Obsidian Energy Corporate Presentation May 2019
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Obsidian EnergyCorporate Presentation
May 2019
Important Notice to the Readers
2
This presentation should be read in conjunction with the Companyrsquos unaudited consolidated financial statements Managements Discussion and Analysis (MDampA) for the three months ended March 31 2019 All dollar amounts contained in this presentation are expressed in millions of Canadian dollars unless otherwise indicated
Certain financial measures included in this presentation do not have a standardized meaning prescribed by International Financial Reporting Standards (ldquoIFRSrdquo) and therefore are considered non-generally accepted accounting practice (non-GAAP) measures accordingly they may not be comparable to similar measures provided by other issuers This presentation also contains oil and gas disclosures various industry terms and forward-looking statements including various assumptions on which such forward-looking statements are based and related risk factors Please see the Companys disclosures located in the Appendix amp Endnotes at the end of this presentation for further details regarding these matters
All slides in this presentation should be read in conjunction with ldquoDefinitions and Industry Termsrdquo ldquoNon-GAAP Measure Advisoryrdquo ldquoOil and Gas Information Advisoryrdquo ldquoReserves Disclosure and Definitions Advisoryrdquo and ldquoForward-Looking Advisoryrdquo Unless noted otherwise the pricing assumption for slide 3 are applicable for all the of the slides All locations are considered to be Unbooked locations unless otherwise noted
Corporate Overview
3
Deep Basin
Peace River(1)
Alberta Viking
4449 boed Q1 2019Cold flow heavy oil
Manage base production and commercialize
1501 boed Q1 2019Liquids rich deeper development
underlying CardiumInfrastructure capacity management
and opportunistic partnering
1009 boed Q1 2019Higher GOR oil play
Strategy is base production management and commercialization
Market SummaryTicker Symbol OBE
Shares Outstanding MM 510
Market Value MM $194
Net Debt MM $497
Enterprise Value MM $691
Corporate SummaryQ1 2019 Production boed 27651
Reserves (2P YE 2018) mmboe` 125
RLI (2P YE 2018) years 13
PDP Decline (YE 2018) 16
NPV10 (2P YE 2018) MM $1702
2019 GuidanceProduction boed 26750 ndash 27750
Capital Expenditures Inc Decommissioning
MM $120
Production Growth Flat
Operating Costs $boe $1400 - $1450
General amp Administrative
$boe $200 - $250
Cardium19375 boed Q1 2019
Light oil conventional developmentManufacturing model for exhaustive
repeatable inventoryLeverage shallow decline base
Legacy Asset Production of 1317 boed in Q1 2019 (1) Currently under Purchase and Sale Agreement per press release dated May 17 2019
Strategic Priorities
bull Target debt EBITDA lt 15X by 2022
bull Spend within cash flow - ability to toggle capital spend based on commodity pricing
bull Rationalize portfolio divest low margin assets to maximize cash flow and deleverage balance sheet
bull Targeted investments to grow
Cardium light oil production
gt20 over 3 years
bull Continued improvements in
efficiency costs and recovery
rates
bull Utilize existing infrastructure
and decades of inventory
identified to create industry
leading value growth
Unlock value from Cardium asset base
1
2
3
bull Target annual corporate production growth of 5-10
bull Invest in fast cycle light oil development
bull Modest spending on secondary recovery to maintain low decline rates
Production and cash flow growth through modest investments
Strong capital discipline to protect balance sheet
4
The Cardium Advantage
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Important Notice to the Readers
2
This presentation should be read in conjunction with the Companyrsquos unaudited consolidated financial statements Managements Discussion and Analysis (MDampA) for the three months ended March 31 2019 All dollar amounts contained in this presentation are expressed in millions of Canadian dollars unless otherwise indicated
Certain financial measures included in this presentation do not have a standardized meaning prescribed by International Financial Reporting Standards (ldquoIFRSrdquo) and therefore are considered non-generally accepted accounting practice (non-GAAP) measures accordingly they may not be comparable to similar measures provided by other issuers This presentation also contains oil and gas disclosures various industry terms and forward-looking statements including various assumptions on which such forward-looking statements are based and related risk factors Please see the Companys disclosures located in the Appendix amp Endnotes at the end of this presentation for further details regarding these matters
All slides in this presentation should be read in conjunction with ldquoDefinitions and Industry Termsrdquo ldquoNon-GAAP Measure Advisoryrdquo ldquoOil and Gas Information Advisoryrdquo ldquoReserves Disclosure and Definitions Advisoryrdquo and ldquoForward-Looking Advisoryrdquo Unless noted otherwise the pricing assumption for slide 3 are applicable for all the of the slides All locations are considered to be Unbooked locations unless otherwise noted
Corporate Overview
3
Deep Basin
Peace River(1)
Alberta Viking
4449 boed Q1 2019Cold flow heavy oil
Manage base production and commercialize
1501 boed Q1 2019Liquids rich deeper development
underlying CardiumInfrastructure capacity management
and opportunistic partnering
1009 boed Q1 2019Higher GOR oil play
Strategy is base production management and commercialization
Market SummaryTicker Symbol OBE
Shares Outstanding MM 510
Market Value MM $194
Net Debt MM $497
Enterprise Value MM $691
Corporate SummaryQ1 2019 Production boed 27651
Reserves (2P YE 2018) mmboe` 125
RLI (2P YE 2018) years 13
PDP Decline (YE 2018) 16
NPV10 (2P YE 2018) MM $1702
2019 GuidanceProduction boed 26750 ndash 27750
Capital Expenditures Inc Decommissioning
MM $120
Production Growth Flat
Operating Costs $boe $1400 - $1450
General amp Administrative
$boe $200 - $250
Cardium19375 boed Q1 2019
Light oil conventional developmentManufacturing model for exhaustive
repeatable inventoryLeverage shallow decline base
Legacy Asset Production of 1317 boed in Q1 2019 (1) Currently under Purchase and Sale Agreement per press release dated May 17 2019
Strategic Priorities
bull Target debt EBITDA lt 15X by 2022
bull Spend within cash flow - ability to toggle capital spend based on commodity pricing
bull Rationalize portfolio divest low margin assets to maximize cash flow and deleverage balance sheet
bull Targeted investments to grow
Cardium light oil production
gt20 over 3 years
bull Continued improvements in
efficiency costs and recovery
rates
bull Utilize existing infrastructure
and decades of inventory
identified to create industry
leading value growth
Unlock value from Cardium asset base
1
2
3
bull Target annual corporate production growth of 5-10
bull Invest in fast cycle light oil development
bull Modest spending on secondary recovery to maintain low decline rates
Production and cash flow growth through modest investments
Strong capital discipline to protect balance sheet
4
The Cardium Advantage
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Corporate Overview
3
Deep Basin
Peace River(1)
Alberta Viking
4449 boed Q1 2019Cold flow heavy oil
Manage base production and commercialize
1501 boed Q1 2019Liquids rich deeper development
underlying CardiumInfrastructure capacity management
and opportunistic partnering
1009 boed Q1 2019Higher GOR oil play
Strategy is base production management and commercialization
Market SummaryTicker Symbol OBE
Shares Outstanding MM 510
Market Value MM $194
Net Debt MM $497
Enterprise Value MM $691
Corporate SummaryQ1 2019 Production boed 27651
Reserves (2P YE 2018) mmboe` 125
RLI (2P YE 2018) years 13
PDP Decline (YE 2018) 16
NPV10 (2P YE 2018) MM $1702
2019 GuidanceProduction boed 26750 ndash 27750
Capital Expenditures Inc Decommissioning
MM $120
Production Growth Flat
Operating Costs $boe $1400 - $1450
General amp Administrative
$boe $200 - $250
Cardium19375 boed Q1 2019
Light oil conventional developmentManufacturing model for exhaustive
repeatable inventoryLeverage shallow decline base
Legacy Asset Production of 1317 boed in Q1 2019 (1) Currently under Purchase and Sale Agreement per press release dated May 17 2019
Strategic Priorities
bull Target debt EBITDA lt 15X by 2022
bull Spend within cash flow - ability to toggle capital spend based on commodity pricing
bull Rationalize portfolio divest low margin assets to maximize cash flow and deleverage balance sheet
bull Targeted investments to grow
Cardium light oil production
gt20 over 3 years
bull Continued improvements in
efficiency costs and recovery
rates
bull Utilize existing infrastructure
and decades of inventory
identified to create industry
leading value growth
Unlock value from Cardium asset base
1
2
3
bull Target annual corporate production growth of 5-10
bull Invest in fast cycle light oil development
bull Modest spending on secondary recovery to maintain low decline rates
Production and cash flow growth through modest investments
Strong capital discipline to protect balance sheet
4
The Cardium Advantage
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Strategic Priorities
bull Target debt EBITDA lt 15X by 2022
bull Spend within cash flow - ability to toggle capital spend based on commodity pricing
bull Rationalize portfolio divest low margin assets to maximize cash flow and deleverage balance sheet
bull Targeted investments to grow
Cardium light oil production
gt20 over 3 years
bull Continued improvements in
efficiency costs and recovery
rates
bull Utilize existing infrastructure
and decades of inventory
identified to create industry
leading value growth
Unlock value from Cardium asset base
1
2
3
bull Target annual corporate production growth of 5-10
bull Invest in fast cycle light oil development
bull Modest spending on secondary recovery to maintain low decline rates
Production and cash flow growth through modest investments
Strong capital discipline to protect balance sheet
4
The Cardium Advantage
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
The Cardium Advantage
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Willesden Green 2018-2019 Program Summary
Crimson Lake
6
R8W5
T43
19 Well Program
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
2 miles
3 kms
INDEX MAP
1
19 Well Program ResultsAverage IP30 rates of 538 boed (86 oil) with an average capital cost of $38MM per well
H1 2019 Drilling ProgramSuccessfully drilled and completed five net Cardium wells in the quarter
12-18 three well pad delivered average IP30 rates of 620 boed per well (83 oil) further de-risksing our locations to the North
1
Two additional Cardium wells added to H2 2019
program
H2 2019 Capital Summary
$50MM 76
$3MM 5
$4MM 6
$9MM 14
$9MM 14
Cardium
Base ProductionEnhancements
Non-Op Development
Enviro
Maintenance amp Corporate
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Revitalization of the Cardium Play
Historical Cardium PoolOil Production (bbld)
Historical Cardium PoolTotal Well Count ()
The Cardium remains one of the premier plays in the Western Canadian Sedimentary Basin with six decades of production
history and significant remaining untapped potential
Historical Willesden GreenCumulative Oil Production (Mbbld)
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Horizontals
Deviated
Verticals
Introduction of horizontal
technology has awoken the giant
0
1000
2000
3000
4000
5000
6000
7000 Horizontals
Deviated
Verticals
7
0
10
20
30
40
50
60
70
80
0 20 40 60
Months
2014 - OBE 26 Wells 2014 - Industry 56 Wells
2015 - OBE 29 Wells 2015 - Industry 17 Wells
2016 - OBE 3 Wells 2016 - Industry 5 Wells
2017 - OBE 5 Wells 2017 - Industry 22 Wells
2018 - OBE 13 Wells 2018 - Industry 36 Wells
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Breaking Down the Cardium Play Fairways - A Large High-graded Inventory
bull Continued Eastward extension of Crimson Lake development program
bull De-risked by new competitor drilling in 2018
bull Existing flexible and scalable infrastructure
86Type Curve Locations
bull Individual fairways and unit boundaries in historically pressure supported properties
bull Ability to waterflood for minimal capital through existing infrastructure
bull Technical de-risking through geo-modelling
171Type Curve Locations
bull Banked oil from historical pressure maintenance
bull Top quality reservoir previously ignored by vertical development
bull Recent top quartile results
bull Existing flexible and scalable infrastructure
54Type Curve Locations
bull Well established productive trend significantly de-risked by major Cardium players
bull Halo underdeveloped acreage
bull Easy access to existing OBE facilities with egress
132Type Curve Locations
West Pembina
Crimson Lake
Central Pembina
East Crimson
448 type curve assigned locations600+ total identified inventory
126 YE 2018 Booked Cardium Locations
CrimsonLake
Central Pembina
West Pembina
East Crimson
10 miles
15 kms
INDEX MAP
OBE Cardium WI land
Peer lands
R10W5
T45
8
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Crimson Lake - Near Term Focus
bull Banked oil from historical pressure maintenance in WGCU9
bull Top quality reservoir previously ignored by historical development due to topographic and infrastructure challenges for vertical drilling
bull Existing flexible and scalable infrastructure at the Crimson 13-27 Facility with optionality to East Crimson
Potential inventory build up with tiers
The Obsidian Energy flag pole for revitalized primary development on our Cardium acreage
Crimson Lake Statistics
Total Acreage (gross sections) 8925
Q1 2019 Production (boed) 9978
Average Working Interest () 89
2018 YE 2P Booked Locations () 36
Inventory shown on map () 54
9
Crimson Lake
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU9
Drilled amp Producing
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE East Crimson land
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
0
20
40
60
80
100
120
140
160
180
0
100
200
300
400
500
600
700
800
900
0 12 24
Cu
mu
lati
ve
Pro
d (
mb
oe
)
Pro
du
cti
on
Ra
te (
bo
ed
)
Months
2600m Type Curve
2200m Type Curve
2200m 2600m
Drill amp Complete $MM $32 $35
Equip amp Tie $MM $05 $05
Total $MM $37 $40
EUR Mboe 180 210
Oil IP30 bbld 410 484
Total IP30 boed 532 627
Oil IP365 bbld 157 186
Total IP365 boed 243 286
NPV BTAX 10 $MM $20 $27
PIR 10 x 05 x 07 x
IRR 90 120
Payout years 09 08
12M Efficiency $boed $15500 $14000
FampD $boe $2075 $1910
Crimson Lake Economics
Production
Economics
Type CurveRate vs TimeCumulative Oil vs TimeCost Inputs
10
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
East Crimson ndash Mid Term Focus
bull Continued Eastward extension of the Crimson Lake development program
bull Area has been de-risked by recent drilling results supporting the revitalized development
bull Shared and scalable infrastructure with the Crimson Lake program
bull Combination of pressure supported edge drilling and underdeveloped unit fairways
Moving the Crimson success eastward and onward
East Crimson Statistics
Total Acreage (gross sections) 5471
Q1 2019 Production (boed) 2182
Average Working Interest () 82
2018 YE 2P Booked Locations () 19
Inventory shown on map () 86
11
East Crimson
3 miles
5 kms
INDEX MAPR8W5
T43
WGCU6
WGCU1
WGCU3
WGCU2
H2 2019 Program
Inventory
Unit land
OBE Cardium WI land
OBE Crimson Lake land
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Targeting Oil Banks in Historic Waterflood
Targeting Oil Banks Horizontal development in pressure maintained fields like East Crimson has two key target types
bull Banked oil on area edges where legacy drilling has failed to capture reserves
bull Underdeveloped fairways within the secondary recovery area where existing vertical well spacing has insufficient recovery
Keys To SuccessRecent production by peers has verified the modelling in the area and further supports inventory
bull Understanding reservoir fluid and movement over time through reservoir modelling to find underdeveloped fairways
bull Horizontal well placement closer to production (away from injection) to prevent water production
bull Utilize infield infrastructure to reduce capital costs
3 miles
5 kms
WGCU9
R6W5
WGCU6
WGCU1
WGCU2
T42
474 bopd0718
482 bopd0318
181 bopd0617
164 bopd0218
High cum
oil recovery
Low cum
oil recovery
WGCU3
H2 2019 Program
Inventory
Peer well
Unit land
OBE Cardium WI land
473 bopd0818
380 bopd1217
405 bopd0917
252 bopd0418
226 bopd0418
12
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
West Pembina ndash Mid Term Focus
bull Significant offsetting production from established Cardium players throughout the West side of Pembina
bull Underdeveloped halo and core acreagebull Existing flexible and scalable infrastructure with
significant available capacity in multiple facilitiesbull Additional uncaptured inventory in non-operated
units in Northern area
Proven oil rich Cardium trend with undeveloped primary development acreage
West Pembina Statistics
Total Acreage (gross sections) 8514
Q1 2019 Production (boed) 4214
Average Working Interest () 59
2018 YE 2P Booked Locations () 38
Inventory shown on map () 132
West PembinaWest Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
CCU4
CCU5
CCU1
PCU11
OBE 2019 optionality well
OBE future well
Unit land
OBE Cardium WI land
OBE Central Pembina land
13
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Central Pembina ndash Long Term Focus
bull Strong technical model is the foundation for additional development from unswept fairways
bull Ability to de-risk through geological and reservoir modelling
bull Proven and booked waterflood response as the foundation for growth
bull Ability to grow waterflood scale through existing wells and infrastructure for minimal capital cost allows for corporate decline maintenance
The epicenter of low decline and pressure maintained development
Central Pembina Statistics
Total Acreage (gross sections) 20082
Q1 2019 Production (boed) 4501
Average Working Interest () 91
2018 YE 2P Booked Locations () 56
Inventory shown on map () 171
Central Pembina
3 miles
5 kms
INDEX MAPR10W5
T48
OBE future well
Unit land
OBE Cardium WI land
OBE West Pembina land
PBLCU1
PCU3
PCU9
PCU31
NWPCU1
PECU1
PCU14CCU3
PCU4
14
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
bull Conservative reserve booking with only 175 net 2P locations with 126 in the Cardium
bull Low average three-year PDP decline rate of 158
bull NPV10 equates to $11bn $13bn and $17bn on PDP 1P and 2P basis respectively
bull Strong self-funded cash flow from Cardium to be reinvested into the asset driving growth in production reserves value and cash flow
2P Reserves (mmboe) 2019E Production ()
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
6
18
31
72
Deep basin PROP Viking
Legacy Cardium
312
51
104
Deep basin PROP VikingLegacy Cardium
Reserves and production summary
Reserves (mmboe) NPV (CAD $MM)
Asset PDP 1P 2P PDP 1P 2P
Cardium 56 77 104 980 1119 1457
Other Assets 10 15 20 148 175 245
Sum 66 92 125 1128 1294 1702
2019 2020 2021 2022 2023
Cardium Growth Other Assets Cardium
15
Comments 2P Production Profile and Targets
Reserves Overview Reserves and Production Break Down
Cardium Growth above 2P Reserves
Note PROP accounts for 6 8 and 12 mmboe and NPV of $80MM $96MM and $137MM on a PDP 1P and 2P basis
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Why invest in Obsidian Energy
16
Main asset Cardium offers low
production costs and quick paybacks
bull Low break-even price and quick paybacks
bull Manufacturing approach - repeatable low cost high-netback light-oil wells with existing infrastructure
bull Portfolio optimization has been key to reduce operating costs
Material asset base with significant
production
bull 2P reserves of 125 mmboe across four primary assets ~83 from the Cardium area
bull Q1 2019 production of 27651 boed ndash with significant production growth potential identified
bull 19375 boed of production coming from the Cardium area with 70 Q1 2019 liquids weighting
Highly de-risked reserve base
bull Low risk asset base - very high proportion of PDP relative to 1P and 2P reserves -66 92 125 mmboe on a PDP 1P 2P reserves
bull PDP decline of ~16 provides reliable base production
bull Substantial reserve life ~8 10 13 years on a PDP 1P 2P reserves basis respectively
bull Owned infrastructure provides control and flexibility
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Appendix amp Endnotes
17
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
$585
$397
$182$147 $129
$0
$100
$200
$300
$400
$500
$600
$700
2014 2015 2016 2017 2018 Target
bull Decommissioning liability is the estimated liability for future abandonment obligations on the Companyrsquos wells facilities and pipelines
bull Obsidian has delivered significant reductions on our Decommissioning liability through successful strategic initiatives in the last 5 years
bull Focused asset sales removing high liability properties
bull Cost reduction strategies implemented to improve efficiencies and maximize the impact per dollar spent
bull Bespoke decommissioning estimates for our facilities
bull Alberta Energy Regulators new Area Based Closure program will result in further material reductions
bull Provide input on current and future Regulatory initiatives related to ARO
bull gt30 reduction in per-well abandonment costs in 2018
bull 35 reduction to our well abandonment and 40-70 reduction to our pipeline discontinuation estimates expected by year-end 2019
bull Provides opportunity to shape current and future regulatory initiatives in Alberta
18
Wells 69
Pipelines 5
Facilities 26
CADm
78 decrease
Decommissioning Liability Improvement
Decommissioning Liability Overview
Commentary
Historical Reductions in Abandonment Costs
Note The disposition of PROP and additional liabilities as stated in the press release dated May 17 2019 is estimated to reduce Obsidian Energyrsquos discounted liability by ~$12MM
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Current hedge position and strategy
bull Hedging program and capital flexibility improve ability to live within funds flow from operations
bull Hedges will be done on a CAD basis to avoid FX management
bull Where liquidity exists we plan to hedge MSW and WCS differentials to protect actual wellhead pricing
19
Bbld
(1) Hedges converted into USD with FX of CADUSD 133x
Hedge Position and Exercise PriceHedging StrategyBbld
Exercise price
CAD$7078
CAD$8347
CAD$8210
0
1000
2000
3000
4000
5000
6000
7000
Q2 2019 Q3 2019 Q4 2019
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Experienced management and strong technical team
20
David Hendry Chief Financial Officer
bull 25 years of extensive financial experience
bull Previously VP of Finance at Obsidian Energy and Talisman Energy including working overseas for 9 years in Norway and the UK with Talisman
bull Public accounting for over 9 years with increasing responsibility largely at PricewaterhouseCoopers
Aaron Smith Senior Vice President Development amp Operations
bull 20 years of engineering expertise across a broad range of technical and leadership roles
bull Prior to Obsidian VP-level leadership of Production Development and Marketing Teams at Sinopec Canada
bull Early career experience in Corporate Planning Completions and Reservoir Engineering Encana Corp
Andrew Sweerts Vice President Business Development amp Commercial
bull 25 years of experience in the oil and gas industry
bull Prior to Obsidian VP Operations and Engineering and VP JV Operations and Marketing at Marathon Oil Canada
bull Early career saw increasing responsibility in a variety of technical and commercial positions at Western Oil Sands LP and Suncor Energy
Michael Faust Interim President and Chief Executive Officerbull 35 years of Subsurface and Management experience
bull Prior to Obsidian VP Exploration Land and Business Development at ConocoPhillips Alaska where he oversaw and managed the companyrsquos exploration strategy
bull Prior to ConocoPhillips held various technical and leadership positions of increasing responsibility at ExxonMobil
bull Currently Independent Director at Parker Drilling (PDX) and SAExploration (SAEX)
Drilling and completionsTechnically advanced including design construction and production of multi-stage fractured horizonal wells
Subsurface technicalStrong understanding of geological subsurface with exceptional reservoir modelling engineering and decline mitigation knowledge
OperationsWell-established routines with methodical planning and preparations which has resulted in exemplary safety performance
EmployeesDeeply experienced with long track-record representing the top tier of Cardium expertise
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
End Notes
21
Slide 3 Corporate Overview
Market Value and Enterprise Value was determined at the close of business on May 1 2019 Net Debt and Common
Shares Outstanding is based on Q1 2019 financials Reserves (2P) RLI NPV10 is based on 2P PDP Decline and our
2019 Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production guidance
growth rate is relative to full year 2018 production adjusted of 26900 boe per day for shut in volumes and Carrot Creek
Disposition
Slide 6 Willesden Green 2018-2019 Program Summary
Production amounts are averaged per well and timing is based on internal estimates H2 2019 Capital Summary is
subject to change
Slide 7 Revitalization of the Cardium Play
Historical production and well count is public data sourced from IHS Accumap all producing wells from Cardium
formation Historic cumulative well production is public data sourced from IHS Accumap for horizontal producing wells
within the Willesden Green field rig released 2014 to current
Slide 8 Breaking Down the Cardium Play Fairways
Individual play fairways are Obsidian Energy defined trends displaying similar reservoir and geological characteristics
The ldquo448 type curve assigned locationsrdquo estimates that full field development based on the inventory locations outlined
would achieve an estimated average production consistent with the defined type curve for that fairway Type curves are
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Inventory not included within the assigned 448 has not been
assigned a production profile and has not been included in development plan models or forward-looking production
estimates
Slide 10 Crimson Lake Economics
Economic metrics are defined from provided type curves and on the Plan Pricing Scenario Type curve production is
defined by existing productive wells within the defined trend displaying similar reservoir and geological characteristics
and normalized for horizontal length and completion Development plan well counts are indicative and based on internal
estimates under our Plan Pricing Scenario
Slide 9 11 13 and 14 Asset Slides
All reserve locations are gross location and are defined by Sproule at YE2018 and do not include 2019 development
activity Booked locations include both waterflood locations waterflood development and primary drilling locations
Total acreage and WI are based on highlighted land in the corresponding map WI is calculated across the entire
highlighted region of the map and includes land where Obsidian Energy is not the operator No inventory locations have
been assigned to land where Obsidian Energy is not the operator
Slide 12 Targeting Oil Banks in Historic Waterfloods
Peer posted rates from offsetting wells are peak calendar day rate from public data sourced from IHS Accumap with corresponding
date labelled Cumulative oil recovery is illustrative of total cumulative oil produced to date based on reservoir modelling and are
not reflective of variations in geology waterflood effectiveness or fluid composition
Slide 15 Reserves and Production Summary
Production profiles are based on reserve profiles Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019
Guidance are as disclosed in our press release dated February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019
financials
Slide 16 Why invest in Obsidian Energy
Reserves (PDP 1P 2P) RLI is based on 2P PDP Decline and our 2019 Guidance are as disclosed in our press release dated
February 11 2019 (the ldquoReleaserdquo) Production is based on Q1 2019 financials
Slide 18 Decommissioning Liability Improvement
Cost estimates are based on internal estimates and a discount rate of 65
Slide 19 Current Hedge Position and Strategy
Current Hedge Position and Strategy is based on Q1 2019 financials and press release dated May 10 2019 The ldquoExercise pricerdquo is
a weighted average price and includes USD denominated crude oil hedges in Q2 2019 These USD denominated crude oil hedges
are converted to CAD based on a FX rate of $133
(1) Production profiles are based on reserve profiles(2) Reserves data based on YE 2018 reserves evaluation (Sproule Associates Limited)
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Definitions and Industry Terms
22
Frac means fraccing short name for Hydraulic fracturing a method for extracting oil and natural gas
FX means foreign exchange rate in our case typically refers to C$ to US$ exchange rates
Free Cash Flow which is Funds Flow from Operations less Total Capital Expenditures
FFO means funds flow from operations detailed in the Non-GAAP measure advisory
FY means fiscal year
GampA means general and administrative expenses
GOR means gas oil ratio
H1 means first half of the year
H2 means second half of the year
Hz means horizontal well
IP means initial production which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
Liquids means crude oil and NGLs
M or k means thousands
MMcf means million cubic feet and MMcfd means million cubic feet per day
Mboe means thousand barrels oil equivalent
MMboe means million barrels oil equivalent
Mbbl amp MMbbl means thousands barrels of oil and million barrels of oil respectively
MSW means Mixed Sweet Oil Blend It is often referred to as Edmonton Par
N S E W means the North South East West or in any combination
NAV means net asset value
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
PDP means proved developed producing reserves as per Oil and Gas Disclosures Advisory
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
12M Efficiency means 12 month capital efficiency in $boed
ABC means area based closure program initiative from the AERCF
AampD means oil and natural gas property acquisitions and divestitures
AER means Alberta Energy Regulor
ARO means Asset Retirement Obligation
bbl and bbld means barrels of oil and barrels of oil per day respectively
bopd means barrel of oil per day
boe boed means barrels of oil equivalent and barrels of oil equivalent per day respectively
CAD means Canadian Dollar
Capital Expenditures amp Capex includes all direct costs related to our operated and non-operated development programs including drilling completions tie-in development of and expansions to existing facilities and major infrastructure optimization and EOR activities
Company or OBE means Obsidian Energy Ltd as applicable
Decommissioning means decommissioning expenditures
Enviro means decommissioning expenditures
EUR means estimated ultimate recovery
FampD means finding and development costs
Fracturing is a short name for Hydraulic fracturing a method for extracting oil and natural gas
NPV means net present value before tax discounted at 10 percent
NYSE means New York Stock Exchange
Opex means operating costs
Payout means the time it takes to cover the return of your initial cash outlay
PCU means Pembina Cardium Unit
Plan Pricing Scenario means the flat price deck at US$60bblWTI US$10bbl Ed Par Differential $2mcf AECO and CADUSD 131x FX Rate
POR means porosity
Perm means permeability
PROP means Peace River Oil Partnership
Release means a press or news release
RLI means Reserve Life Index
SEC means US Securities and Exchange Commission
Spud means the process of beginning to drill a well
Unbooked means locations that are internal estimates based on Obsidian Energyrsquos prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources (including contingent and prospective) Unbooked locations have been identified by management as an estimation of Obsidian Energyrsquos multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information
USD means United States Dollar
WCS means Western Canadian Select
WI means working interest
WF means waterflood
WTI means West Texas Intermediate
YE means year end
YOY means year over year
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Non-GAAP Measures Advisory
23
In this presentation we refer to certain financial measures that are not determined in accordance with IFRS These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies We believe that in conjunction with results presented in accordance with IFRS these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance You are cautioned however that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance These measures include the following
Enterprise Value is the measure of a companyrsquos total value and includes all ownership interests and asset claims from both debt and equity It is calculated as share price multiplied by total shares outstanding plus Net Debt
Funds flow is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements
Funds flow from operations or FFO is cash flow from operating activities before changes in non-cash working capital decommissioning expenditures and office lease settlements which also excludes the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties operating costs and transportation The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets For additional information relating to netbacks including a detailed calculation of our netbacks see our latest managements discussion and analysis which is available in Canada at wwwsedarcom and in the United States at wwwsecgov and
Net Debt is the amount of long-term debt comprised of long-term notes and bank debt plus net working capital (surplus)deficit Net debt is a measure of leverage and liquidity
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Oil and Gas Information Advisory
24
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 61 utilizing a conversion on a 61 basis is misleading as an indication of value
This presentation contains a number of oil and gas metrics prepared by management including reserve life index or RLI which does not have a standardized meaning or standard method of calculation and therefore such measure may not be comparable to similar measures used by other companies Such metrics have been included herein to provide readers with additional measures to evaluate our performance on a comparable basis with prior periods however such measures are not reliable indicators of our future performance and our future performance may not compare to the performance in previous periods RLI has been calculated in this presentation as the volume of our 2P reserves as of December 31 2018 divided by our average daily production for 2019 production for the associated reserve category
Inventory
This presentation discloses drilling locations in three categories (i) proved locations (ii) probable locations and (iii) unbooked locations Proved locations and probable locations are derived from the Sproule Report and account for drilling locations that have associated proved andor probable reserves as applicable Unbooked locations are internal estimates based on our prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review Unbooked locations do not have attributed reserves or resources
Of the 891 gross drilling locations identified herein 189 are proved locations 208 are probable locations and 683 are unbooked locations
Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic seismic engineering production and reserves information There is no certainty that we will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves resources or production The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital regulatory approvals seasonal restrictions oil and natural gas prices costs actual drilling results additional reservoir information that is obtained and other factors While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves or production
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Reserves Disclosure and Definitions
25
Unless otherwise noted any reference to reserves in this presentation are based on the report (Sproule Report) prepared by Sproule Associates Limited dated January 24 2019 where they evaluated one
hundred percent of the crude oil natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31
2018 For further information regarding the Sproule Report see our Release It should not be assumed that the estimates of future net revenues presented herein represent the fair market value of the reserves
There is no assurance that the forecast price and cost assumptions will be attained and variances could be material The recovery and reserves estimates of crude oil natural gas liquids and natural gas
reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered Actual crude oil natural gas and natural gas liquid reserves may be greater than or less
than the estimates provided herein The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation
Production and Reserves
The use of the word gross in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests (ii) in relation to wells means the total number of wells in which we have an interest and (iii) in relation to properties means the total area of properties in which we have an
interest The use of the word net in this presentation (i) in relation to our interest in production and reserves means our working interest (operating or non-operating) share after deduction of royalty
obligations plus our royalty interests (ii) in relation to our interest in wells means the number of wells obtained by aggregating our working interest in each of our gross wells and (iii) in relation to our interest in
a property means the total area in which we have an interest multiplied by the working interest owned by us Unless otherwise stated production volumes and reserves estimates in this presentation are stated
on a gross basis All references to well counts are net to the Company unless otherwise indicated
Reserve Definitions
Reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations as of a given date based on the analysis of drilling
geological geophysical and engineering data the use of established technology and specified economic conditions which are generally accepted as being reasonable Reserves are classified according to the
degree of certainty associated with the estimates
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves
probable reserves are those additional reserves that are less certain to be recovered than proved reserves It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or if facilities have not been installed that would involve a low expenditure (for example
when compared to the cost of drilling a well) to put the reserves on production The developed category may be subdivided into producing and non-producing
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate These reserves may be currently producing or if
shut-in they must have previously been on production and the date of resumption of production must be known with reasonable certainty
Developed non-producing reserves are those reserves that either have not been on production or have previously been on production but are shut-in and the date of resumption of production is
unknown
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example when compared to the cost of drilling a well) is required to render
them capable of production They must fully meet the requirements of the reserves category (proved probable) to which they are assigned
For additional reserve definitions see the Release
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
Forward-Looking Information Advisory
26
Certain statements contained in this presentation 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 andor peak rates are not necessarily indicative of long-term performance or ultimate recovery In particular this presentation contains without limitation forward-looking statements pertaining to the following our 2019 guidance including production production growth operating and GampA cost ranges the expected decline rates and reserve life index on reserves our strategic priorities moving forward including unlocking value from the Cardium asset base production and cash flow growth through modest investments strong capital discipline to protect our balance sheet on certain spend profiles targeted metrics and a rationalized portfolio with divesting low margin assets to maximize cash flow and deleverage balance sheet our expected H2 2019 capital spend profile that the Cardium play has remaining untapped potential how we plan to drill complete equip and tie-in in order to reduce certain costs our ability to waterflood certain locations and for minimal capital through existing infrastructure our potential locations that certain locations have been de-risked due to various reasons that the Cardium play has remaining untapped potential our internal expectations for type curves our expectations on how we will deliver returns in the future how we plan to target certain oil banks and the keys to its success how we plan to reduce certain costs the value that the Cardium brings including low production costs and quick paybacks that there will be strong self-funded cash flow from the Cardium to reinvest into the asset driving growth that participating in the new Alberta Energy Regulator area based closure program will result in further material reductions to our decommissioning liability and the expectations for those reductions and target numbers for 2019 our hedging strategy including type of hedge currency and that it improves our ability to live within funds flow from operations
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws Financial outlook and future-oriented financial information contained in this presentation are based on assumptions about future events based on managements assessment of the relevant information currently available In particular this presentation contains projected operational and financial information for 2019 and beyond for the Company The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the date of this presentation Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein
With respect to forward-looking statements contained in this document we have made assumptions regarding among other things our ability to complete asset sales and the terms and timing of any such sales the Alberta government mandated production curtailment the economic returns that we anticipate realizing from expenditures made on our assets 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 capital expenditure levels future crude oil natural gas liquids and natural gas production levels drilling results future exchange rates and interest rates future taxes and royalties the continued suspension of our dividend 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 our ability to obtain financing on acceptable terms including our ability to renew or replace our reserve based loan our ability to finance the repayment of our senior secured notes on maturity and our ability to add production and reserves through our development and exploitation activities In addition many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements and such assumptions should be taken into account when reading such forward-looking statements There is also a Pricing Assumption slide which should be taken into account when reviewing the presentation Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the End Notes section of the presentation
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable undue reliance should not be placed on the forward-looking information because Obsidian Energy can give no assurances that they will prove to be correct Since forward-looking information addresses future events and conditions by its very nature it involves inherent risks and uncertainties Actual results could differ materially from those currently anticipated due to a number of factors and risks These include but are not limited to the risks associated with the oil and gas industry in general such as operational risks in development exploration and production the possibility that the semi-annual borrowing base re-determination under our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants pursuant to our amending agreements with holders of our senior secured notes delays or changes in plans with respect to exploration or development projects or capital expenditures the uncertainty of estimates and projections relating to reserves production costs and expenses health safety and environmental risks commodity price and exchange rate fluctuations interest rate fluctuations marketing and transportation loss of markets environmental risks competition incorrect assessment of the value of acquisitions failure to complete or realize the anticipated benefits of acquisitions or dispositions ability to access sufficient capital from internal and external sources failure to obtain required regulatory and other approvals reliance on third parties and changes in legislation including but not limited to tax laws royalties and environmental regulations Readers are cautioned that the foregoing list of factors is not exhaustive Additional information on these and other factors that could affect Obsidian Energy or its operations or financial results are included in the Companys Annual Information Form (See Risk Factors and Forward-Looking Statements therein) which may be accessed through the SEDAR website (wwwsedarcom) EDGAR website (wwwsecgov) or Obsidian Energys website
Unless otherwise specified the forward-looking statements contained in this document speak only as of May 19 2019 Except as expressly required by applicable securities laws we do not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information future events or otherwise The forward-looking statements contained in this document are expressly qualified by this cautionary statement
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