-- Launches Sale Process for Alberta Viking
Assets; Ongoing Discussions with CIC Regarding Disposition of PROP;
Plans to Use Any Sale Proceeds to Fund Cardium Growth, Reduce Debt
and Buy Back Shares --
CALGARY, April 2, 2018 /PRNewswire/ - OBSIDIAN ENERGY
LTD. (TSX – OBE, NYSE – OBE.BC) ("Obsidian Energy", the
"Company", "we", "us" or "our") has
retained RBC Capital Markets to explore a potential sale of the
Company's Alberta Viking assets and is engaged in ongoing
discussions with China Investment Corporation ("CIC")
regarding a disposition of the Company's share of jointly owned
Peace River assets. Obsidian
Energy intends to use the proceeds of any such asset sales to
accelerate growth in the Company's prime Cardium assets, pay down
debt and return capital to shareholders through the implementation
of a Normal Course Issuer Bid.
The Company is also announcing a deferral of the proposed share
consolidation and changes to Obsidian Energy's Director
compensation to further align director pay with shareholders.
"Today's announcement is the natural next step in our ongoing
strategy to unlock shareholder value and establish Obsidian Energy
as a growth company focused on optimizing our industry-leading
position in the Cardium," said David
French, President and CEO of Obsidian Energy. "In addition
to exploring the sale of our Alberta Viking and Peace River assets, we are actively reviewing
industry consolidation opportunities with significant synergies and
a focus on creating a company with best-in-class operating
performance, financial discipline and industry-leading growth
prospects."
Over the past three years, Obsidian Energy has divested
approximately $2.3 billion of assets,
significantly improved the Company's financial and operating
performance and eliminated a number of the legacy challenges that
have constrained the Company's relative performance.
"Obsidian Energy's Board and management are working with a sense
of purpose – and opportunity – to create value for all
shareholders," said Jay Thornton,
Board Chair. "This process started in Q3 last year and accelerated
in October when the Board selected RBC Capital Markets as our lead
financial advisor to work alongside management to action any and
all value creating transactions. We believe in the Company's future
and are excited about its potential."
With production of approximately 2,500 boe/d, the Alberta Viking
asset offers a mix of light-oil and gas with high-netback shorter
cycle wells, an industry-leading land position and extensive owned
infrastructure over the entire Esther area. The Peace River
Oil Partnership ("PROP") is a joint venture between Obsidian
Energy and CIC, with net production to Obsidian Energy of
approximately 5,000 boe/d and a large position in a crude oil
resource highly amenable to conventional cold-flow production. PROP
has de-risked its large resource base and has many years of
inventory with attractive economics.
The Company expects to conclude a sale of the Alberta Viking
assets by the end of the second quarter of 2018. Discussions with
CIC are expected to continue into the fall before a formal process
is started.
Planned Use of Proceeds
The Board will determine the
right balance of accelerated Cardium growth, debt repayment and
share buybacks based on changes in the Company's borrowing base as
a result of any production being sold, and Obsidian Energy's share
price at the time of any such sale. The Company intends to apply
for a Notice of Intention to Make a Normal Course Issuer Bid (the
"Bid") with the Toronto Stock Exchange (the "TSX")
upon closing of the potential transaction. The Bid will be subject
to the approval of the TSX and the Company's lenders. Obsidian
Energy intends to repurchase shares on both the TSX and New York
Stock Exchange (the "NYSE") and/or alternative Canadian
trading systems.
Proposed Share Consolidation to Cure NYSE Listing
Requirements to Be Deferred, or Otherwise Cancelled
Obsidian Energy previously announced its intention to propose a
consolidation of the Company's outstanding common shares at the
upcoming Annual and Special Meeting, subject to Board discretion.
The Board and management have listened to investor feedback
encouraging the Board not to proceed with the share consolidation
at this time. Moreover, the Board and management strongly believe
that the continued execution of the Company's strategy will bring
Obsidian Energy into compliance with the NYSE's listing
requirements within the applicable time frame. The Board will,
however, continue to seek the discretion to consolidate the common
shares, on the same ratio as previously stated, but only in the
event that the Company is not in compliance with the minimum share
price listing standard on the latest date necessary to potentially
avoid the delisting from the NYSE.
Obsidian Energy Directors Elect to Receive All Fees in Equity
versus Cash
As an expression of confidence in the Company's
future and to even more firmly align the interests of Directors
with the interests of Obsidian Energy shareholders, each member of
the Board of Directors has elected to take all of his or her fees
in the form of equity (e.g. Deferred Share Units) going
forward.
Obsidian Energy shares are listed on the Toronto Stock Exchange
under the symbol "OBE" and the New York Stock Exchange under the
symbol "OBE.BC".
OBSIDIAN ENERGY: Suite 200, 207 - 9th Avenue SW, Calgary,
Alberta T2P 1K3, Phone: 403-777-2500, Fax: 403-777-2699, Toll
Free: 1-866-693-2707, Website: www.obsidianenergy.com;
Investor Relations: Toll Free: 1-888-770-2633, E-mail:
investor_relations@obsidianenergy.com
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
particular, this document contains forward-looking statements
pertaining to, without limitation, the following: a potential sale
of the Company's Alberta Viking assets and the engagement of
discussions with CIC regarding a disposition of the Company's share
of jointly owned Peace River
assets; how the Company intends to use the proceeds of any such
asset sales; that we are actively reviewing industry consolidation
opportunities with significant synergies and are focusing on
creating a company with best-in-class operating performance,
financial discipline and industry-leading growth prospects; that we
believe in the Company's future and are excited about its
potential; that PROP has de-risked its large resource base and has
many years of inventory with attractive economics; the timing for
potential sales and discussions to occur; that the Company intends
to apply for a Bid, the expected timing for doing so and where it
intends to repurchase those shares; the belief that the continued
execution of the Company's strategy will bring Obsidian Energy into
compliance with the NYSE's listing requirements within the
applicable time frame; that the Company will continue to seek to
consolidate the common shares only on the reasons set forth; and
that each of the members of the Board Of Directors will take their
fees in the form of equity going forward.
With respect to forward-looking statements contained in this
document, we have made assumptions regarding, among other
things 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.
SOURCE Obsidian Energy Ltd.