due to lower power and trucking costs.
• G&A costs -- general and administrative (G&A) costs increased to $1.77 per boe in the first quarter of 2024 compared with $1.60 per boe in 2023. The company increased staffing levels to align with its higher activity level and expanded capital program under its growth plan. G&A costs per boe are expected to decrease going forward as production levels further increase.
• Net income -- net income for the first quarter of 2024 was $11.9-million (15 cents per share basic) as a result of the company's increased production levels and positive operating netback. First quarter 2024 net income was partially offset by higher depletion costs, SBC charges, and the impact of lower commodity prices and wider light oil differentials when compared with the first quarter of 2023.

First quarter 2024 capital program and highlights

The company had a strong start to its 2024 program with the first quarter pace of development and capital expenditures as anticipated, providing encouraging initial results at or above expectations. It completed the majority of its first-half drilling program during the quarter with five rigs operating in its Peace River (Bluesky and Clearwater formations) and Willesden Green/Pembina (Cardium formation) areas. Obsidian is currently in the process of completion activities for the wells and have one rig drilling additional development wells at its new Peace River Dawson Clearwater field through spring breakup. The breakdown of operated wells that were rig released and on production during the first quarter of 2024 is noted herein.

Obsidian Energy also participated in 11 non-operated (5.8 net) wells during the first quarter, one (0.4 net) of which was a water injector well. In April, the company brought an additional 17 (17.0 net) operated and four (1.3 net) non-operated wells on stream; most of its wells from its first-half 2024 program are expected to be on production by the end of June.

Capital program highlights for the first quarter 2024 were as follows:

• Achieved encouraging initial well results -- while most of the wells are expected on stream in the second quarter of 2024, Obsidian is realizing encouraging results with solid initial production (IP) rates from wells on production, including:
  • Peace River (Bluesky): The HVS 8-28 pad (two wells) produced above the company's internal expectations with an average pad 25-day IP rate of 533 boe/d (100 per cent oil) per well;
  • Pembina:
    • A fourth (1.0 net) well was drilled on the 7-36 pad in addition to the three (3.0 net) wells from 2023. Initial production rates are encouraging with average 30-day IP rates of 371 boe/d (83 per cent light oil) for the four wells;
    • All three 6-08 pad wells at the Pembina Cardium unit No. 9 came on stream in mid-April with a gross average 10-day IP rate of 366 (330 net) boe/d (83 per cent light oil);
  • Willesden Green:
    • Following up the highly economic well drilled at the Open Creek 9-17 pad in 2023, the company rig released another well (0.7 net) at the pad in March. The well came on stream in mid-April with a gross 10-day IP rate of 373 (243 net) boe/d (89 per cent light oil);
    • All three wells at the 2-13 pad came on stream in mid-April with a gross average 10-day IP rate of 321 boe/d (60 per cent oil);
    • A third (1.0 net) well on the three-well 4-18 pad was spudded in January, 2024; all three wells came on stream in February and had average 30-day IP rates of 151 boe/d (78 per cent light oil) for the three wells.
• Initiated and accelerated development of Clearwater Dawson field -- the company began the active development of its first Clearwater field at Dawson in Peace River with the drilling of two (2.0 net) wells. Based on initial indications from the two wells and favourable spring conditions in the area allowing the company to extend the drilling season, it accelerated development of the field by adding four (4.0 net) wells to the first-half program.
• Peace River potential -- all five (5.0 net) vertical OSE wells planned in the company's 2024 capital program were completed. Initial indications from the well cores are encouraging, helping to further delineate Obsidian's extensive land position and identify new locations and development areas.
• Active decommissioning program -- the company successfully abandoned a combined net total of 24 wells, two facilities and 88 kilometres of pipeline as part of activities from its decommissioning spend of $10.1-million.

Hedging update

Obsidian's hedging strategy focused on its natural gas position given its concerns regarding natural gas storage levels, leading to a realized gain of $3.8-million in the first quarter of 2024 related to these contracts. The company entered into additional oil contracts for April and May with the contracts noted herein currently in place on a weighted average basis.

Annual and special meeting

The company's annual and special meeting is scheduled for Thursday, May 2, 2024, at 9 a.m. (MT) at the offices of Obsidian Energy, suite 200, 207, 9 Ave. SW, Calgary, Alta. Access to the meeting will, subject to company's bylaws, be limited to essential personnel, registered shareholders and proxyholders entitled to attend and vote at the meeting as well as invited guests.

In association with the meeting, Obsidian's president and CEO, Mr. Loukas, and other members of management will host a webcast presentation after the formal portion of the meeting at 10 a.m. MT (12 p.m. ET).

The presentation will be broadcast live on the Internet and may be accessed either through Obsidian's website or directly at the webcast portal. Those who wish to listen to the presentation should connect at least five minutes prior to the scheduled start time through the following numbers:

• Canada/United States: 1-800-319-4610 (toll-free);
• Toronto: 1-416-915-3239;
• Calgary: 1-403-351-0324.

A question-and-answer session will be held following the presentation. If you wish to submit a question to the company, participants can do so ahead of time after registering on the webcast portal on the Intranet or by e-mailing questions to investor.relations@obsidianenergy.com. The updated corporate presentation and the presentation will be available for replay on Obsidian's website.

We seek Safe Harbor.