CALGARY, April 16, 2019 /CNW/ - OBSIDIAN ENERGY LTD.
(TSX – OBE, NYSE – OBE.BC) ("Obsidian Energy", the
"Company", "we", "us" or "our") is
pleased to announce an operational update on our Cardium drilling
program.
"While still in the early days of my tenure as Interim President
and CEO of Obsidian Energy, I continue to be excited by the high
caliber of our Cardium program and the future for long term growth.
We continued to march through our development program delivering
volumes as expected, on time, and on budget. Given the vast
inventory of similar locations in Willesden Green and throughout
our Cardium properties, we see years of compelling repeatable
development campaigns to come. We are examining every facet of
the business to ensure we are always making improvements, including
a continual review of our capital allocation, cost structure, and
portfolio composition." commented Michael
Faust, Interim President and CEO.
Continued Cardium Success
After proving the viability of a quick cycle, light oil, primary
production campaign in early 2018, we began a dedicated execution
program starting in July 2018 and
carrying through to break-up in March
2019. All 19 wells have now been completed and are on
production. These wells continue to perform as expected,
demonstrating the repeatability of our development style as we
drill the first of several core Cardium areas. The average drill,
complete, equip, and tie-in costs of all 19 wells came in at
$3.8 million per well and without any
safety or environmental incidents.
The 14 wells drilled in 2018 averaged initial production rates
over the first 30 days of 540 boe per day and 87% oil. The 2019
portion of that program included five wells, the last three of
which came on production in the past week. These three wells are
showing extremely robust initial production rates, with the pad
averaging single day peak rates of over 1,000 boe per day per
well.
The Company will resume drilling of its fast cycle primary
development program in the Cardium following spring break-up in
July 2019 and plan to continue
through to March 2020. All of our
planned 2019 locations will be fully licensed and drill ready in
the very near future. We remain committed to execute our program
and keep our spend within Funds Flow from Operations, and therefore
will remain flexible and responsive to changes in commodity
price.
Oil and Gas Information Advisory
Barrels of oil equivalent ("boe") may be misleading,
particularly if used in isolation. A boe conversion ratio of six
thousand cubic feet of natural gas to one barrel of crude oil is
based on an energy equivalency conversion method primarily
applicable at the burner tip and does not represent a value
equivalency at the wellhead. Given that the value ratio based on
the current price of crude oil as compared to natural gas is
significantly different from the energy equivalency conversion
ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading
as an indication of value.
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. Please note that
initial production and or peak rates are not necessarily indicative
of long-term performance or ultimate recovery. In particular, this
document contains forward-looking statements pertaining to, without
limitation, the following: the potential for long term growth and
inventory for repeatable compelling development; the expected full
cycle IRRs; when we expect to resume drilling and duration; that
all of our planned 2019 locations will be fully licensed and drill
ready; and that we remain committed to execute our program and keep
our spend within Funds Flow from Operations and remain flexible and
responsive to changes in commodity prices.
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; the
impact of the Alberta Government curtailment; 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.
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SOURCE Obsidian Energy Ltd.