Obsidian Energy Ltd 6-K, filed Feb 25, 2021
Obsidian Energy Ltd. (OBE)
About this 6-K
Obsidian Energy Ltd filed this 6-K on February 25, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2021
Commission File Number 1-32895
Obsidian Energy Ltd.
(Translation of registrant’s name into English)
Suite 200, 207 – 9th Avenue SW
Calgary, Alberta T2P 1K3
Canada
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ☐
DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K
See the Exhibit Index hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 25, 2021.
| OBSIDIAN ENERGY LTD. | ||
| By: | /s/ Stephen E. Loukas | |
| Name: | Stephen E. Loukas | |
| Title: | Interim President & CEO | |
2
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | News release, dated February 24, 2021 | |
Exhibit 99.1
Obsidian Energy Announces Extension to our Syndicated Credit Facility and
Provides Hedging Update
CALGARY, February 24, 2021 - OBSIDIAN ENERGY LTD. (TSX – OBE, OTCQX – OBELF) (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) announces an extension of our syndicated credit facility to March 31, 2021 and provides a hedging update.
CREDIT FACILITY EXTENSION
The Company has entered into an agreement with lenders to extend our syndicated credit facility to March 31, 2021. The syndicated credit facility has an underlying borrowing base of $550 million with $450 million available to be drawn; both amounts remain unchanged. Under the agreement, the syndicated credit facility continues to be available on a revolving basis until March 31, 2021, subject to further extensions, with the end date of the term period remaining on November 30, 2021.
HEDGING UPDATE
The Company continues to add incremental hedges to our hedge book at recent price levels with the following financial oil and natural gas hedges and physical oil and differential hedges in place:
Financial
| 2021 | ||||||||||||
| Oil |
February | March | April | |||||||||
| WTI C$/bbl |
$ | 64.33 | $ | 68.37 | $ | 74.83 | ||||||
| Total bbl/d |
6,250 | 6,550 | 2,250 | |||||||||
| 2021 | ||||||||||||||||||||
| Natural gas |
February | March | April | May | June | |||||||||||||||
| C$/mcf |
$ | 2.94 | $ | 2.96 | $ | 2.83 | $ | 2.68 | $ | 2.67 | ||||||||||
| Total mcf/d |
23,700 | 26,060 | 23,700 | 21,325 | 21,325 | |||||||||||||||
Physical
| 2021 | ||||||||||||||||||||
| Oil 1 |
February | March | April | May | June | |||||||||||||||
| WTI C$/bbl |
$ | 55.24 | $ | 55.24 | $ | 59.04 | $ | 59.04 | $ | 59.04 | ||||||||||
| Total bbl/d |
581 | 524 | 577 | 558 | 577 | |||||||||||||||
| (1) | WTI, differentials and foreign exchange hedged to lock-in positive net operating income on certain heavy oil properties. |
| 2021 | ||||||||||||||||||||||||
| Light oil differential |
April | May | June | July | August | September | ||||||||||||||||||
| CAD1,2 |
||||||||||||||||||||||||
| WTI C$/bbl |
$ | 5.51 | $ | 5.51 | $ | 5.51 | $ | 5.82 | $ | 5.82 | $ | 5.82 | ||||||||||||
| Total bbl/d |
1,259 | 1,218 | 1,259 | 1,218 | 1,218 | 1,259 | ||||||||||||||||||
| USD1 |
||||||||||||||||||||||||
| WTI US$/bbl |
$ | 4.00 | $ | 4.00 | $ | 4.00 | $ | 4.42 | $ | 4.42 | $ | 4.42 | ||||||||||||
| Total bbl/d |
1,573 | 1,522 | 1,573 | 1,522 | 1,522 | 1,573 | ||||||||||||||||||
| (1) | Differentials completed on a WTI - MSW basis. |
| (2) | Completed on a US$ WTI - US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.281 in the second quarter of 2021 and $1.279 in the third quarter of 2021. |
| 2021 | ||||||||||||
| Heavy oil differential |
July | August | September | |||||||||
| CAD1 |
||||||||||||
| WTI C$/bbl |
$ | 14.85 | $ | 14.85 | $ | 14.85 | ||||||
| Total bbl/d |
558 | 558 | 577 | |||||||||
| (1) | Differentials completed on a WTI - WCS basis. |
ADDITIONAL READER ADVISORIES
OIL AND GAS INFORMATION ADVISORY
Barrels of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value. Boe/d means barrels of oil equivalent per day.
Abbreviations
| Oil |
Natural Gas | |||||
| bbl | barrel or barrels | NGL | Natural Gas Liquid | |||
| bbl/d | barrels per day | mcf | thousand cubic feet | |||
| boe/d | barrels of oil equivalent per day | mcf/d | thousand cubic feet per day | |||
| WTI | West Texas Intermediate | |||||
| MSW | Mixed Sweet Blend | |||||
| WCS | Western Canada Select | |||||
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute forward-looking statements or information (collectively “forward-looking statements”). Forward-looking statements are typically identified by words such as “anticipate”, “continue”, “estimate”, “expect”, “forecast”, “budget”, “may”, “will”, “project”, “could”, “plan”, “intend”, “should”, “believe”, “outlook”, “objective”, “aim”, “potential”, “target” and similar words suggesting future events or future performance. In particular, this presentation contains, without limitation, forward-looking statements pertaining to the extension of our syndicated credit facility to March 31, 2021, subject to further extensions and option to complete a borrowing base determination, with end date of the term period set at November 30, 2021; and hedges.
2
With respect to forward-looking statements contained in this document, we have made assumptions regarding, among other things: we will have the ability to continue as a going concern going forward and realize our assets and discharge our liabilities in the normal course of business; our ability to complete asset sales and the terms and timing of any such sales; the impact of regional and/or global health related events on energy demand; global energy policies going forward; 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; that we are able to move forward through the various reconfirmation, redetermination dates with the credit facility and 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.
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; the impact that any government assistance programs could have on the Company in connection with, among other things, the COVID-19 pandemic and other regional and/or global health related events; the possibility that we are not able to continue as a going concern and realize our assets and discharge our liabilities in the normal course of business; the impact on energy demands due to regional and/or global health related events; 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 Company’s Annual Information Form (See “Risk Factors” and “Forward-Looking Statements” therein) which may be accessed through the SEDAR website (www.sedar.com), EDGAR website (www.sec.gov) or Obsidian Energy’s website.
Unless otherwise specified, the forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly update or revise any forward.
All figures are in Canadian dollars unless otherwise stated.
3
CONTACT
OBSIDIAN ENERGY
Suite 200, 207 - 9th Avenue SW, Calgary, Alberta T2P 1K3
Phone: 403-777-2500
Toll Free: 1-866-693-2707
Website: www.obsidianenergy.com;
Investor Relations:
Toll Free: 1-888-770-2633
E-mail: investor.relations@obsidianenergy.com
4