CALGARY, AB, Nov. 16, 2020 /PRNewswire/ - OBSIDIAN ENERGY LTD.
(TSX: OBE) (OTCQX: OBELF) ("Obsidian Energy", "Company", "we", or
"our") today announced that leading independent proxy advisory
firms, Institutional Shareholder Services Inc. ("ISS") and Glass,
Lewis & Co ("Glass Lewis") both recommend that, at the
Company's upcoming special meeting of shareholders on November 23, 2020 (the "Meeting"), Obsidian
Energy shareholders vote FOR the resolution (the "Issuance
Resolution") approving the issuance of up to 72,282,992 common
shares of Obsidian Energy in connection with the Company's exchange
offer (the "Offer") to purchase all of the common shares of
Bonterra Energy Corp. ("Bonterra") (TSX – BNE).
"The positive vote recommendation from both ISS and Glass Lewis
reinforces our belief that combining Obsidian Energy and Bonterra
is in the best interests of both companies' respective
shareholders," said Steve Loukas,
Obsidian Energy's Interim President and CEO. "The combined entity
will create the Cardium Champion, having a far superior future than
what either company could achieve on a standalone basis. Together,
our lower cost structure and improved capital efficiency would
generate substantially more free cash flow, allowing us to
accelerate debt repayment, improve our financial position and
provide a clear path to share price appreciation."
Following its review of the Offer, ISS stated "[t]he rationale
behind the proposed acquisition appears sound. It is anticipated
that the merger of the two companies would create a top 20 Western
Canadian oil producer with a lower debt-to-EBITDA, higher free cash
flow, and a stronger overall business. The combined company would
be the largest Cardium-focused firm and should be positioned to be
a Cardium consolidator with the ability to pursue further synergies
from follow-on transactions. Furthermore, the combined company
should be able to reduce its debt ratios and an improved financial
outlook should improve its access to capital. Finally, the combined
company is expected to benefit from synergies of around
$50 million after the first year. In
light of these benefits, shareholder approval of this resolution is
warranted."
Glass Lewis also commented that "[t]he combined company would
likely stand to benefit from having enhanced scale and a strong
balance sheet, which in turn could improve its standing with
investors, enhance its ability to pursue follow-on acquisitions and
provide it with greater access to capital."
Vote FOR the Creation of the Cardium Champion
Obsidian Energy recommends that its shareholders vote FOR the
Issuance Resolution at the Meeting. A vote FOR the Issuance
Resolution will be a step towards creating the Cardium Champion, a
combined entity with greater size, improved financial metrics,
increased capital markets relevance and enhanced positioning for
future Cardium consolidation, relative to either Obsidian Energy or
Bonterra continuing on a standalone basis. For further
details of the Issuance Resolution, Obsidian Energy shareholders
are encouraged to carefully read the Company's management
information circular dated October 16,
2020 (the "Information Circular"), which is available in
Canada on SEDAR at www.sedar.com,
in the United States on EDGAR at
www.sec.gov and on the Company's website at
www.obsidianenergy.com.
Meeting Information
The Meeting will be held at the corporate head office of
Obsidian Energy, located at 200 – 207 9th Avenue SW Calgary, Alberta on Monday, November 23, 2020, at 9:00 a.m. (Mountain Standard Time) to consider
and, if thought advisable, to pass, with or without variation, the
Issuance Resolution and to transact such further and other business
as may properly be brought before the Meeting or any adjournment or
postponement thereof.
Although Obsidian Energy currently intends to hold the Meeting
in-person, due to restrictions on gatherings implemented by the
Government of Alberta in response
to the continually evolving COVID-19 (Coronavirus) outbreak,
guidelines issued with respect to social distancing and out of
concern for the wellbeing of all participants, we strongly
recommend that shareholders not attend the Meeting in-person. Any
person attending the Meeting will be required to follow the
Company's health and safety measures, which will include physical
distancing, use of personal protective equipment (including
mandatory use of facemasks) and completion of a health-assessment
prior to being admitted to the Meeting. The precautionary measures
being taken by the Company are intended to reduce the potential
risks associated with the COVID-19 pandemic, and they may be
further updated as necessary to take into account evolving
recommendations and directives of public health
authorities. In the event it is not possible or advisable to
hold the Meeting in person, we will announce alternative
arrangements for the Meeting as promptly as practicable, which may
include holding the Meeting entirely by electronic means, telephone
or other communication facilities. Please monitor our website at
www.obsidianenergy.com for updated information.
ADDITIONAL READER ADVISORIES
NO OFFER OR SOLICITATION
This news release does not constitute an offer to buy or sell,
or a solicitation of an offer to sell or buy, any securities of
Obsidian Energy or Bonterra. The Offer is subject to a registration
statement (the "Registration Statement") filed with the United
States Securities and Exchange Commission (the "SEC") under the
U.S. Securities Act of 1933, as amended. The Registration Statement
includes various documents related to such offer and sale. OBSIDIAN
ENERGY URGES INVESTORS AND SHAREHOLDERS OF BONTERRA TO READ THE
REGISTRATION STATEMENT AND ANY AND ALL OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC IN CONNECTION WITH THE OFFER AS
THOSE DOCUMENTS BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN OR WILL
CONTAIN IMPORTANT INFORMATION. You may obtain a free copy of such
registration statement, as well as other relevant filings regarding
Obsidian Energy or the Offer, at the SEC's website (www.sec.gov)
under the issuer profile for Obsidian Energy, or on request without
charge from the Corporate Secretary of Obsidian Energy at Suite
200, 207 – 9th Avenue, SW, Calgary,
Alberta T2P 1K3.
NON-GAAP MEASURES
This news release contains references to the terms EBITDA, debt
and free cash flow which do not have a standardized meaning
prescribed by International Financial Reporting Standards and
therefore are considered non-GAAP measures; accordingly, they may
not be comparable to similar measures provided by other issuers.
EBITDA is net earnings (loss) plus finance expenses (income),
provisions for (recovery of) income taxes, and depletion,
depreciation and amortization. Debt is bank debt, notes and, solely
in respect of Bonterra, subordinated debt (including the
subordinated note(s) issued by Bonterra to private related party
investors). Free cash flow is funds flow from operations less
capital and decommissioning expenditures. Funds flow from
operations is cash flow from operating activities before changes in
non-cash working capital, decommissioning expenditures, onerous
office lease settlements, the effects of financing related
transactions from foreign exchange contracts and debt repayments,
restructuring charges, transaction costs and certain other expenses
and is representative of cash related to continuing operations.
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: that
the combination is in the best interests of both company's
shareholders; and the anticipated strategic, operational and
financial benefits and synergies that may result from the proposed
combination between Obsidian Energy and Bonterra.
With respect to forward-looking statements contained in this
document, Obsidian Energy has made assumptions regarding, among
other things: that both Obsidian Energy and Bonterra, each of which
are subject to short term extensions on their respective senior
revolving credit facilities, continue to obtain extensions in
respect thereof and otherwise continue to satisfy the applicable
covenants under such facilities, including following the completion
of the Offer and any subsequent second step transaction, the
ability to complete the Offer and the proposed combination,
integrate Obsidian Energy's and Bonterra's businesses and
operations and realize financial, operational and other synergies
from the proposed combination; that each of Obsidian Energy,
Bonterra and, following the completion of the Offer, the combined
entity will have the ability to continue as a going concern and
realize its assets and discharge its liabilities in the normal
course of business; the impact of regional and/or global health
related events, including the ongoing COVID-19 pandemic, on energy
demand; that the combined entity's operations and production will
not be disrupted by circumstances attributable to the COVID-19
pandemic and the responses of governments and the public to the
pandemic; that Bonterra's publicly available information, including
it public reports and securities filings as of November 15, 2020, are accurate and complete;
global energy policies going forward, including the continued
agreement of members of OPEC, Russia and other nations to adhere to existing
production quotas or further reduce production quotas; Obsidian
Energy's ability to execute on its plans as described herein and in
its other disclosure documents and the impact that the successful
execution of such plans will have on Obsidian Energy and, following
the combination, the combined entity and the combined entities'
respective stakeholders; 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, West Texas Intermediate (WTI) and
world oil and natural gas prices; future crude oil, natural gas
liquids and natural gas production levels, including that we will
not be required to shut-in additional production due to the
continuation of low commodity prices or the further deterioration
of commodity prices and our expectations regarding when commodity
prices will improve such that shut-in properties can be returned to
production; future exchange rates and interest rates; future debt
levels; the ability to execute our capital programs as planned
without significant adverse impacts from various factors beyond our
control, including weather, wild fires, infrastructure access and
delays in obtaining regulatory approvals and third party consents;
the combined entity's ability to obtain equipment in a timely
manner to carry out development activities and the costs thereof;
the combined entity's ability to market its oil and natural gas
successfully to current and new customers; the combined entity's
ability to obtain financing on acceptable terms; and the combined
entity's ability to add production and reserves through development
and exploitation activities.
Although Obsidian Energy believes 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 actual performance and financial results to differ
materially from any estimates or projections of future performance
or results expressed or implied by such forward-looking statements.
Such assumptions, risks and uncertainties are described in the
Information Circular and Obsidian Energy's Annual Information Form
and other public filings, available in Canada on SEDAR at www.sedar.com and in
the United States on EDGAR at
www.sec.gov. Readers are cautioned that such assumptions, risks and
uncertainties 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.
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
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SOURCE Obsidian Energy Ltd.
