Equibles

6-K

OBSIDIAN ENERGY LTD. (OBE)

6-K 2022-11-08 For: 2022-09-30
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Added on April 10, 2026

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 November 2022

(Commission File No. 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 registrant’s principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover 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):

Yes ☐ No ☒

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):

Yes ☐ No ☒

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, thereto duly authorized on November 8, 2022.

OBSIDIAN ENERGY LTD.
By: /s/ Stephen Loukas
Name: Stephen Loukas
Title: Interim President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Description
99.1 News Release, dated November 8, 2022
99.2 Management’s Discussion and Analysis for the three and nine months ended September 30, 2022
99.3 Financial Statements for the three and nine months ended September 30, 2022
99.4 Quarterly Certification of the Chief Executive Officer under Canadian law
99.5 Quarterly Certification of the Chief Financial Officer under Canadian law

EX-99.1

Exhibit 99.1

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Obsidian Energy Announces Third Quarter 2022 Results and Updated 2022 Guidance

• Third quarter average production increased 24 percent to 29,985 boe/d from 2021 with current production over 33,000 boe/d

• Continued net debt reduction to $323.1 million from $428.1 million at September 30, 2021, including repayment of the $30.0 million non-revolving term loan

• Peace River acquisition of additional 10 sections of land and Seal 9-15 gas plant, providing for additional Bluesky and Clearwater development

• 2023 guidance and shareholder return of capital intentions to be announced in mid-December

CALGARY, November 8, 2022 - OBSIDIAN ENERGY LTD. (TSX / NYSE American – OBE) (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) is pleased to report operating and financial results for the third quarter of 2022.

Nine months ended<br> September 30
2021 2022 2021
FINANCIAL1
(millions, except per share amounts)
Cash flow from operating activities 121.4 65.5 330.3 136.1
Basic per share (/share)2 1.48 0.88 4.03 1.83
Diluted per share (/share)2 1.44 0.85 3.92 1.78
Funds flow from operations3 104.6 59.3 340.2 137.9
Basic per share (/share)4 1.27 0.79 4.16 1.86
Diluted per share (/share)4 1.24 0.77 4.04 1.81
Adjusted Funds flow from operations3 107.4 61.7 365.5 151.6
Basic per share (/share)4 1.31 0.82 4.46 2.04
Diluted per share (/share)4 1.27 0.80 4.34 1.99
Net income 40.7 46.6 178.4 392.3
Basic per share (/share) 0.50 0.62 2.18 5.28
Diluted per share (/share) 0.48 0.60 2.12 5.14
Capital expenditures 74.0 45.1 217.7 96.1
Decommissioning expenditures 3.5 1.6 15.8 5.4
Long-term debt 253.7 397.0 253.7 397.0
Net debt3 323.1 428.1 323.1 428.1
OPERATIONS
Daily Production
Light oil (bbl/d) 11,062 10,314 11,480 10,389
Heavy oil (bbl/d) 5,854 2,688 5,940 2,712
NGL (bbl/d) 2,379 2,213 2,405 2,144
Natural gas (mmcf/d) 64 54 63 53
Total production5 (boe/d) 29,985 24,164 30,324 24,017
Average sales price 2,6
Light oil (/bbl) 118.66 84.27 125.99 76.35
Heavy oil (/bbl) 81.78 60.87 91.19 49.94
NGL (/bbl) 69.12 52.79 73.38 43.64
Natural gas (/mcf) 5.31 3.89 5.90 3.44
Netback (/boe)
Sales price 76.58 56.21 83.64 50.11
Risk management loss (0.59 ) (0.93 ) (3.92 ) (1.27 )
Net sales price 75.99 55.28 79.72 48.84
Royalties (14.06 ) (5.99 ) (13.71 ) (4.56 )
Net operating costs4 (14.57 ) (13.28 ) (14.17 ) (13.50 )
Transportation (3.18 ) (2.41 ) (3.08 ) (2.05 )
Netback4 (/boe) 44.18 33.60 48.76 28.73

All values are in US Dollars.

(1) We adhere to generally accepted accounting principles ("GAAP"); however, we also employ certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including funds flow from operations, adjusted funds flow from operations, net debt, netback, and net operating costs. Additionally, other financial measures are also used to analyze performance. These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities, as indicators of our performance.

(2) Supplementary financial measure. See "Non-GAAP and Other Financial Measures".

(3) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(4) Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

(5) Please refer to the "Oil and Gas Information Advisory" section below for information regarding the term "boe".

(6) Before risk management gains/(losses).

Detailed information can be found in Obsidian Energy's unaudited consolidated financial statements and management's discussion and analysis ("MD&A") as at and for the three and nine months ended September 30, 2022, on our website at www.obsidianenergy.com, which will be filed on SEDAR and EDGAR in due course.

KEY THIRD quarter 2022 RESULTS

With active drilling and completions in all the Company’s core areas, third quarter production increased 24 percent to 29,985 boe/d over 2021, and further grew to over 33,000 boe/d currently with the addition of seven new wells (6.8 net) on production in the fourth quarter. Higher production and commodity prices in the third quarter resulted in a 76 percent increase in funds flow from operations (“FFO”) from the third quarter of 2021 and generated positive free cash flow of $27.1 million. During the third quarter and into the fourth quarter, we achieved strong production results from our ongoing development program, reduced our net debt, successfully acquired additional land for prospective Bluesky, Clearwater and Cardium opportunities, purchased a key gas plant in Peace River to secure future offtake capacity and commenced exploration drilling in our highly prospective Clearwater play.

2022 Third Quarter Financial Highlights

• Strong Funds Flow – FFO increased 76 percent to $104.6 million ($1.27 per basic share) for the quarter compared to $59.3 million ($0.79 per basic share) in the third quarter of 2021, largely due to the higher commodity price environment and increased production levels.

• Capital Development Growth – The Company began second half development activities in all areas during the third quarter, resulting in capital expenditures of $74.0 million (2021 – $45.1 million) and decommissioning expenditures of $3.5 million (2021 – $1.6 million).

• Continued Debt Reduction – Strong free cash flow generation and our continued focus on reducing debt resulted in a decrease in net debt by 25 percent to $323.1 million at September 30, 2022, from $428.1 million at September 30, 2021. We completed our refinancing that incorporated both senior and subordinated debt during the quarter, resulting in a more favourable debt structure for the Company (see ‘Debt Refinancing’).

• Net Operating Costs – Net operating costs of $14.57 per boe in the third quarter of 2022 were higher than in 2021 or the second quarter of 2022, largely from higher power and fuel costs due to rate increases, particularly in August and September.

• G&A Costs – General and administrative (“G&A”) costs were lower at $1.73 per boe in the third quarter of 2022 compared to $1.82 per boe for the same period in 2021.

• Net Income – Continued strong commodity prices contributed to net income of $40.7 million ($0.50 per basic share) for the third quarter of 2022 compared to net income of $46.6 million ($0.62 per basic share) in the comparable period of 2021. In the third quarter of 2021, net income was aided by an impairment reversal of $26.5 million in our Peace River area, which was mainly due to our acquisition of the remaining 45 percent ownership in the Peace River Oil Partnership.

2022 Third Quarter Operational Highlights

• Production Levels – Average production was 29,985 boe/d, a 24 percent increase from 24,164 boe/d in the third quarter of 2021.

• Second Half Development Program – Although development activities were delayed due to wet weather conditions in July, the Company successfully drilled 13 wells (12.8 net) with 11 wells (11.0 net) completed and brought on stream, including eight Viking wells (8.0 net) drilled in our first half development program.

• Peace River Acquisition – We purchased the Seal 9-15 gas plant within our core Peace River asset during the quarter. This acquisition contributes to our dominant infrastructure position in the area (70 percent of the total area gas processing capacity), providing capacity for future development and expected strong future cash flow through third-party processing fees.

• Turnaround and Facility Expansion – In September, we completed a major turnaround at our Pembina Lodgepole gas plant and oil battery. In parallel, we executed a low-cost expansion project

that increased the facility’s capacity by 40 percent (30 percent net), which immediately brought an additional 600 boe/d net production online and created capacity for planned development activity.

• Continued Focus on Decommissioning Liabilities Reduction – With continued decommissioning work, we are on track to meeting our goal of abandoning over 270 net wells and over 500 kilometres of pipelines (net) in 2022.

2022 Highlights Subsequent to the Quarter

• Acquired Additional Peace River Land – In October 2022, we purchased an additional 10 sections (approximately 6,400 acres) of prospective Clearwater and Bluesky rights from the Alberta land sale in the Peace River region for a consideration of $4.0 million, further expanding our ownership in the area.

2022 dEVELOPMENT PROGRAM update

The largest development program that the Company has undertaken in several years, our second half 2022 program is well underway in all our core areas with 13 wells (12.8 net) rig-released in the third quarter: five Cardium wells (4.8 net) in Pembina and Willesden Green, six Bluesky wells (6.0 net) in Peace River, one Mannville gas well (1.0 net) in Willesden Green, and one vertical Devonian well (1.0 net). Of those wells, six wells (6.0 net) are on production in Peace River along with eight Viking wells (8.0 net) that were rig-released in the second quarter of 2022.

Another six wells (6.0 net) were rig-released and nine wells (8.8 net) brought on production in October, resulting in strong initial production (“IP”) rates in the Peace River and Willesden Green areas. With a second rig now drilling in the Peace River area, we are focused on completing the drilling of the remainder of the 35 well (33.9 net) second half program by year-end. In total, we expect 65 wells (63.4 net) will be rig-released in 2022, of which 52 wells (50.7 net) are expected to be on production by the end of the year.

Peace River

In the third quarter, we rig-released six Bluesky wells (6.0 net) from our second half 2022 program, with an additional two Bluesky wells (2.0 net) rig-released in October. Three wells (3.0 net) were on production in the third quarter; the remaining five wells (5.0) are expected to come on production throughout the fourth quarter. Results are in line with expectations with six of the recent wells drilled on production at ~800 boe/d (98 percent heavy oil) in total. Some of these wells are producing through rate limited temporary production facilities to accelerate clean-up times; production rates will continue to strengthen as the wells transition to higher oil rates. In addition, we began drilling the first well (1.0 net) of the remaining five Bluesky wells (5.0 net) to be drilled in the fourth quarter.

While testing an edge location of a producing pool, we encountered reservoir stability issues resulting in low productivity on a single two-well pad drilled late in the first half of 2022, which is reflected in our updated production guidance (see ‘Updated 2022 Guidance’). The information gathered during the drilling of this pad has been incorporated into our mapping and future inventory locations.

In late October 2022, we furthered the delineation and exploration of our land base with the spud of the first of two wells (2.0 net) targeting the Clearwater play; our second well is expected to spud in December. As part of our larger exploration process, these wells will provide key information towards an extensive 2023 Clearwater exploration program. Both wells will be evaluated and tested in late 2022 and early 2023, respectively. In parallel with the Bluesky, our Clearwater acreage offers significant exploration and development upside with identified drilling opportunities, and represents a compelling risked value opportunity.

During the third quarter, we purchased the Seal 9-15 gas plant in Peace River, contributing to our dominant infrastructure position in the area (approximately 70 percent of the total area gas processing capacity) while providing expected strong future cash flow through third-party processing fees. The Seal gas plant has approximately 10 mmcf/d of capacity and is currently operating at about 65 percent capacity. Obsidian Energy currently delivers less than 1 mmcf/d of gas to the facility, leaving ample room for our near term and

future development programs. Ownership of this plant combined with our existing infrastructure solidifies Obsidian Energy’s unique position compared to peers in this increasingly competitive development area. The acquisition supports our long-term Environmental, Social and Governance strategy of minimizing flaring and emissions, and aides in meeting provincial gas conservation regulations unique to this area. The Company currently conserves over 95 percent of gas in the Peace River area.

In October 2022, we increased our substantial land position in the Peace River area with the purchase of 10 sections (approximately 6,400 acres) of prospective Bluesky and Clearwater rights at the Alberta land sale for a consideration of approximately $4.0 million. The Company has identified 51 potential Bluesky locations and 32 potential Clearwater opportunities on this newly acquired acreage through technical evaluation of the parcels. In total, we have acquired 33.5 sections for a total consideration of $17.9 million in 2022. This brings our total land ownership to 497 sections of heavy oil rights in Peace River. Through the 2022 land sales acquisitions, Obsidian Energy estimates that it has added a total of 79 potential Bluesky locations and 46 potential Clearwater opportunities.

Willesden Green

Willesden Green continues to provide high quality economic development across multiple formations for the Company. During the third quarter, Obsidian Energy drilled four wells (4.0 net) targeting the Cardium formation and one liquids-rich Mannville well (1.0 net). Currently, four wells (4.0 net) are on production, providing excellent rates and robust economic returns. The two wells at the Crimson 3-03 Pad are meeting expectations and capital efficiencies for top tier Cardium development with average IP 30-day rates of 597 boe/d (69 percent oil) per well. The third well on the 4-17 Pad surpassed internal expectations with peak daily production rates of 698 boe/d (84 percent oil). The Mannville gas well is still in early production with a peak daily rate of 1,158 boe/d (16 percent oil). We expect to complete the drilling of three additional wells in our Willesden Green area during the remainder of 2022.

Pembina

The two Cardium wells (1.8 net) on the 16-09 Pad were drilled and rig released during the third quarter. Online in early October, total pad production is currently approximately 560 boe/d (72 percent oil) as the wells continue to clean up and improve. In addition, one exploration vertical Devonian well (1.0 net) was drilled and is currently under evaluation during the quarter. Drilling of the final well on the three-well 14-6 Pad in South Lodgepole is being completed, and we expect to finish drilling three additional Cardium wells (2.7 net) and one vertical Devonian well (0.5 net) by year-end.

Viking

All eight (8.0 net) wells from our first half Viking program are on production, adding a peak total rate of over 1,000 boe/d to the Esther field. As part of this program the Company drilled a step-out well to test the western extent of the play, which displayed peak and last 60-day production rates of 242 boe/d (88 percent oil) and 211 boe/d (86 percent oil), respectively, and exhibits minimal decline. As one of the most prolific Viking wells drilled in the area, it provides an outstanding economic return and effectively delineates the area, opening multiple additional development locations on our extensive land position.

DEBT REFINANCING

On July 27, 2022, we completed a private placement issuance of senior unsecured notes and entered into new syndicated credit facilities providing a more favourable debt structure with long-term debt capital and credit facilities to meet our ongoing operational liquidity needs. The refinancing was composed as follows:

• Senior Unsecured Notes: We issued five-year senior unsecured notes (the “Notes”) in the amount of $127.6 million (the “Offering”) at a rate of 11.95 percent due on July 27, 2027.

• New Credit Facilities: The Company entered into new syndicated credit facilities with borrowing capacity of $205.0 million (the “New Credit Facilities”), consisting of $175.0 million revolving syndicated credit facilities (the “New Syndicated Facilities”) and a $30.0 million non-revolving term

loan (the “New Term Loan”). The New Term Loan was fully repaid in September 2022 from free cash flow from our operations.

• Debt Repayment: Upon completion of the Offering, we repaid all our previous senior secured notes due November 30, 2022, the outstanding balances under our previous credit facilities due November 30, 2022, and the PROP limited recourse loan due on December 31, 2022. In addition, the Company also closed out hedges that were put in place for the PROP 45 limited recourse financing (US$3.4 million loss) and paid fees associated with the refinancing ($6.5 million).

2022 UPDATED gUIDANCE

Our 2022 guidance has been updated to capture our latest production estimates that incorporate several strategic and investment decisions. A prolonged break-up period due to excessively wet ground conditions delayed the start of our second half development operations in Central Alberta. The Company chose to focus on capital efficiency rather than incur significant additional costs to enforce a premature start. Our updated guidance incorporates this modified second half development program, including on-stream production delays, recent strong well results, lower than expected results on one Peace River pad from the first half of 2022 (see “Peace River’) and our 2022 development program adjustment to 65 wells (63.4 net) from a total of 68 wells (65.0 net) for the year.

Production guidance has been lowered by approximately three percent to 31,000 boe per day (at the midpoint), representing a 26 percent increase over 2021, with associated adjustments to net operating costs and general and administrative expenses on a per boe basis. Operating cost guidance reflects the impact of higher than anticipated third quarter electrical power rates and additional inflationary pressures. Our capital expenditures guidance has been increased to account for: incremental success in land sale activity in our Clearwater, Bluesky and Cardium plays; acquisition of the Seal 9-15 gas plant; accelerated exploration investment in our Clearwater holdings; higher working interest in certain operated projects; incremental non-operated activity; and inflationary pressures. Regarding 2023, the Company is currently reviewing our program and, once the 2023 capital budget has been approved (which is expected to occur in mid-December) detailed guidance will be provided, which will supersede our previously disclosed preliminary 2023 forecast. With the release of our 2023 guidance, we also expect to announce our intentions regarding our shareholder return of capital plans. Our updated 2022 guidance is presented below.

2022E Previous<br><br>Guidance 2022E Updated Guidance
Production1 boe/d 31,500 – 32,500 30,800 – 31,200
% Oil and NGLs 66% 65%
Capital expenditures $ millions 295 – 305 320 – 330
Decommissioning Expenditures2 $ millions 17 18
Net operating costs $/boe 12.70 – 13.50 13.50 – 14.00
General & administrative $/boe 1.45 – 1.55 1.55 – 1.65
Based on midpoint of above guidance
WTI Range3 US$/bbl 90.00 – 120.00 85.00 – 95.00
AECO Range3 CAD$/GJ 5.50 – 7.50 5.80
FFO $ millions 455 – 580 441 – 456
Adjusted FFO4 $ millions 499 – 624 487 – 502
Free cash flow 4 $ millions 137 – 262 98 – 113
Net debt5 $ millions 257 – 132 335 – 320
Net debt to FFO4,5 times 0.6x – 0.2x 0.8x – 0.7x

(1) Mid-point of 2022E updated guidance range: 11,715 bbl/d light oil, 6,065 bbl/d heavy oil, 2,475 bbl/d NGLs and 64.5 mmcf/d natural gas. Mid-point of 2022E previous guidance of 12,350 bbl/d light oil, 6,325 bbl/d heavy oil, 2,525 bbl/d NGLs and 64.6 mmcf/d natural gas. Average production volumes in 2022 do not include any forecasted production associated with Clearwater exploratory capital expenditures.

(2) Decommissioning expenditures do not include grants and allocations to be utilized by the Company under the Alberta Site Rehabilitation Program (“ASRP”).

(3) 2022E updated guidance pricing assumptions are for November to December. Mid-point pricing assumptions for our 2022E updated guidance include WTI at US$90.00/bbl and AECO at $5.80/GJ from November to December; and for our 2022E previous guidance was WTI at US$105.00/bbl and AECO at $6.50/GJ from July to December.

(4) Pricing assumptions for our 2022E updated guidance outlined are forecasted for November and December 2022 and includes risk management (hedging) adjustments as of November 4, 2022. Guidance FFO and free cash flow (“FCF”) includes approximately $46 million of estimated charges for 2022 related to the deferred share units, performance share units and non-treasury incentive plan awards share-based compensation amounts which are based on a share price of $15.00 per share. The charge is primarily due to the Company’s increased share price in 2022 compared to the closing price on December 31, 2021, of $5.21 per share. Adjusted FFO excludes the estimated non-cash share-based compensation amounts for 2022.

(5) Net debt figures estimated as at December 31, 2022.

HEDGING UPDATE

The Company continues to focus our hedging program on near term WTI positions to protect cashflow given our first half capital program. As at November 7, 2022, the following financial oil and gas contracts are in place on a weighted average basis:

WTI Oil Contracts

Type Remaining Term Volume <br>(bbls/d) Bought Put Price (C/bbl) Sold Call Price (C/bbl) Swap Price (C/bbl)
WTI Collar October 2022 10,000
WTI Swap November 2022 1,950
WTI Collar November 2022 7,000
WTI Collar December 2022 2,000

All values are in US Dollars.

AECO Natural Gas Contracts

Type Remaining Term Volume <br>(mcf/d) Swap Price (C/mcf)
AECO Swap October 2022 26,065
AECO Swap April 2023 - October 2023 17,487

All values are in US Dollars.

UPDATED CORPORATE PRESENTATION

For further information on these and other matters, Obsidian Energy will post an updated corporate presentation later today on our website, www.obsidianenergy.com.

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

TEST RESULTS AND INITIAL PRODUCTION RATES

Test results and initial production rates disclosed herein, particularly those short in duration, may not necessarily be indicative of long-term performance or of ultimate recovery. Readers are cautioned that short term rates should not be relied upon as indicators of future performance of these wells and therefore should not be relied upon for investment or other purposes. A pressure transient analysis or well-test interpretation has not been carried out and thus certain of the test results provided herein should be considered preliminary until such analysis or interpretation has been completed.

NON-GAAP AND OTHER FINANCIAL MEASURES

Throughout this news release and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities as indicators of our performance. The Company's unaudited consolidated financial statements and management's discussion and analysis ("MD&A") as at and for the three and nine months ended September 30, 2022 are available on the Company's website at www.obsidianenergy.com and under our SEDAR profile at www.sedar.com. The disclosure under the section "Non-GAAP and Other Financial Measures" in the MD&A is incorporated by reference into this news release

Non-GAAP Financial Measures

The following measures are non-GAAP financial measures: FFO; adjusted FFO; net debt; net operating costs; netback; and FCF. These non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three and nine months ended September 30, 2022, for an explanation of the composition of these measures, how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.

For a reconciliation of FFO to cash flow from operating activities, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of adjusted FFO to cash flow from operating activities, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of net debt to long-term debt, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of net operating costs to operating costs, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of netback to sales price, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of FCF to cash flow from operating activities, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

Non-GAAP Ratios

The following measures are non-GAAP ratios: funds flow from operations (basic per share ($/share) and diluted per share ($/share)), which use funds flow from operations as a component; net operating costs ($/boe), which uses net operating costs as a component; netback ($/boe), which uses netback as a component. These non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three and nine months ended September 30, 2022, for an explanation of the composition of these non-GAAP ratios, how these non-GAAP ratios provide useful information to an investor, and the additional purposes, if any, for which management uses these non-GAAP ratios.

Supplementary Financial Measures

The following measures are supplementary financial measures: average sales price; cash flow from operating activities (basic per share and diluted per share); and general and administrative costs ($/boe). See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three and nine months ended September 30, 2022, for an explanation of the composition of these measures.

Non-GAAP Measures Reconciliations

2022 and 2021 Cash Flow from Operating Activities, Funds Flow from Operations and Free Cash Flow

Three months ended<br> September 30 Nine months ended<br>September 30
(millions, except per share amounts) 2022 2021 2022 2021
Cash flow from operating activities $ 121.4 $ 65.5 $ 330.3 $ 136.1
Change in non-cash working capital (21.9 ) (9.1 ) (13.9 ) (1.1 )
Decommissioning expenditures 3.5 1.6 15.8 5.4
Onerous office lease settlements 2.3 2.3 6.9 7.0
Deferred financing costs (0.7 ) (1.7 ) (2.1 ) (4.4 )
Financing fees paid - - - 4.4
Restructuring charges (1) - 0.1 2.5 (1.8 )
Transaction costs - - 0.1 -
Other expenses (1) - 0.6 0.6 (7.7 )
Funds flow from operations 104.6 59.3 340.2 137.9
Share based compensation (2) 2.8 2.4 25.3 13.7
Adjusted Funds flow from operations 107.4 61.7 365.5 151.6
Share based compensation (2) (2.8 ) (2.4 ) (25.3 ) (13.7 )
Capital expenditures (74.0 ) (45.1 ) (217.7 ) (96.1 )
Decommissioning expenditures (3.5 ) (1.6 ) (15.8 ) (5.4 )
Free Cash Flow $ 27.1 $ 12.6 $ 106.7 $ 36.4

(1) Excludes the non-cash portion of restructuring and other expenses.

(2) Includes expenses associated with our cash settled share-based incentive plans, being the Deferred Share Unit Plan, Performance Share Unit Plan and the Non-Treasury Incentive Award Plan.

2022 and 2021 Netback to Sales Price

 Three Months Ended Nine Months Ended
September 30 September 30
(millions) 2022 2021 2022 2021
        
Sales price  $ 76.58  $ 56.21  $ 83.64  $ 50.11
Risk management loss  (0.59 )  (0.93 )  (3.92 )  (1.27 )
Net sales price  75.99  55.28  79.72  48.84
Royalties  (14.06 )  (5.99 )  (13.71 )  (4.56 )
Net operating costs  (14.57 )  (13.28 )  (14.17 )  (13.50 )
Transportation  (3.18 )  (2.41 )  (3.08 )  (2.05 )
Netback  $ 44.18  $ 33.60  $ 48.76  $ 28.73

2022 and 2021 Net Operating Costs to Operating Costs

 Three Months Ended Nine Months Ended
September 30 September 30
(millions) 2022 2021 2022 2021
Operating costs  $ 43.5 $ 32.3 $ 127.7 $ 97.1
Less processing fees  (1.6 ) (1.6 ) (5.5 ) (4.9 )
Less road use recoveries  (1.8 ) (1.2 ) (4.9 ) (3.7 )
Net operating costs  $ 40.1 $ 29.5 $ 117.3 $ 88.5

2022 and 2021 Net Debt to Long-Term Debt

As at
(millions) September 30, 2022 December 31, 2021
Long-term debt
Syndicated credit facility $ 134.0 $ 321.5
Senior unsecured notes 127.6 -
Senior secured notes - 54.9
PROP Limited recourse loan - 16.0
Deferred interest - 1.3
Unamortized discount of senior unsecured notes (2.4 ) -
Deferred financing costs (5.5 ) (2.7 )
Total 253.7 391.0
Working capital deficiency
Cash - (7.3 )
Accounts receivable (79.6 ) (68.9 )
Prepaid expenses and other (14.7 ) (9.1 )
Accounts payable and accrued liabilities 163.7 107.8
Total 69.4 22.5
Net debt $ 323.1 $ 413.5

ABBREVIATIONS

Oil Natural Gas
bbl barrel or barrels mcf thousand cubic feet
bbl/d barrels per day mmcf million cubic feet
boe barrel of oil equivalent mmcf/d million cubic feet per day
boe/d barrels of oil equivalent per day AECO Alberta benchmark price for natural gas
MSW Mixed Sweet Blend NGL natural gas liquids
WTI West Texas Intermediate

FUTURE-ORIENTED FINANCIAL INFORMATION

This release contains future-oriented financial information (“FOFI”) and financial outlook information relating to the Company's prospective results of operations, operating costs, expenditures, production, FFO, adjusted FFO, FCF, net operating costs, and net debt, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth below under "Forward-Looking Statements". The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such FOFI, or if any of them do so, what benefits the Company will derive therefrom. The Company has included this FOFI to provide readers with a more complete perspective on the Company's business as of the date hereof and such information may not be appropriate for other purposes.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute forward-looking statements or information (collectively “forward-looking statements”) within the meaning of the "safe harbour" provisions of applicable securities legislation. 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. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: that we will file the unaudited consolidated financial statements and MD&A on our website, SEDAR and EDGAR in due course; expectations for future

development capacity and third-party processing fees due to the Seal 9-15 gas plant purchase; that we will meet out decommissioning liabilities goal for 2022; our expectations of potential drilling opportunities in the Bluesky and Clearwater; our development program; our expected spud and on-stream dates; our 2022 updated guidance for production, capital and decommissioning expenditures, net operating costs and general & administrative costs, FFO, adjusted FFO, FCF, net debt and net debt to FFO; the expected timing for 2023 guidance disclosure and intentions regarding our shareholder return of capital plans; our hedges; and our expectations for an updated corporate presentation.

With respect to forward-looking statements and FOFI contained in this document, the Company has made assumptions regarding, among other things: that the Company does not dispose of or acquire material producing properties or royalties or other interests therein other than stated herein (provided that, except where otherwise stated, the forward-looking statements and FOFI contained herein (including our guidance set out under “2022 Updated Guidance") do not assume the completion of any transaction); the impact of regional and/or global health related events, including the ongoing COVID-19 pandemic, on energy demand and commodity prices; that the Company's operations and production will not be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to the pandemic; global energy policies going forward, including the ability of members of OPEC, and other nations to agree on and adhere to production quotas from time to time; our ability to qualify for (or continue to qualify for) new or existing government programs created as a result of the COVID-19 pandemic (including the Alberta Site Rehabilitation Program) or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial condition; our ability to execute our plans as described herein and in our other disclosure documents and the impact that the successful execution of such plans will have on our Company and our stakeholders; future capital expenditure and decommissioning expenditure levels; future operating costs and general & administrative costs; 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 hedging activities; future crude oil, natural gas liquids and natural gas production levels; future exchange rates, inflation rates and interest rates; future debt levels; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including extreme weather events, such as wild fires and flooding, infrastructure access and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully to current and new customers; our ability to obtain financing on acceptable terms, including our ability (if necessary) to continue to extend the revolving period and term out period of our credit facility, our ability to maintain the existing borrowing base under our credit facility, our ability (if necessary) to replace our syndicated bank facility and our ability (if necessary) to finance the repayment of our Notes on maturity; and our ability to add production and reserves through our development and exploitation activities.

Although the Company believes that the expectations reflected in the forward-looking statements and FOFI contained in this document, and the assumptions on which such forward-looking statements and FOFI are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements and FOFI included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements and FOFI involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements and FOFI contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements and FOFI. These risks and uncertainties include, among other things: the possibility that we change our 2022 budget in response to internal and external factors, including those described herein; the possibility that the Company will not be able to continue to successfully execute our business plans and strategies in part or in full, and the possibility that some or all of the benefits that the Company anticipates will accrue to our Company and our stakeholders as a result of the successful execution of such plans and strategies do not materialize; the possibility that the Company is unable to complete one or more of the potential transactions being pursued, on favorable terms or at all; the possibility that the Company ceases to qualify for, or does not qualify for, one or more existing or new government assistance programs implemented in connection with

the COVID-19 pandemic and other regional and/or global health related events or otherwise, that the impact of such programs falls below our expectations, that the benefits under one or more of such programs is decreased, or that one or more of such programs is discontinued; the impact on energy demand and commodity prices of regional and/or global health related events, including the ongoing COVID-19 pandemic, and the responses of governments and the public to the pandemic, including the risk that the amount of energy demand destruction and/or the length of the decreased demand exceeds our expectations; the risk that there is another significant decrease in the valuation of oil and natural gas companies and their securities and in confidence in the oil and natural gas industry generally, whether caused by a resurgence of the COVID-19 pandemic, the worldwide transition towards less reliance on fossil fuels and/or other factors; the risk that the COVID-19 and/or other factors pandemic adversely affects the financial capacity of the Company's contractual counterparties and potentially their ability to perform their contractual obligations; the possibility that the revolving period and/or term out period of our credit facility and the maturity date of our notes is not further extended (if necessary), that the borrowing base under our credit facility is reduced, that the Company is unable to renew or refinance our credit facilities on acceptable terms or at all and/or finance the repayment of our notes when they mature on acceptable terms or at all and/or obtain debt and/or equity financing to replace one or all of our credit facilities and notes; the possibility that we breach one or more of the financial covenants pursuant to our agreements with our lenders and the holders of our notes; the possibility that we are forced to shut-in production, whether due to commodity prices decreasing, extreme weather events or other factors; the risk that OPEC and other nations fail to agree on and/or adhere to production quotas from time to time that are sufficient to balance supply and demand fundamentals for crude oil; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; industry conditions, including fluctuations in the price of crude oil, natural gas liquids and natural gas, price differentials for crude oil and natural gas produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; fluctuations in foreign exchange or interest rates; the risk that our costs increase significantly due to inflation, supply chain disruptions and/or other factors, adversely affecting our profitability; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed (including extreme cold during winter months, wild fires and flooding); the risk that wars and other armed conflicts adversely affect world economies and the demand for oil and natural gas, including the ongoing war between Russian and Ukraine; the possibility that fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to hydrocarbons and technological advances in fuel economy and renewable energy generation systems could permanently reduce the demand for oil and natural gas and/or permanently impair the Company's ability to obtain financing on acceptable terms or at all, and the possibility that some or all of these risks are heightened as a result of the response of governments and consumers to the ongoing COVID-19 pandemic and/or public opinion and/or special interest groups. 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. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

Unless otherwise specified, the forward-looking statements and FOFI 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-looking statements. The forward-looking statements and FOFI contained in this document are expressly qualified by this cautionary statement.

Obsidian Energy shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American in the United States under the symbol "OBE".

All figures are in Canadian dollars unless otherwise stated.

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

EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three and nine months ended September 30, 2022

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) of Obsidian Energy Ltd. (“Obsidian Energy”, the “Company”, “we”, “us”, “our”) should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2022 and the Company’s audited consolidated financial statements and MD&A for the year ended December 31, 2021. The date of this MD&A is November 7, 2022. All dollar amounts contained in this MD&A are expressed in millions of Canadian dollars unless noted otherwise.

Throughout this MD&A and in other materials disclosed by the Company, we adhere to generally accepted accounting principles ("GAAP"), however the Company also employs certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including funds flow from operations, adjusted funds flow from operations, netback, sales, gross revenues, net operating costs, net debt and free cash flow. Additionally, other financial measures are also used to analyze performance. These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities, as indicators of our performance.

This MD&A also contains oil and natural gas information and forward-looking statements. Please see the Company's disclosure under the headings "Non-GAAP and Other Financial Measures", "Oil and Natural Gas Information", and "Forward-Looking Statements" included at the end of this MD&A.

Quarterly Financial Summary

(millions, except per share and production amounts) (unaudited)

Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31
Three months ended 2022 2022 2022 2021 2021 2021 2021 2020
Production revenues $ 210.6 $ 276.5 $ 203.7 $ 149.8 $ 124.5 $ 111.0 $ 92.2 $ 72.8
Cash flow from operating activities 121.4 125.0 83.9 62.6 65.5 42.2 28.4 11.1
Basic per share (1) 1.48 1.52 1.03 0.81 0.88 0.57 0.39 0.15
Diluted per share (1) 1.44 1.48 1.00 0.78 0.85 0.55 0.37 0.15
Funds flow from operations (2) 104.6 157.0 78.6 80.0 59.3 42.3 36.3 26.4
Basic per share (3) 1.27 1.91 0.97 1.04 0.79 0.57 0.49 0.36
Diluted per share (3) 1.24 1.86 0.94 1.00 0.77 0.55 0.48 0.36
Net income 40.7 113.9 23.8 21.7 46.6 322.5 23.2 0.2
Basic per share 0.50 1.39 0.29 0.28 0.62 4.33 0.32 0.01
Diluted per share $ 0.48 $ 1.35 $ 0.28 $ 0.27 $ 0.60 $ 4.23 $ 0.31 $ 0.01
Production
Light oil (bbl/d) 11,062 12,261 11,114 11,155 10,314 10,836 10,014 10,055
Heavy oil (bbl/d) 5,854 6,174 5,789 3,237 2,688 2,660 2,788 2,895
NGLs (bbl/d) 2,379 2,406 2,432 2,310 2,213 2,162 2,056 2,087
Natural gas (mmcf/d) 64 64 60 58 54 54 50 52
Total (boe/d) 29,985 31,575 29,407 26,352 24,164 24,651 23,225 23,644

(1) Supplemental financial measure. See "Non-GAAP and Other Financial Measures".

(2) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(3) Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 1

Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow

Three months ended<br> September 30 Nine months ended<br>September 30
(millions, except per share amounts) 2022 2021 2022 2021
Cash flow from operating activities $ 121.4 $ 65.5 $ 330.3 $ 136.1
Change in non-cash working capital (21.9 ) (9.1 ) (13.9 ) (1.1 )
Decommissioning expenditures 3.5 1.6 15.8 5.4
Onerous office lease settlements 2.3 2.3 6.9 7.0
Deferred financing costs (0.7 ) (1.7 ) (2.1 ) (4.4 )
Financing fees paid - - - 4.4
Restructuring charges (1) - 0.1 2.5 (1.8 )
Transaction costs - - 0.1 -
Other expenses (1) - 0.6 0.6 (7.7 )
Funds flow from operations (2) 104.6 59.3 340.2 137.9
Share based compensation (3) 2.8 2.4 25.3 13.7
Adjusted Funds flow from operations (2) 107.4 61.7 365.5 151.6
Share based compensation (3) (2.8 ) (2.4 ) (25.3 ) (13.7 )
Capital expenditures (74.0 ) (45.1 ) (217.7 ) (96.1 )
Decommissioning expenditures (3.5 ) (1.6 ) (15.8 ) (5.4 )
Free Cash Flow (2) $ 27.1 $ 12.6 $ 106.7 $ 36.4
Per share – funds flow from operations (4)
Basic per share $ 1.27 $ 0.79 $ 4.16 $ 1.86
Diluted per share $ 1.24 $ 0.77 $ 4.04 $ 1.81

(1) Excludes the non-cash portion of restructuring and other expenses.

(2) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(3) Includes expenses associated with our cash settled share-based incentive plans, being the Deferred Share Unit Plan, Performance Share Unit Plan and the Non-Treasury Incentive Award Plan.

(4) Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

In the 2022 periods, funds flow from operations, adjusted funds flow from operations, and cash flow from operating activities were significantly higher compared to the 2021 periods due to higher commodity prices and higher production levels as the Company advanced our development program. In the second half of 2021 and into 2022, the Company increased development activities in response to higher commodity prices which led to higher production levels in 2022. Additionally, in Q4 2021, the Company acquired the remaining 45 percent interest of the Peace River Oil Partnership (“PROP”) from our joint venture partner which increased production levels by approximately 2,400 boe per day.

These results were partially offset by higher share-based compensation charges, mainly in Q1 2022, of $25.3 million for the first nine months of 2022 related to certain share-based incentive plans. This was primarily due to the significant increase in the Company’s share price and resultant mark-to-market charge (September 30, 2022 share price close of $9.93 compared to December 31, 2021 share price close of $5.21).

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 2

Business Strategy

Our strategy is focused on maintaining moderate production growth, operational excellence, improving our debt leverage and delivering top quartile total shareholder returns. We believe our plan to focus development activity primarily on our Cardium and Peace River assets will generate value for all stakeholders. Our industry leading Cardium position with a deep inventory of high return wells offers a predictable, liquids weighted, production profile that is capable of generating growth and sustainable free cash flow. Additionally, the Company’s consolidation of the 100 percent interest in PROP in late 2021 combined with our success in 2022 of adding to our substantial land position in Peace River, results in an asset base with compelling Bluesky development and significant Clearwater potential for future heavy oil production growth and cash flow generation, offering further value for stakeholders.

Our debt refinancing was completed in July 2022, incorporating both senior and subordinated debt resulting in a more favourable debt structure for a Company of our size. We plan to continue to decrease debt levels as we focus on meeting our leverage and absolute debt targets. With a stable debt structure that provides appropriate operational liquidity and a longer-term maturity profile, the Company anticipates being well positioned to continue developing our strong portfolio of assets while being able to act on new opportunities to our shareholders’ benefit.

In the first nine months of 2022, our participation in the Alberta Site Rehabilitation Program (“ASRP”) focused on inactive fields in Northern Alberta. We have utilized approximately $28.8 million (net) grants and allocations since the inception of the program in late 2020 through to the end of Q3 2022. The ASRP is currently set to expire at the end of 2022.

Business Environment

The following table outlines quarterly averages for benchmark prices and Obsidian Energy’s realized prices for the previous eight quarters.

Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Q1 2021 Q4 2020
Benchmark prices
WTI oil (US/bbl) 91.55 $ 108.41 $ 94.29 $ 77.19 $ 70.56 $ 66.07 $ 57.84 $ 42.66
Edm mixed sweet par price (CAD/bbl) 116.88 137.76 115.64 93.36 83.77 77.30 66.61 50.29
Western Canada Select (CAD/bbl) 93.62 122.06 100.99 78.82 71.80 67.01 57.45 43.46
NYMEX Henry Hub (US/mmbtu) 8.20 7.17 4.95 5.83 4.01 2.83 3.56 2.53
AECO Index (CAD/mcf) 4.16 7.24 4.74 4.66 3.60 3.09 3.15 2.77
Foreign exchange rate (US/CAD) 1.31 1.28 1.27 1.26 1.26 1.23 1.27 1.30
Benchmark differentials
WTI - Edm Light Sweet (US/bbl) (2.05 ) (0.50 ) (2.96 ) (3.10 ) (4.08 ) (3.11 ) (5.24 ) (4.07 )
WTI - WCS Heavy (US/bbl) (19.86 ) (12.80 ) (14.53 ) (14.64 ) (13.58 ) (11.49 ) (12.47 ) (9.31 )
Average sales price (1) (2)
Light oil (CAD/bbl) 118.66 139.88 117.91 92.55 84.27 76.97 67.34 50.76
Heavy oil (CAD/bbl) 81.78 106.18 84.77 51.76 60.87 48.58 40.48 30.00
NGLs (CAD/bbl) 69.12 82.93 68.09 59.46 52.79 39.31 38.20 24.61
Total liquids (CAD/bbl) 101.36 123.32 101.72 80.07 75.55 66.95 58.27 43.14
Natural gas (CAD/mcf) 5.31 $ 7.38 $ 4.96 $ 5.05 $ 3.89 $ 3.21 $ 3.21 $ 2.81

All values are in US Dollars.

(1) Excludes the impact of realized hedging gains or losses.

(2) Supplemental financial measures. See "Non-GAAP and Other Financial Measures".

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 3

Oil

WTI oil prices averaged US$91.55 per barrel during Q3 2022. Oil prices reached close to US$100 per barrel in July before decreasing throughout the quarter, settling in the low US$80 per barrel range in September. Oil prices were impacted by rising interest rates which led to potential recession fears combined with concerns over further COVID-19 lockdowns through various parts of the world, particularly China, creating demand uncertainty.

In Q3 2022, both MSW and particularly WCS differentials widened and settled at US$2.05 per barrel and US$19.86 per barrel differential to WTI, respectively. Throughout Q3 2022, volatility persisted with the WCS differential due to planned and unplanned refinery outages and the negative impact of the US Department of Energy releasing barrels from their Strategic Petroleum Reserve given a significant portion of those barrels competed directly with WCS barrels for refining capacity.

The Company currently has the following oil contracts in place on a weighted average basis:

Type Volume <br>(bbls/d) Remaining<br>Term Bought Put Price (C/bbl) Sold Call Price (C/bbl) Swap Price (C/bbl)
WTI Swap 1,950 November 2022
WTI Collar 10,000 October 2022
WTI Collar 7,000 November 2022
WTI Collar 2,000 December 2022

All values are in US Dollars.

Natural Gas

NYMEX Henry Hub averaged US$8.20 per mmbtu in Q3 2022. Volatility persisted throughout Q3 2022 with prices steadily increasing into August as global demand for LNG continued. Strong production and storage receipts resulted in a weakening of prices over the next month with the quarter closing at US$6.40 per mmbtu.

During Q3 2022, AECO 5A averaged $4.16 per mcf and reached a high close to $7.00 per mcf in July due to strong global demand for LNG. Western Canadian system restrictions from TC Energy Corporation in August resulted in prices decreasing for the balance of the quarter.

The Company currently has the following natural gas hedges in place on a weighted average basis:

Type Volume <br>(mcf/d) Remaining<br>Term Swap Price (C/mcf)
AECO Swap 26,065 October 2022
AECO Swap 17,487 April 2023 - October 2023

All values are in US Dollars.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 4

Average Sales Prices (1)

Three months ended <br>September 30 Nine months ended <br>September 30
2022 2021 % <br>change 2022 2021 % <br>change
Light oil (per bbl) $ 118.66 $ 84.27 41 $ 125.99 $ 76.35 65
Heavy oil (per bbl) 81.78 60.87 34 91.19 49.94 83
NGL (per bbl) 69.12 52.79 31 73.38 43.64 68
Total liquids (per bbl) 101.36 75.55 34 109.18 67.05 63
Risk management gain (loss) (per bbl) 0.54 (0.13 ) n/a (4.83 ) (1.50 ) 222
Total liquids price, net (per bbl) 101.90 75.42 35 104.35 65.55 59
Natural gas (per mcf) 5.31 3.89 37 5.90 3.44 72
Risk management loss (per mcf) (0.44 ) (0.38 ) 16 (0.37 ) (0.14 ) 164
Natural gas net (per mcf) 4.87 3.51 39 5.53 3.30 68
Weighted average (per boe) 76.58 56.21 36 83.64 50.11 67
Risk management loss (per boe) (0.59 ) (0.93 ) (37 ) (3.92 ) (1.27 ) 209
Weighted average net (per boe) $ 75.99 $ 55.28 37 $ 79.72 $ 48.84 63

(1) Supplemental financial measures. See "Non-GAAP and Other Financial Measures".

RESULTS OF OPERATIONS

Production

Three months ended<br>September 30 Nine months ended<br>September 30
Daily production 2022 2021 % <br>change 2022 2021 % <br>change
Light oil (bbls/d) 11,062 10,314 7 11,480 10,389 11
Heavy oil (bbls/d) 5,854 2,688 118 5,940 2,712 119
NGL (bbls/d) 2,379 2,213 8 2,405 2,144 12
Natural gas (mmcf/d) 64 54 19 63 53 19
Total production (boe/d) 29,985 24,164 24 30,324 24,017 26

In the 2022 periods, production levels increased compared to 2021 due to the Company’s expanded development program during the year and the acquisition of our partner's non-operated interest in PROP in late 2021.

The Company continued our active 2022 development program through Q3 2022, albeit with a delayed start due to a wet spring, which resulted in increased activity across our entire portfolio resulting in production growth. For the first nine months of 2022, we brought 39 wells (38.3 net) on production.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 5

Average production within the Company’s key development areas and within the Company’s Legacy asset area was as follows:

Three months ended <br>September 30 Nine months ended <br>September 30
Daily production (boe/d) (1) 2022 2021 %<br>change 2022 2021 %<br>change
Cardium 21,853 19,807 10 22,395 19,753 13
Peace River 6,623 2,974 123 6,686 2,960 126
Alberta Viking 1,034 822 26 819 810 1
Legacy 475 561 (15 ) 424 494 (14 )
Total 29,985 24,164 24 30,324 24,017 26

(1) Refer to “Supplemental Production Disclosure” for details by product type.

Netbacks

Three months ended September 30
(per boe) 2022 2021
Netback:
Sales price (1) $ 76.58 $ 56.21
Risk management loss (2) (0.59 ) (0.93 )
Royalties (14.06 ) (5.99 )
Transportation (3.18 ) (2.41 )
Net operating costs (3) (14.57 ) (13.28 )
Netback (3) $ 44.18 $ 33.60
(boe/d) (boe/d)
Production 29,985 24,164

(1) Includes the impact of commodities purchased and sold to/from third parties - $0.5 million (2021 – $0.4 million).

(2) Realized risk management gains and losses on commodity contracts.

(3) Non-GAAP financial ratios. See "Non-GAAP and Other Financial Measures".

Nine months ended September 30
(per boe) 2022 2021
Netback:
Sales price (1) $ 83.64 $ 50.11
Risk management loss (2) (3.92 ) (1.27 )
Royalties (13.71 ) (4.56 )
Transportation (3.08 ) (2.05 )
Net operating costs (3) (14.17 ) (13.50 )
Netback (3) $ 48.76 $ 28.73
(boe/d) (boe/d)
Production 30,324 24,017

(1) Includes the impact of commodities purchased and sold to/from third parties - $1.6 million (2021 – $0.8 million).

(2) Realized risk management gains and losses on commodity contracts, including closing out the PROP Energy 45 Limited Partnership ("PROP 45") hedges in July 2022.

(3) Non-GAAP financial ratios. See "Non-GAAP and Other Financial Measures".

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 6

The Company's netbacks in 2022 have increased from the comparable periods primarily due to higher commodity prices. This was partially offset by increased royalties due to higher commodity prices and increased transportation costs due to higher production in Peace River from the PROP acquisition and various Bluesky wells brought on production during 2022.

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Netback:
Sales (1) (2) $ 211.1 $ 124.9 $ 692.4 $ 328.5
Risk management loss (3) (1.6 ) (2.0 ) (32.4 ) (8.3 )
Royalties (38.8 ) (13.3 ) (113.5 ) (29.9 )
Transportation (8.7 ) (5.4 ) (25.5 ) (13.5 )
Net operating costs (2) (40.1 ) (29.5 ) (117.3 ) (88.5 )
Netback (2) $ 121.9 $ 74.7 $ 403.7 $ 188.3

(1) Includes the impact of commodities purchased and sold to/from third parties - $0.5 million (2021 – $0.4 million) for the third quarter of 2022 and $1.6 million (2021 – $0.8 million) for the first nine months of 2022.

(2) Non-GAAP financial measures. See "Non-GAAP and Other Financial Measures".

(3) Realized risk management gains and losses on commodity contracts.

Production Revenues

A reconciliation from production revenues to gross revenues is as follows:

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Production revenues $ 210.6 $ 124.5 $ 690.8 $ 327.7
Sales of commodities purchased 4.0 2.8 10.8 6.7
Less: Commodities purchased (3.5 ) (2.4 ) (9.2 ) (5.9 )
Sales (1) 211.1 124.9 692.4 328.5
Realized risk management loss (2) (1.6 ) (2.0 ) (32.4 ) (8.3 )
Gross revenues (1) $ 209.5 $ 122.9 $ 660.0 $ 320.2

(1) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(2) Relates to realized risk management gains and losses on commodity contracts.

The Company's production revenues and gross revenues were significantly higher in the 2022 periods compared to the 2021 periods, due to increases in both commodity prices and higher production volumes. For the first nine months of 2022, the increases in gross revenues were partially offset by higher realized hedging losses compared to 2021.

Change in Gross Revenues (1)

(millions)
Gross revenues – January 1 – September 30, 2021 $ 320.2
Increase in liquids production 70.1
Increase in liquids prices 241.7
Increase in natural gas production 9.8
Increase in natural gas prices 42.3
Increase in realized oil risk management loss (19.9 )
Increase in realized natural gas risk management loss (4.2 )
Gross revenues – January 1 – September 30, 2022 (2) $ 660.0

(1) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(2) Excludes processing fees and other income.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 7

Royalties

Three months ended<br> September 30 Nine months ended<br>September 30
2022 2021 2022 2021
Royalties (millions) $ 38.8 $ 13.3 $ 113.5 $ 29.9
Average royalty rate (1) 18 % 11 % 16 % 9 %

(1) Excludes effects of risk management activities and other income.

For the 2022 periods, both absolute royalties and the average royalty rate increased from the comparable periods largely due to higher commodity prices.

Expenses

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Net operating (1) $ 40.1 $ 29.5 $ 117.3 $ 88.5
Transportation 8.7 5.4 25.5 13.5
Financing 12.6 10.7 32.9 33.4
Share-based compensation $ 4.0 $ 3.0 $ 28.9 $ 15.4

(1) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

Operating

A reconciliation of operating costs to net operating costs is as follows:

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Operating costs $ 43.5 $ 32.3 $ 127.7 $ 97.1
Less processing fees (1.6 ) (1.6 ) (5.5 ) (4.9 )
Less road use recoveries (1.8 ) (1.2 ) (4.9 ) (3.7 )
Net operating costs (1) $ 40.1 $ 29.5 $ 117.3 $ 88.5

(1) Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures”.

Operating costs have increased compared to the 2021 periods due to incremental costs with new wells coming on production, higher power costs and general inflationary pressures experienced across the industry. Additionally, the Company increased repair and maintenance activity in 2022 as more projects become economic under the current commodity price environment.

Transportation

The Company continues to utilize multiple sales points in the Peace River area to increase realized prices. The PROP acquisition and new wells drilled in the Peace River area in Q4 2021 and the first half of 2022, resulted in higher production and thus higher transportation costs in the 2022 periods compared to the 2021 periods. The increase in realized prices is partially offset by additional transportation costs.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 8

Financing

Financing expense consists of the following:

Three months ended September 30 Nine months ended September 30
(millions) 2022 2021 2022 2021
Interest $ 8.3 $ 6.8 $ 20.2 $ 19.5
Interest on PROP Limited recourse loan 0.7 - 1.7 -
Advisor fees 0.1 0.4 0.6 1.4
Accretion on decommissioning liability 2.5 1.4 7.5 4.3
Accretion on office lease provision 0.3 0.5 1.1 1.5
Accretion on other non-current liability - 0.1 0.2 0.2
Accretion on lease liabilities 0.1 0.2 0.3 0.5
Deferred financing costs 0.7 1.7 2.1 4.4
Debt modification (0.1 ) (0.4 ) (0.8 ) 1.6
Financing $ 12.6 $ 10.7 $ 32.9 $ 33.4

Obsidian Energy’s debt structure includes short-term borrowings under our syndicated credit facility and term financing through our senior unsecured notes. Financing charges were comparable in the 2022 and 2021 periods as higher interest rates under the Company’s current banking agreements in 2022 were offset by lower balances under our syndicated credit facility and senior unsecured notes.

In July 2022, the Company completed a refinancing and issued five-year senior unsecured notes for an aggregate principal amount of $127.6 million (the “New Notes) as well as entered into new syndicated credit facilities with borrowing capacity of $205.0 million (the “New Credit Facilities“). The Company used the net proceeds from the New Notes, together with initial draws on the New Credit Facilities, to repay all of our existing senior secured notes due November 30, 2022, repay the outstanding balances under our existing credit facilities due November 30, 2022, and repay the PROP limited recourse loan due on December 31, 2022.

The New Credit Facilities were entered into with a group of lenders providing the Company with a $175.0 million revolving credit facility and a $30.0 million non-revolving term loan. The revolving credit facility is subject to a semi-annual borrowing base redetermination typically in May and November of each year and currently has a revolving period to July 27, 2023 and a term-out period of July 27, 2024. The non-revolving term loan was subsequently repaid in September 2022 and is no longer available.

The New Notes have an interest rate of 11.95 percent and mature on July 27, 2027 and were issued at a price of $980.00 per $1,000.00 principal amount resulting in aggregate gross proceeds of $125.0 million. The New Notes are direct senior unsecured obligations of Obsidian Energy ranking equal with all other present and future senior unsecured indebtedness of the Company. As part of the terms of the New Notes, the Company is required to provide a repurchase offer (the "Repurchase Offer"), which can be exercised at the option of the noteholders, to an aggregate amount of $63.8 million. The Repurchase Offer is based on free cash flow available, as defined in the New Notes agreement (EBITDA less both capital expenditures and decommissioning expenditures), whereby 75 percent of free cash flow is required to be offered towards redeeming a portion of the New Notes on or before July 27, 2024, and 50 percent of free cash flow thereafter. The Repurchase Offer is in cash at a price equal to 103 percent of the principal amount of the New Notes to be redeemed plus accrued and unpaid interest. The redemption dates are semi-annual based on Q1 and Q2 free cash flow (paid typically in August) and based on Q3 and Q4 free cash flow (paid typically in March). Minimum available liquidity thresholds under the Company's New Credit Facilities are also required to be met in order to proceed with a Repurchase Offer.

At September 30, 2022, letters of credit totaling $5.0 million were outstanding (December 31, 2021 – $5.0 million) that reduce the amount otherwise available to be drawn on the New Credit Facilities.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 9

Share-Based Compensation

Share-based compensation expense relates to the Company's Stock Option Plan (the “Option Plan”), restricted shares units (“RSUs") granted under the Restricted and Performance Share Unit Plan (“RPSU plan”), restricted awards granted under the Non-Treasury Incentive Award Plan (“NTIP”), Deferred Share Unit Plan (“DSU plan”) and performance share units (“PSUs”) granted under the RPSU plan.

Share-based compensation expense consisted of the following:

Three months ended <br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
DSUs $ 0.2 $ 0.8 $ 11.1 $ 8.7
PSUs 2.0 0.8 8.6 3.6
NTIP 0.6 0.8 5.6 1.4
Cash settled share-based incentive plans $ 2.8 $ 2.4 $ 25.3 $ 13.7
RSUs $ 0.9 $ 0.2 $ 2.5 $ 0.9
Options 0.3 0.4 1.1 0.8
Equity settled share-based incentive plans 1.2 0.6 3.6 1.7
Share-based compensation $ 4.0 $ 3.0 $ 28.9 $ 15.4

During the first nine months of 2022, there was a significant increase in the Company’s share price which closed at $9.93 per share at September 30, 2022, compared to $5.21 per share at December 31, 2021. The change in share price at the balance sheet date results in a mark-to-market valuation which is used to calculate the PSU, DSU plan and NTIP plan future obligations.

General and Administrative Expenses (“G&A”)

Three months ended<br> September 30 Nine months ended<br>September 30
(millions, except per boe amounts) 2022 2021 2022 2021
Gross $ 8.6 $ 7.5 $ 24.8 $ 20.5
Per boe (1) 3.12 3.36 3.00 3.13
Net 4.7 4.1 13.6 11.4
Per boe (1) $ 1.73 $ 1.82 $ 1.64 $ 1.73

(1) Supplementary financial measure. See “Non-GAAP and Other Financial Measures”.

The Company has increased staffing levels throughout 2022 to align with our activity levels and expanded capital program compared to 2021, which has contributed to higher absolute G&A costs in the 2022 periods compared to the 2021 periods. In 2022, general inflationary pressures have also impacted G&A. On a per boe basis, G&A was lower due to higher production levels.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 10

Restructuring and other expenses

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Restructuring $ - $ 0.1 $ 2.5 $ (1.8 )
Other $ 1.2 $ 0.6 $ 1.8 $ (7.7 )

For the first nine months of 2022, restructuring expenses included severance charges as well as the acceleration of certain expenses under the RPSU plan due to staff changes.

Both restructuring and other expenses in the first nine months of 2021 included settlement benefits of previously accrued costs.

Depletion, Depreciation and Impairment

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Depletion and depreciation (“D&D”) $ 46.0 $ 32.4 $ 128.8 $ 83.8
PP&E Impairment (reversal) $ 25.1 $ (22.3 ) $ 35.8 $ (333.7 )

The Company’s D&D expense has increased from the comparable periods, primarily due to higher production and non-cash impairment reversal charges recorded in 2021 in our Cardium and Peace River cash generating units (“CGUs”) which increased the depletable base. These impairment reversals were recorded mainly due to the improved commodity price environment, strong drilling results in the Cardium and Peace River area and the Company purchasing the remaining 45 percent interest of our partner in PROP in late 2021.

For the first nine months of 2022, we recorded a $35.8 million impairment in our Legacy CGU due to accelerated decommissioning spending and an increase to our forecasted near-term spending profile in the area due to new Alberta government regulations. The Legacy CGU has no recoverable amount, as such changes in our decommissioning liability are (recovered) expensed each period.

Taxes

At September 30, 2022, the Company was in a net unrecognized deferred tax asset position of approximately $337.2 million (December 31, 2021 - $378.6 million). Since the Company has not recognized the benefit of deductible timing differences in excess of taxable timing differences, deferred tax expense (recovery) for the quarter is nil.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 11

Foreign Exchange

Obsidian Energy recorded unrealized foreign exchange gains or losses to translate our previously outstanding U.S. denominated senior secured notes and the related accrued interest to Canadian dollars using the exchange rates in effect on the balance sheet date. Realized foreign exchange gains or losses were recorded upon repayment of the senior secured notes.

Foreign exchange gain or loss is as follows:

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Foreign exchange loss (gain) $ (0.1 ) $ 1.6 $ 0.7 $ -

The Company repaid all of our outstanding senior secured notes in the amount of US$36.8 million in Q3 2022. Total repayments for the first nine months of 2022 were US$43.4 million.

Net Income

Three months ended<br> September 30 Nine months ended<br>September 30
(millions, except per share amounts) 2022 2021 2022 2021
Net income $ 40.7 $ 46.6 $ 178.4 $ 392.3
Basic per share 0.50 0.62 2.18 5.28
Diluted per share $ 0.48 $ 0.60 $ 2.12 $ 5.14

In the 2022 periods, net income was the result of higher revenues due to the Company’s strong netback, predominantly from higher commodity prices and higher production levels. This was partially offset by increased depletion and depreciation expenses and higher share-based compensation charges as a result of the Company’s significant share price appreciation during the first nine months of 2022.

In the 2021 periods, net income was mainly due to increasing oil prices and a $311.5 million Cardium impairment reversal, which was recorded in Q2 2021.

Capital Expenditures

Three months ended<br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Drilling and completions $ 54.7 $ 30.8 $ 142.5 $ 64.4
Well equipping and facilities 18.4 14.4 60.1 30.6
Land and geological/geophysical 0.7 (0.3 ) 14.4 0.6
Corporate 0.2 0.2 0.7 0.5
Capital expenditures 74.0 45.1 217.7 96.1
Property acquisitions, net 4.3 - 4.6 -
Total $ 78.3 $ 45.1 $ 222.3 $ 96.1

Our Q3 2022 capital program was delayed by wet spring conditions, however we drilled 13 (12.8 net) operated wells in our Cardium and Peace River areas and brought 11 (11.0 net) wells on production, of which 8 (8.0 net) were in our Viking area. Additionally, during Q3 2022, we purchased a gas plant in our Peace River area for consideration of $4.1 million, providing us additional processing capacity as we continue to develop this asset.

In Q1 2022, we successfully purchased 23 sections (14,720 acres) of prospective oil sands rights through Alberta land sales in the Peace River area for a consideration of approximately $13.7 million. Subsequent to September 30, 2022, we continued to build on our Peace River land base and purchased an additional 10 sections (6,326 acres) for $4.0 million.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 12

Drilling

Nine months ended September 30
2022 2021
(number of wells) Gross Net Gross Net
Oil 49 42 23 19
Gas 1 1 1 1
Injectors, stratigraphic and service 1 0 3 1
Total 51 43 27 21

The Company drilled 43 operated gross wells (42.3 net) during the first nine months of 2022. In addition to this, the Company had a minor non-operated working interest on eight wells that were drilled by various partners during the period.

Environmental and Climate Change

The oil and natural gas industry has a number of environmental risks and hazards and is subject to regulation by all levels of government. Environmental legislation includes, but is not limited to, operational controls, site rehabilitation requirements and restrictions on emissions of various substances produced in association with oil and natural gas operations. Compliance with such legislation is expected to require additional expenditures and a failure to comply may result in fines and penalties which could, in the aggregate and under certain assumptions, become material.

Obsidian Energy is dedicated to managing the environmental impact from our operations through our environmental programs which include resource conservation, water management and site abandonment/ reclamation/ remediation. Operations are continuously monitored to minimize both environmental and climate change impacts and allocate sufficient capital to reclamation and other activities to mitigate the impact on the areas in which the Company operates. Obsidian Energy voluntarily entered into the Government of Alberta’s Area Based Closure program (the "ABC program") which allowed the Company to accelerate abandonment activities, specifically on inactive properties, in a more cost-effective manner through 2020 and 2021. Beginning in 2022, the Company is required to follow the new AER guidance under Directive 088 where a minimum amount of spending is required to abandon inactive sites. In August 2022, our minimum spending target for 2023 was increased by the Alberta Government.

The Company has received ASRP grants and allocations to date of over $34 million on a gross basis, a portion of which was received in allocation eligibility as an ABC program participant. During Q2 2022, the Company was notified that certain grants/allocations that we had previously received under the ASRP program had been revoked by the Government of Alberta due to a broad reduction in program support that impacted many industry participants, which resulted in approximately a $2.3 million reduction. Total grant support will be determined by final project costs. These awards have allowed the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. We began utilizing the ASRP grants in Q4 2020 and have continued this work through 2022, with the ASRP set to expire at the end of 2022.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 13

Liquidity and Capital Resources

Net Debt

Net debt is the total of long-term debt and working capital deficiency as follows:

As at
(millions) September 30, 2022 December 31, 2021
Long-term debt
Syndicated credit facility $ 134.0 $ 321.5
Senior unsecured notes 127.6 -
Senior secured notes - 54.9
PROP Limited recourse loan - 16.0
Deferred interest - 1.3
Unamortized discount of senior unsecured notes (2.4 ) -
Deferred financing costs (5.5 ) (2.7 )
Total 253.7 391.0
Working capital deficiency
Cash - (7.3 )
Accounts receivable (79.6 ) (68.9 )
Prepaid expenses and other (14.7 ) (9.1 )
Accounts payable and accrued liabilities 163.7 107.8
Total 69.4 22.5
Net debt (1) $ 323.1 $ 413.5

(1) Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

Net debt decreased compared to December 31, 2021, as a result of debt repayments made during the period and lower drawings on the syndicated credit facility which was reduced by applying excess free cash flow. This was partially offset by a higher working capital deficiency due to higher activity levels which led to increased accounts payable.

Liquidity

Currently, the Company has a reserve-based syndicated credit facility with a borrowing limit of $175.0 million and senior unsecured notes totaling $127.6 million due in 2027. For further details on the Company’s debt instruments please refer to the “Financing” section of this MD&A.

The Company actively manages our debt portfolio and considers opportunities to reduce or diversify our debt capital structure. Management contemplates both operating and financial risks and takes action as appropriate to limit the Company’s exposure to certain risks. Management maintains close relationships with the Company’s lenders and agents to monitor credit market developments. These actions and plans aim to increase the likelihood of maintaining the Company’s financial flexibility and appropriate capital program, supporting the Company’s ongoing operations and ability to execute longer-term business strategies.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 14

Financial Instruments

Obsidian Energy had the following financial instruments outstanding as at September 30, 2022. Fair values are determined using external counterparty information, which is compared to observable market data. The Company limits our credit risk by executing counterparty risk procedures which include transacting only with institutions within our syndicated credit facility or companies with high credit ratings, and by obtaining financial security in certain circumstances.

Notional<br>Volume Remaining<br>Term Bought Put Price Sold Call Price Swap Price Fair value <br>(millions)
Oil
WTI Collar 10,000 bbl/d October 2022 109.75/bbl 130.07/bbl $ 1.1
WTI Collar 6,000 bbl/d November 2022 105.83/bbl 127.90/bbl 0.7
AECO
AECO Swap 26,065 mcf/d October 2022 4.74/mcf -
Total $ 1.8

All values are in US Dollars.

Refer to the Business Environment section above for a full list of hedges currently outstanding including contracts that were entered into subsequent to September 30, 2022.

Based on commodity prices and contracts in place at September 30, 2022, a $1.00 change in the price per barrel of liquids would change pre-tax unrealized risk management by $0.5 million and a $0.10 change in the price per mcf of natural gas would change pre-tax unrealized risk management by $0.1 million.

The components of risk management on the Consolidated Statements of Income are as follows:

Three months ended <br> September 30 Nine months ended<br>September 30
(millions) 2022 2021 2022 2021
Realized
Settlement of commodity contracts $ (1.6 ) $ (2.0 ) $ (32.4 ) $ (8.3 )
Total realized risk management loss $ (1.6 ) $ (2.0 ) $ (32.4 ) $ (8.3 )
Unrealized
Commodity contracts $ 7.8 $ (0.9 ) $ 4.2 $ (4.4 )
Total unrealized risk management gain (loss) 7.8 (0.9 ) 4.2 (4.4 )
Risk management gain (loss) $ 6.2 $ (2.9 ) $ (28.2 ) $ (12.7 )

In Q3 2022, in conjunction with our refinancing, we closed out the existing hedges put in place by our wholly owned subsidiary PROP 45 for a realized risk management loss of US$3.4 million.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 15

Sensitivity Analysis

Estimated sensitivities to selected key assumptions on funds flow from operations for the 12 months subsequent to the date of this MD&A, including risk management contracts entered into to date, are based on forecasted results.

Impact on funds flow from operations (1)
Change of: Change millions /share
Price per barrel of liquids WTI US1.00
Liquids production 1,000 bbl/day
Price per mcf of natural gas AECO 0.10
Natural gas production 10 mmcf/day
Effective interest rate %
Exchange rate ($US per $CAD)

All values are in US Dollars.

(1) Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP and Other Financial Measures”.

Contractual Obligations and Commitments

Obsidian Energy is committed to certain payments over the next five calendar years and thereafter as follows:

2022 2023 2024 2025 2026 Thereafter Total
Long-term debt (1) $ - $ - $ 134.0 $ - $ - $ 127.6 $ 261.6
Transportation 2.9 7.0 3.3 2.2 1.7 4.2 21.3
Interest obligations 2.4 24.7 20.7 15.2 15.2 15.2 93.4
Office lease 2.5 10.0 10.0 0.8 - - 23.3
Lease liability 1.1 3.2 0.9 0.3 0.1 5.1 10.7
Decommissioning liability (2) 2.8 23.2 21.5 19.9 18.5 79.3 165.2
Total $ 11.7 $ 68.1 $ 190.4 $ 38.4 $ 35.5 $ 231.4 $ 575.5

(1) The 2024 figure includes our syndicated credit facility which has a term-out date of July 2024. The 2027 figure includes our senior unsecured notes due in July 2027. Refer to the Financing section above for further details. Historically, the Company has successfully renewed its syndicated credit facility.

(2) These amounts represent the inflated, discounted future reclamation and abandonment costs that are expected to be incurred over the life of the Company’s properties.

At September 30, 2022, the Company had an aggregate of $127.6 million in senior unsecured notes maturing in July 2027. The revolving period of our syndicated credit facility is July 27, 2023, with a term out period to July 27, 2024. In the future, if the Company is unsuccessful in renewing or replacing the syndicated credit facility or obtaining alternate funding for some or all of the maturing amounts of the senior unsecured notes, it is possible that we could be required to seek to obtain other sources of financing, including other forms of debt or equity arrangements if available. Please see the Financing section of this MD&A for further details regarding our outstanding debt instruments.

The Company is involved in various litigation and claims in the normal course of business and records provisions for claims as required.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 16

Equity Instruments

Common shares issued:
As at September 30, 2022 82,436,210
Issuance under Stock option plan 4,000
As at November 7, 2022 82,440,210
Options outstanding:
As at September 30, 2022 2,280,672
Exercised (4,000 )
As at November 7, 2022 2,276,672
RSUs outstanding:
As at September 30, 2022 861,746
Granted 13,170
As at November 7, 2022 874,916
OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 17
--- ---

Supplemental Production Disclosure

Outlined below is production by product type for each area and in total for the three and nine months ended September 30, 2022 and 2021.

Three months ended <br>September 30 Nine months ended <br>September 30
Daily production (boe/d) 2022 2021 2022 2021
Cardium
Light oil (bbls/d) 10,572 9,988 11,168 10,098
Heavy oil (bbls/d) 41 60 46 52
NGLs (bbls/d) 2,301 2,127 2,330 2,067
Natural gas (mmcf/d) 54 46 53 45
Total production (boe/d) 21,853 19,807 22,395 19,753
Peace River
Light oil (bbls/d) - - - -
Heavy oil (bbls/d) 5,648 2,449 5,751 2,481
NGLs (bbls/d) 5 2 5 3
Natural gas (mmcf/d) 6 3 6 3
Total production (boe/d) 6,623 2,974 6,686 2,960
Viking
Light oil (bbls/d) 389 177 224 168
Heavy oil (bbls/d) 116 122 108 118
NGLs (bbls/d) 43 49 34 43
Natural gas (mmcf/d) 3 3 3 3
Total production (boe/d) 1,034 822 819 810
Legacy
Light oil (bbls/d) 101 149 88 123
Heavy oil (bbls/d) 49 57 35 61
NGLs (bbls/d) 30 35 36 31
Natural gas (mmcf/d) 1 2 1 2
Total production (boe/d) 475 561 424 494
Total
Light oil (bbls/d) 11,062 10,314 11,480 10,389
Heavy oil (bbls/d) 5,854 2,688 5,940 2,712
NGLs (bbls/d) 2,379 2,213 2,405 2,144
Natural gas (mmcf/d) 64 54 63 53
Total production (boe/d) 29,985 24,164 30,324 24,017
OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 18
--- ---

Reconciliation of Cash flow from operating activities to Funds flow from operations

Sep. 30 June 30 Mar. 31 Dec. 31 Sep. 30 June 30 Mar. 31 Dec. 31
Three months ended 2022 2022 2022 2021 2021 2021 2021 2020
Cash flow from operating activities $ 121.4 $ 125.0 $ 83.9 $ 62.6 $ 65.5 $ 42.2 $ 28.4 $ 11.1
Change in non-cash working capital (21.9 ) 26.0 (18.0 ) 6.2 (9.1 ) (2.3 ) 10.3 7.6
Decommissioning expenditures 3.5 3.8 8.5 2.7 1.6 0.5 3.3 2.3
Onerous office lease settlements 2.3 2.3 2.3 2.1 2.3 2.4 2.3 2.3
Deferred financing costs (0.7 ) (0.7 ) (0.7 ) (1.1 ) (1.7 ) (1.7 ) (1.0 ) (2.8 )
Financing fees paid - - - 0.3 - 0.3 4.1 5.6
Restructuring charges (1) - - 2.5 - 0.1 0.1 (2.0 ) 0.9
Transaction costs - - 0.1 3.4 - - 0.1 -
Other expenses (1) - 0.6 - 0.1 0.6 0.8 (9.2 ) (0.6 )
Commodities purchased from third parties - - - 3.7 - - - -
Funds flow from operations $ 104.6 $ 157.0 $ 78.6 $ 80.0 $ 59.3 $ 42.3 $ 36.3 $ 26.4

(1) Excludes the non-cash portion of restructuring and other expenses.

Changes in Internal Control Over Financial Reporting (“ICFR”)

Obsidian Energy’s senior management has evaluated whether there were any changes in the Company's ICFR that occurred during the period beginning on July 1, 2022 and ending on September 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR. No changes to the Company’s ICFR were made during the quarter.

Off-Balance-Sheet Financing

Obsidian Energy has off-balance-sheet financing arrangements consisting of operating leases. The operating lease payments are summarized in the Contractual Obligations and Commitments section.

Non-GAAP and Other Financial Measures

Throughout this MD&A and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities, as indicators of our performance.

Non-GAAP Financial Measures

“Free cash flow” is funds flow from operations less both capital and decommissioning expenditures and the Company believes it is a useful measure to determine and indicate the funding available to Obsidian Energy for investing and financing activities, including the repayment of debt, reallocation to existing business units, and deployment into new ventures. See “Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow” above for a reconciliation of free cash flow to cash flow from operating activities, being our nearest measure prescribed by IFRS.

“Funds flow from operations” is cash flow from operating activities before changes in non-cash working capital, decommissioning expenditures, onerous office lease settlements, the effects of financing related transactions from foreign exchange contracts and debt repayments, restructuring charges, transaction costs, certain other expenses and certain commodities purchased from third parties, and is representative of cash related to continuing operations. Funds flow from operations is used to assess the Company’s ability to fund our planned capital programs. See “Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow” and "Reconciliation of Cash flow from operating activities to Funds flow from operations" above for reconciliations of funds flow from operations to cash flow from operating activities, being our nearest measure prescribed by IFRS.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 19

“Adjusted Funds flow from operations” is funds flow from operations less share-based compensation relating to the Company's Deferred Share Unit plan, Performance Share Unit plan and Non-Treasury Incentive Award plan. The Company believes it is a useful measure to determine and indicate the funding available to Obsidian Energy for investing and financing activities, including the repayment of debt, reallocation to existing business units, and deployment into new ventures. See “Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow” above for a reconciliation of adjusted funds flow from operations to cash flow from operating activities, being our nearest measure prescribed by IFRS.

“Gross revenues” are production revenues including realized risk management gains and losses on commodity contracts and adjusted for commodities purchased and sales of commodities purchased and is used to assess the cash realizations on commodity sales. See “Results of Operations – Production Revenues” for a reconciliation of gross revenues to production revenues, being our nearest measure prescribed by IFRS.

"Sales” are production revenues plus sales of commodities purchased less commodities purchased and is used to assess the cash realizations on commodity sales before realized risk management gains and losses. See “Results of Operations – Production Revenues” for a reconciliation of sales to production revenues, being our nearest measure prescribed by IFRS.

“Net debt” is the total of long-term debt and working capital deficiency and is used by the Company to assess our liquidity. See “Liquidity and Capital Resources – Net Debt” above for a reconciliation of net debt to long-term debt, being our nearest measure prescribed by IFRS.

“Net operating costs” are calculated by deducting processing income and road use recoveries from operating costs and is used to assess the Company’s cost position. Processing fees are primarily generated by processing third party volumes at the Company’s facilities. In situations where the Company has excess capacity at a facility, it may agree with third parties to process their volumes to reduce the cost of operating/owning the facility. Road use recoveries are a cost recovery for the Company as we operate and maintain roads that are also used by third parties. See “Results of Operations – Expenses – Operating” above for a reconciliation of net operating costs to operating costs, being our nearest measure prescribed by IFRS.

“Netback” is revenue less royalties, net operating costs, transportation expenses and realized risk management gains and losses, and is used in capital allocation decisions and to economically rank projects. See "Results of Operations – Netbacks" above for a reconciliation of netbacks to sales.

Non-GAAP Financial Ratios

“Funds flow from operations – basic per share” is comprised of funds flow from operations divided by basic weighted average common shares outstanding. Funds flow from operations is a non-GAAP financial measure. See “Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow” above.

“Funds flow from operations – diluted per share” is comprised of funds flow from operations divided by diluted weighted average common shares outstanding. Funds flow from operations is a non-GAAP financial measure. See “Cash flow from Operating Activities, Funds Flow from Operations, Adjusted Funds Flow from Operations and Free Cash Flow” above.

“Net operating costs per bbl”, “Net operating costs per mcf” and “Net operating costs per boe” are net operating costs divided by weighted average daily production on a per bbl, per mcf or per boe basis, as applicable. Net operating costs is a non-GAAP financial measure. See “Results of Operations – Expenses – Operating”.

“Netback per bbl”, “Netback per mcf” and “Netback per boe” are netbacks divided by weighted average daily production on a per bbl, per mcf or per boe basis, as applicable. Management believes that netback per boe is a key industry performance measure of operational efficiency and provides investors with information that is also commonly presented by other oil and natural gas producers. Netback is a non-GAAP financial measure. See “Results of Operations – Netbacks” above.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 20

Supplementary Financial Measures

Average sales prices for light oil, heavy oil, NGLs, total liquids and natural gas are supplementary financial measures calculated by dividing each of these components of production revenues by their respective production volumes for the periods.

“Cash flow from operating activities – basic per share” is comprised of cash flow from operating activities, as determined in accordance with IFRS, divided by basic weighted average common shares outstanding.

“Cash flow from operating activities – diluted per share" is comprised of cash flow from operating activities, as determined in accordance with IFRS, divided by diluted weighted average common shares outstanding.

"G&A gross – per boe" is comprised of general and administrative expenses on a gross basis, as determined in accordance with IFRS, divided by boe for the period.

"G&A net – per boe" is comprised of general and administrative expenses on a net basis, as determined in accordance with IFRS, divided by boe for the period.

Oil and Natural Gas Information

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 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 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.

ABBREVIATIONS

Oil Natural Gas
bbl barrel or barrels mcf thousand cubic feet
bbl/d barrels per day mcf/d thousand cubic feet per day
boe barrel of oil equivalent mmcf million cubic feet
boe/d barrels of oil equivalent per day mmcf/d million cubic feet per day
MSW Mixed Sweet Blend mmbtu Million British thermal unit
WTI West Texas Intermediate AECO Alberta benchmark price for natural gas
WCS Western Canadian Select NGL natural gas liquids

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: our strategy of maintaining moderate production growth, operational excellence, improving our debt leverage and delivering top quartile total shareholder return; our belief that our plan to focus development activity on our Cardium and Peace River assets will generate value for all stakeholders; that our Cardium position with a deep inventory of high return wells offers a predictable, liquids weighted, production profile capable of generating growth and sustainable free cash flow; that there is compelling Bluesky development and significant Clearwater potential for future heavy oil production growth and cash flow generation, offering further value for stakeholders; terms and conditions for the New Notes (including the Repurchase Offer) and revolving credit facility; that the compliance with certain environmental legislation is expected to require additional expenditures and a failure to comply may result in fines and penalties which could, in the aggregate and under certain assumptions, become material; that the Company continuously monitors operations to minimize environmental impact and allocate sufficient capital to reclamation and other activities to mitigate the impact on the areas in which the Company operates; that we are dedicated to managing the environmental impact from our operations through the environmental programs which include resource conservation, water management and site abandonment / reclamation / remediation; that the Company will follow the new AER guidance under Directive 088 where a minimum amount of spending is required

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 21

to abandon inactive sites; that we will continue the ASRP work in 2022; our expectations for debt levels and targets; that management contemplates both operating and financial risks and takes action as appropriate to limit the Company’s exposure to certain risks and that management maintains close relationships with the Company's lenders and agents to monitor credit market developments, and these actions and plans aim to increase the likelihood of maintaining the Company's financial flexibility and capital program, supporting the Company's ongoing operations and ability to execute longer-term business strategies; and the sensitivity analysis and contractual obligations and commitments moving forward.

With respect to forward-looking statements contained in this document, the Company has made assumptions regarding, among other things: that the Company does not dispose of or acquire material producing properties or royalties or other interests therein; the impact of regional and/or global health related events, including the ongoing COVID-19 pandemic, on energy demand and commodity prices; that the Company's operations and production will not be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to the pandemic; global energy policies going forward, including the continued ability and willingness of members of OPEC and other nations to agree on and adhere to production quotas from time to time; our ability to qualify for (or continue to qualify for) new or existing government programs created as a result of the COVID-19 pandemic or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial condition; our ability to execute our plans as described herein and in our other disclosure documents and the impact that the successful execution of such plans will have on our Company and our stakeholders; future capital expenditure and decommissioning expenditure levels; future operating costs and G&A costs; future 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 hedging activities; future oil, natural gas liquids and natural gas production levels; future exchange rates and interest rates; future debt levels; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including extreme weather events such as wild fires and flooding, infrastructure access and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully to current and new customers; our ability to obtain financing on acceptable terms, including our ability (if necessary) to extend the revolving period and term out period of our credit facility, our ability to maintain the existing borrowing base under our credit facility, our ability (if necessary) to replace our syndicated bank facility and our ability (if necessary) to finance the repayment of our senior unsecured notes on maturity; and our ability to add production and reserves through our development and exploitation activities.

Although the Company believes that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the possibility that we change our budgets in response to internal and external factors, including those described herein; the possibility that the Company will not be able to continue to successfully execute our business plans and strategies in part or in full, and the possibility that some or all of the benefits that the Company anticipates will accrue to our Company and our stakeholders as a result of the successful execution of such plans and strategies do not materialize; the possibility that the Company ceases to qualify for, or does not qualify for, one or more existing or new government assistance programs implemented in connection with the COVID-19 pandemic and other regional and/or global health related events or otherwise, that the impact of such programs falls below our expectations, that the benefits under one or more of such programs is decreased, or that one or more of such programs is discontinued; the impact on energy demand and commodity prices of regional and/or global health related events, including the ongoing COVID-19 pandemic, and the responses of governments and the public to the pandemic, including the risk that the amount of energy demand destruction and/or the length of the decreased demand exceeds our expectations; the risk that there is another significant decrease in the valuation of oil and natural gas companies and their securities and in confidence in the oil and natural gas industry generally, whether caused by a resurgence of the COVID-19 pandemic, the worldwide transition towards less reliance on fossil fuels and/or other factors; the risk that the COVID-19 pandemic and/or other factors adversely

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 22

affects the financial capacity of the Company's contractual counterparties and potentially their ability to perform their contractual obligations; the possibility that the revolving period and/or term out period of our credit facility and the maturity date of our senior unsecured notes is not extended (if necessary), that the borrowing base under our credit facility is reduced, that the Company is unable to renew or refinance our credit facilities on acceptable terms or at all and/or finance the repayment of our senior unsecured notes when they mature on acceptable terms or at all and/or obtain debt and/or equity financing to replace our credit facilities and/or senior unsecured notes; the possibility that we breach one or more of the financial covenants pursuant to our agreements with our lenders and the holders of our senior unsecured notes; the possibility that we are forced to shut-in production, whether due to commodity prices decreasing, extreme weather events or other factors; the risk that OPEC and other nations fail to agree on and/or adhere to production quotas from time to time that are sufficient to balance supply and demand fundamentals for oil; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; industry conditions, including fluctuations in the price of oil, natural gas liquids and natural gas, price differentials for oil and natural gas produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; fluctuations in foreign exchange, including the impact of the Canadian/U.S. dollar exchange rate on our revenues and expenses; fluctuations in interest rates, including the effects of increased interest rates on our borrowing costs and on economic activity, and including the risk that higher interest rates cause or contribute to the onset of a recession; the risk that our costs increase significantly due to ongoing high levels of inflation, supply chain disruptions and/or other factors, adversely affecting our profitability; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed (including extreme cold during winter months, wild fires and flooding); the risk that wars and other armed conflicts adversely affect world economies and the demand for oil and natural gas, including the ongoing war between Russian and Ukraine; the possibility that fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to hydrocarbons and technological advances in fuel economy and renewable energy generation systems could permanently reduce the demand for oil and natural gas and/or permanently impair the Company's ability to obtain financing and/or insurance on acceptable terms or at all, and the possibility that some or all of these risks are heightened as a result of the response of governments, financial institutions and consumers to the ongoing COVID-19 pandemic and/or public opinion and/or special interest groups; and the other factors described under "Risk Factors" in our Annual Information Form and described in our public filings, available in Canada at www.sedar.com and in the United States at www.sec.gov. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, the Company does not undertake any obligation to publicly update any forward-looking statements. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Additional Information

Additional information relating to Obsidian Energy, including Obsidian Energy’s Annual Information Form, is available on the Company’s website at www.obsidianenergy.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

OBSIDIAN ENERGY THIRD QUARTER 2022 MANAGEMENT’S DISCUSSION AND ANALYSIS 23

EX-99.3

Exhibit 99.3

Obsidian Energy Ltd.

Consolidated Balance Sheets

As at
(CAD millions, unaudited) Note September 30, 2022 December 31, 2021
Assets
Current
Cash $ - $ 7.3
Accounts receivable 79.6 68.9
Risk management 7 1.8 1.8
Prepaid expenses and other 14.7 9.1
96.1 87.1
Non-current
Property, plant and equipment 3 1,468.3 1,342.1
1,468.3 1,342.1
Total assets $ 1,564.4 $ 1,429.2
Liabilities and Shareholders’ Equity
Current
Accounts payable and accrued liabilities $ 163.7 $ 107.8
Current portion of long-term debt 4 - 391.0
Current portion of lease liabilities 5 3.9 4.1
Current portion of provisions 6 29.1 23.4
Risk management 7 - 4.2
196.7 530.5
Non-current
Long-term debt 4 253.7 -
Lease liabilities 5 2.9 4.6
Provisions 6 155.9 123.8
Other non-current liabilities 8.3 6.8
617.5 665.7
Shareholders’ equity
Shareholders’ capital 9 2,221.9 2,213.8
Other reserves 100.1 103.2
Deficit (1,375.1 ) (1,553.5 )
946.9 763.5
Total liabilities and shareholders’ equity $ 1,564.4 $ 1,429.2

Subsequent event (Note 7)

Commitments and contingencies (Note 11)

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1

Obsidian Energy Ltd.

Consolidated Statements of Income

Three months ended<br>September 30 Nine months ended<br>September 30
(CAD millions, except per share amounts, unaudited) Note 2022 2021 2022 2021
Production revenues 8 $ 210.6 $ 124.5 $ 690.8 $ 327.7
Processing fees 1.6 1.6 5.5 4.9
Royalties (38.8 ) (13.3 ) (113.5 ) (29.9 )
Sales of commodities purchased from third parties 4.0 2.8 10.8 6.7
177.4 115.6 593.6 309.4
Other income 1.8 1.2 4.9 3.7
Government decommissioning assistance 12 4.5 2.9 15.6 8.8
Risk management gain (loss) 7 6.2 (2.9 ) (28.2 ) (12.7 )
189.9 116.8 585.9 309.2
Expenses
Operating 43.5 32.3 127.7 97.1
Transportation 8.7 5.4 25.5 13.5
Commodities purchased from third parties 3.5 2.4 9.2 5.9
General and administrative 4.7 4.1 13.6 11.4
Restructuring - 0.1 2.5 (1.8 )
Share-based compensation 10 4.0 3.0 28.9 15.4
Depletion, depreciation and impairment 3 71.1 10.1 164.6 (249.9 )
Gain on provisions 6 - (0.1 ) - (0.4 )
Foreign exchange loss (gain) 4 (0.1 ) 1.6 0.7 -
Financing 4 12.6 10.7 32.9 33.4
Transaction costs - - 0.1 -
Other 1.2 0.6 1.8 (7.7 )
149.2 70.2 407.5 (83.1 )
Income before taxes 40.7 46.6 178.4 392.3
Deferred tax expense - - - -
Net and comprehensive income $ 40.7 $ 46.6 $ 178.4 $ 392.3
Net income per share
Basic $ 0.50 $ 0.62 $ 2.18 $ 5.28
Diluted $ 0.48 $ 0.60 $ 2.12 $ 5.14
Weighted average shares outstanding (millions)
Basic 9 82.2 74.9 81.9 74.3
Diluted 9 84.5 77.3 84.2 76.4

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 2

Obsidian Energy Ltd.

Consolidated Statements of Cash Flows

Three months ended<br>September 30 Nine months ended<br>September 30
(CAD millions, unaudited) Note 2022 2021 2022 2021
Operating activities
Net income $ 40.7 $ 46.6 $ 178.4 $ 392.3
Government decommissioning assistance (4.5 ) (2.9 ) (15.6 ) (8.8 )
Depletion, depreciation and impairment 3 71.1 10.1 164.6 (249.9 )
Provisions 6 - (0.1 ) - (0.4 )
Financing 4 3.5 3.5 10.4 12.5
Share-based compensation 10 1.2 0.6 3.6 1.7
Unrealized risk management loss (gain) 7 (7.8 ) 0.9 (4.2 ) 4.4
Foreign exchange loss (gain) 4 (0.1 ) 1.6 0.7 -
Decommissioning expenditures 6 (3.5 ) (1.6 ) (15.8 ) (5.4 )
Onerous office lease settlements 6 (2.3 ) (2.3 ) (6.9 ) (7.0 )
Financing fees paid - - - (4.4 )
Other 1.2 - 1.2 -
Change in non-cash working capital 21.9 9.1 13.9 1.1
121.4 65.5 330.3 136.1
Investing activities
Capital expenditures 3 (74.0 ) (45.1 ) (217.7 ) (96.1 )
Property acquisitions 3 (4.3 ) - (4.6 ) -
Change in non-cash working capital 31.4 12.4 27.1 15.8
(46.9 ) (32.7 ) (195.2 ) (80.3 )
Financing activities
Decrease in long-term debt 4 (148.1 ) (30.0 ) (187.5 ) (55.0 )
Issuance of senior unsecured notes 4 125.0 - 125.0 -
Repayments of senior secured notes/PROP limited recourse loan 4 (53.1 ) - (71.6 ) (1.4 )
Financing fees paid (6.5 ) - (6.5 ) -
Lease liabilities settlements 5 (1.2 ) (1.1 ) (3.2 ) (3.4 )
Exercised compensation plans 0.2 - 1.4 (0.1 )
(83.7 ) (31.1 ) (142.4 ) (59.9 )
Change in cash and cash equivalents (9.2 ) 1.7 (7.3 ) (4.1 )
Cash and cash equivalents, beginning of period 9.2 2.3 7.3 8.1
Cash and cash equivalents, end of period $ - $ 4.0 $ - $ 4.0

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 3

Obsidian Energy Ltd.

Statements of Changes in Shareholders’ Equity

(CAD millions, unaudited) Note Shareholders’ Capital Other <br>Reserves Deficit Total
Balance at January 1, 2022 $ 2,213.8 $ 103.2 $ (1,553.5 ) $ 763.5
Net and comprehensive income - - 178.4 178.4
Share-based compensation 10 - 3.6 - 3.6
Issued on exercise of equity compensation plans 9 8.1 (6.7 ) - 1.4
Balance at September 30, 2022 $ 2,221.9 $ 100.1 $ (1,375.1 ) $ 946.9
(CAD millions, unaudited) Note Shareholders’ Capital Other <br>Reserves Deficit Total
--- --- --- --- --- --- --- --- --- --- --- --- --- ---
Balance at January 1, 2021 $ 2,187.0 $ 103.6 $ (1,967.5 ) $ 323.1
Net and comprehensive income - - 392.3 392.3
Share-based compensation 10 - 1.7 - 1.7
Issued on exercise of equity compensation plans 9 2.6 (2.7 ) - (0.1 )
Balance at September 30, 2021 $ 2,189.6 $ 102.6 $ (1,575.2 ) $ 717.0

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 4

Notes to the Unaudited Interim Consolidated Financial Statements

(All tabular amounts are in CAD millions except numbers of common shares, per share amounts, percentages and various figures in Note 7)

  1. Structure of Obsidian Energy

Obsidian Energy Ltd. (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) is an exploration and production company and is governed by the laws of the Province of Alberta, Canada. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. Obsidian Energy’s portfolio of assets is managed at an enterprise level, rather than by separate operating segments or business units. The Company assesses our financial performance at the enterprise level and resource allocation decisions are made on a project basis across our portfolio of assets, without regard to the geographic location of projects. Obsidian Energy owns the petroleum and natural gas assets or 100 percent of the equity, directly or indirectly, of the entities that carry on the remainder of the oil and natural gas business of Obsidian Energy which includes 100 percent of the Peace River Oil Partnership (“PROP”) effective November 24, 2021.

  1. Basis of presentation and statement of compliance

a) Basis of Presentation

The unaudited condensed interim consolidated financial statements (“interim consolidated financial statements”) include the accounts of Obsidian Energy and our wholly owned subsidiaries.

Certain comparative figures have been reclassified to correspond with current period presentation.

b) Statement of Compliance

These interim consolidated financial statements are prepared in compliance with IAS 34 “Interim Financial Reporting” and accordingly do not contain all of the disclosures included in Obsidian Energy’s annual audited consolidated financial statements. These financial statements should be read in conjunction with Obsidian Energy’s audited annual consolidated financial statements as at and for the year ended December 31, 2021.

These interim consolidated financial statements were prepared using the same accounting policies as in the annual consolidated financial statements as at and for the year ended December 31, 2021.

All tabular amounts are in millions of Canadian dollars, except numbers of common shares, per share amounts, percentages and other figures as noted.

These interim consolidated financial statements were approved for issuance by the Board of Directors on November 7, 2022.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 5
  1. Property, plant and equipment (“PP&E”)

Oil and Gas assets/ Facilities, Corporate assets

Cost Nine months ended<br>September 30, 2022 Year ended<br>December 31, 2021
Balance, beginning of period $ 10,528.7 $ 10,838.3
Capital expenditures 217.7 140.9
Business acquisition - 32.9
Acquisitions 4.6 0.1
Net decommissioning changes 67.5 62.3
Derecognition on acquisition - (545.8 )
Balance, end of period $ 10,818.5 $ 10,528.7
Accumulated depletion and depreciation Nine months ended<br>September 30, 2022 Year ended<br>December 31, 2021
--- --- --- --- --- ---
Balance, beginning of period $ 9,194.6 $ 9,942.6
Depletion and depreciation 126.1 116.3
Impairments 35.8 19.5
Impairment reversals - (338.0 )
Derecognition on acquisition - (545.8 )
Balance, end of period $ 9,356.5 $ 9,194.6
As at
--- --- --- --- ---
Net book value September 30, 2022 December 31, 2021
Total $ 1,462.0 $ 1,334.1

Right-of-use assets

Cost Nine months ended<br>September 30, 2022 Year ended<br>December 31, 2021
Balance, beginning of period $ 24.8 $ 22.7
Additions 1.0 2.1
Balance, end of period $ 25.8 $ 24.8
Accumulated amortization Nine months ended<br>September 30, 2022 Year ended<br>December 31, 2021
--- --- --- --- ---
Balance, beginning of period $ 16.8 $ 13.2
Amortization 2.7 3.6
Balance, end of period $ 19.5 $ 16.8
As at
--- --- --- --- ---
Net book value September 30, 2022 December 31, 2021
Total $ 6.3 $ 8.0

Total PP&E

Total PP&E including Oil and Gas assets, Facilities, Corporate assets and Right-of-use assets is as follows:

As at
PP&E September 30, 2022 December 31, 2021
Oil and Gas assets, Facilities, Corporate assets $ 1,462.0 $ 1,334.1
Right-of-use assets 6.3 8.0
Total $ 1,468.3 $ 1,342.1
OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 6
--- ---

At September 30, 2022, the Company completed an assessment to determine if indicators of impairment or an impairment reversal were present. No indicators were noted for our Cardium, Peace River and Viking cash generating units (“CGUs").

During the first nine months of 2022, we recorded a $35.8 million impairment in our Legacy CGU due to accelerated decommissioning spending and an increase to our forecasted near-term spending profile in the area due to new Alberta government regulations. The Legacy CGU has no recoverable amount, as such changes in our decommissioning liability are expensed each period.

  1. Long-term debt
December 31, 2021
Syndicated credit facility 134.0 $ 321.5
Senior unsecured notes - 2022
11.95% CAD127.6 million, maturing July 27, 2027 127.6 -
PROP Limited recourse loan
10.50%, maturing December 31, 2022 - 16.0
Senior secured notes – 2008 Notes
9.37%, US3.1 million, maturing November 30, 2022 - 4.7
Senior secured notes – 2010 Q1 Notes
8.82%, US7.6 million, maturing November 30, 2022 - 11.3
Senior secured notes – 2010 Q4 Notes
7.85%, US10.3 million, maturing November 30, 2022 - 15.4
7.95%, US4.5 million, maturing November 30, 2022 - 6.8
8.20%, US1.7 million, maturing November 30, 2022 - 2.5
Senior secured notes – 2011 Q4 Notes
7.76%, US9.5 million, maturing November 30, 2022 - 14.2
Total 261.6 392.4
Deferred interest - 1.3
Unamortized discount of senior unsecured notes (2.4 ) -
Deferred financing costs (5.5 ) (2.7 )
Total long-term debt 253.7 $ 391.0
Current portion - $ 391.0
Non-current portion 253.7 $ -

All values are in US Dollars.

At December 31, 2021, the term-out date of the syndicated credit facility was within one year of the balance sheet date, which resulted in the outstanding amount being presented as a current liability.

In July 2022, the Company completed a refinancing and issued five-year senior unsecured notes for an aggregate principal amount of $127.6 million (the “New Notes) as well as entered into new syndicated credit facilities with borrowing capacity of $205.0 million (the “New Credit Facilities“). The Company used the net proceeds from the New Notes, together with initial draws on the New Credit Facilities, to repay all of our existing senior secured notes due November 30, 2022, repay the outstanding balances under our existing credit facilities due November 30, 2022, and repay the PROP limited recourse loan due on December 31, 2022.

The New Credit Facilities were entered into with a group of lenders providing the Company with a $175.0 million revolving credit facility and a $30.0 million non-revolving term loan. The revolving credit facility is subject to a semi-annual borrowing base redetermination typically in May and November of each year and currently has a revolving period to July 27, 2023 and a term out date of July 27, 2024. The non-revolving term loan was subsequently repaid in September 2022 and is no longer available. As part of the New Credit Facilities, the Company has continued to agree to grant floating charge security over all of our properties in favour of lenders within our banking syndicate.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 7

The New Notes have an interest rate of 11.95 percent and mature on July 27, 2027 and were issued at a price of $980.00 per $1,000.00 principal amount resulting in aggregate gross proceeds of $125.0 million. The New Notes are direct senior unsecured obligations of Obsidian Energy ranking equal with all other present and future senior unsecured indebtedness of the Company. As part of the terms of the New Notes, the Company is required to provide a repurchase offer (the "Repurchase Offer"), which can be exercised at the option of the noteholders, to an aggregate amount of $63.8 million. The Repurchase Offer is based on free cash flow available, as defined in the New Notes agreement (EBITDA less both capital expenditures and decommissioning expenditures), whereby 75 percent of free cash flow is required to be offered towards redeeming a portion of the New Notes on or before July 27, 2024, and 50 percent of free cash flow thereafter. The Repurchase Offer is in cash at a price equal to 103 percent of the principal amount of the New Notes to be redeemed plus accrued and unpaid interest. The redemption dates are semi-annual based on Q1 and Q2 free cash flow (paid typically in August) and based on Q3 and Q4 free cash flow (paid typically in March). Minimum available liquidity thresholds under the Company's New Credit Facilities are also required to be met in order to proceed with a Repurchase Offer.

At September 30, 2022, letters of credit totaling $5.0 million were outstanding (December 31, 2021 – $5.0 million) that reduce the amount otherwise available to be drawn on the New Credit Facilities.

Financing expense consists of the following:

Three months ended September 30 Nine months ended September 30
2022 2021 2022 2021
Interest $ 8.3 $ 6.8 $ 20.2 $ 19.5
Interest on PROP Limited recourse loan 0.7 - 1.7 -
Advisor fees 0.1 0.4 0.6 1.4
Accretion on decommissioning liability 2.5 1.4 7.5 4.3
Accretion on office lease provision 0.3 0.5 1.1 1.5
Accretion on other non-current liability - 0.1 0.2 0.2
Accretion on lease liabilities 0.1 0.2 0.3 0.5
Deferred financing costs 0.7 1.7 2.1 4.4
Debt modification (0.1 ) (0.4 ) (0.8 ) 1.6
Financing $ 12.6 $ 10.7 $ 32.9 $ 33.4
OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8
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  1. Lease liabilities

Total lease liabilities included in the Consolidated Balance Sheets are as follows:

Nine months ended <br>September 30, 2022 Year ended<br>December 31, 2021
Balance, beginning of period $ 8.7 $ 10.4
Additions 1.0 2.1
Accretion charges 0.3 0.6
Lease payments (3.2 ) (4.4 )
Balance, end of period $ 6.8 $ 8.7
Current portion $ 3.9 $ 4.1
Non-current portion $ 2.9 $ 4.6
  1. Provisions
As at
September 30, 2022 December 31, 2021
Decommissioning liability $ 165.2 $ 121.6
Office lease provision 19.8 25.6
Total $ 185.0 $ 147.2
Current portion $ 29.1 $ 23.4
Non-current portion $ 155.9 $ 123.8

Decommissioning liability

At September 30, 2022, the decommissioning liability was determined by applying an inflation factor of 2.0 percent (December 31, 2021 - 2.0 percent) and the inflated amount was discounted using a credit-adjusted rate of 10.0 percent (December 31, 2021 – 9.0 percent) over the expected useful life of the underlying assets, currently extending over 50 years into the future. At September 30, 2022, the total decommissioning liability on an undiscounted, uninflated basis was $582.2 million (December 31, 2021 - $594.6 million).

Changes to the decommissioning liability were as follows:

Nine months ended<br>September 30, 2022 Year ended <br>December 31, 2021
Balance, beginning of period $ 121.6 $ 70.5
Net liabilities added (1) 0.4 0.1
Acquisition - 2.1
Increase due to changes in estimates 67.1 62.2
Liabilities settled (15.8 ) (8.1 )
Government decommissioning assistance (15.6 ) (11.0 )
Accretion charges 7.5 5.8
Balance, end of period $ 165.2 $ 121.6
Current portion $ 20.2 $ 14.5
Non-current portion $ 145.0 $ 107.1

(1) Includes additions from drilling activity, facility capital spending and disposals related to net property dispositions.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 9

In August 2022, the Alberta Energy Regulator announced an increase in the minimum mandatory spending requirement for all oil and gas companies inactive decommissioning liabilities starting in 2023. This largely contributed to the Company's increase due to changes in estimates.

Office lease provision

The office lease provision represents the net present value of non-lease components on future office lease payments. The office lease provision was determined by applying an asset specific credit-adjusted discount rate of 6.5 percent (December 31, 2021 – 6.5 percent) over the remaining life of the lease contracts, extending into 2025.

Changes to the office lease provision were as follows:

Nine months ended<br>September 30, 2022 Year ended <br>December 31, 2021
Balance, beginning of period $ 25.6 $ 33.5
Decrease due to changes in estimates - (0.7 )
Settlements (6.9 ) (9.1 )
Accretion charges 1.1 1.9
Balance, end of period $ 19.8 $ 25.6
Current portion $ 8.9 $ 8.9
Non-current portion $ 10.9 $ 16.7
  1. Risk management

Financial instruments consist of cash, accounts receivable, fair values of derivative financial instruments, accounts payable and accrued liabilities and long-term debt. At September 30, 2022, the fair values of these financial instruments approximate their carrying amounts.

The fair values of all outstanding financial commodity related contracts are reflected on the Consolidated Balance Sheets with the changes during the period recorded in income as unrealized gains or losses.

At September 30, 2022 and December 31, 2021, the only asset or liability measured at fair value on a recurring basis was the risk management asset and liability, which was valued based on “Level 2 inputs” being quoted prices in markets that are not active or based on prices that are observable for the asset or liability.

The following table reconciles the changes in the fair value of financial instruments outstanding:

Risk management asset (liability) Nine months ended <br>September 30, 2022 Year ended <br>December 31, 2021
Balance, beginning of period $ (2.4 ) $ 0.2
Unrealized gain (loss) on financial instruments:
Commodity collars and swaps 4.2 (2.6 )
Total fair value, end of period $ 1.8 $ (2.4 )
Current asset portion $ 1.8 $ 1.8
Current liability portion $ - $ (4.2 )

Obsidian Energy had the following financial instruments outstanding as at September 30, 2022. Fair values are determined using external counterparty information, which is compared to observable market data. The Company limits our credit risk by executing counterparty risk procedures which include transacting only with institutions within our syndicated credit facility or companies with high credit ratings and by obtaining financial security in certain circumstances.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 10
Notional<br>Volume Remaining<br>Term Bought Put Price Sold Call Price Swap Price Fair value <br>(millions)
--- --- --- --- --- --- --- ---
Oil
WTI Collar 10,000 bbl/d October 2022 109.75/bbl 130.07/bbl $ 1.1
WTI Collar 6,000 bbl/d November 2022 105.83/bbl 127.90/bbl 0.7
AECO
AECO Swap 26,065 mcf/d October 2022 4.74/mcf -
Total $ 1.8

All values are in US Dollars.

Subsequent to September 30, 2022, the Company entered into the following additional financial hedges:

Notional<br>Volume Remaining<br>Term Bought Put Price Sold Call Price Swap Price
Oil
WTI Swap 1,950 bbl/d November 2022 123.97/bbl
WTI Collar 1,000 bbl/d November 2022 107.50/bbl 120.00/bbl
WTI Collar 2,000 bbl/d December 2022 105.00/bbl 130.20/bbl
AECO
AECO Swap 17,487 mcf/d April 2023 - October 2023 4.01/mcf

All values are in US Dollars.

The components of risk management on the Consolidated Statements of Income are as follows:

Three months ended <br> September 30 Nine months ended<br>September 30
2022 2021 2022 2021
Realized
Settlement of commodity contracts $ (1.6 ) $ (2.0 ) $ (32.4 ) $ (8.3 )
Total realized risk management loss $ (1.6 ) $ (2.0 ) $ (32.4 ) $ (8.3 )
Unrealized
Commodity contracts $ 7.8 $ (0.9 ) $ 4.2 $ (4.4 )
Total unrealized risk management gain (loss) 7.8 (0.9 ) 4.2 (4.4 )
Risk management gain (loss) $ 6.2 $ (2.9 ) $ (28.2 ) $ (12.7 )

In July 2022, in conjunction with our refinancing, we closed out the existing hedges put in place by our wholly owned subsidiary PROP Energy 45 Limited Partnership for a realized risk management loss of US$3.4 million.

Market risks

Obsidian Energy is exposed to normal market risks inherent in the oil and natural gas business, including, but not limited to, commodity price risk, foreign currency rate risk, credit risk, interest rate risk and liquidity risk. The Company seeks to mitigate these risks through various business processes and management controls and from time to time by using financial instruments.

There have been no material changes to these risks from those discussed in the Company’s annual audited consolidated financial statements.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 11
  1. Revenue and Other Income

The Company’s significant revenue streams consist of the following:

Three months ended <br> September 30 Nine months ended<br>September 30
2022 2021 2022 2021
Oil $ 164.2 $ 94.6 $ 541.1 $ 252.7
NGLs 15.1 10.7 48.2 25.5
Natural gas 31.3 19.2 101.5 49.5
Production revenues 210.6 124.5 690.8 327.7
Processing fees 1.6 1.6 5.5 4.9
Oil and natural gas sales 212.2 126.1 696.3 332.6
Other income 1.8 1.2 4.9 3.7
Oil and natural gas sales and other income $ 214.0 $ 127.3 $ 701.2 $ 336.3
  1. Shareholders’ equity

i) Issued

Shareholders’ capital Common Shares Amount
Balance, December 31, 2020 73,516,225 $ 2,187.0
Issued pursuant to equity compensation plans (1) 1,356,610 2.6
Equity issue 5,880,681 25.9
Share issue costs - (1.7 )
Balance, December 31, 2021 80,753,516 $ 2,213.8
Issued pursuant to equity compensation plans (1) 1,682,694 8.1
Balance, September 30, 2022 82,436,210 $ 2,221.9

(1) Upon vesting or exercise of equity awards, the net benefit is recorded as a reduction of other reserves and an increase to shareholders’ capital.

ii) Earnings per share - Basic and Diluted

The weighted average number of shares used to calculate per share amounts was as follows:

Three months ended <br> September 30 Nine months ended<br>September 30
Average shares outstanding (millions) 2022 2021 2022 2021
Basic 82.2 74.9 81.9 74.3
Dilutive impact of stock options/ Restricted Share Units ("RSUs") 2.3 2.4 2.3 2.1
Diluted 84.5 77.3 84.2 76.4
  1. Share-based compensation

Restricted and Performance Share Unit plan ("RPSU plan")

Restricted Share Unit grants under the RPSU plan

Obsidian Energy awards RSU grants under the RPSU plan whereby employees receive consideration that fluctuates based on the Company’s share price on the Toronto Stock Exchange ("TSX"). Consideration can be in the form of cash or shares purchased on the open market or issued from treasury.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 12
RSUs <br>(number of shares equivalent) Nine months ended <br>September 30, 2022 Year ended<br>December 31, 2021
--- --- --- --- --- --- ---
Outstanding, beginning of period 1,167,351 2,355,408
Granted 524,055 190,500
Vested (784,514 ) (1,344,672 )
Forfeited (45,146 ) (33,885 )
Outstanding, end of period 861,746 1,167,351

The fair value and weighted average assumptions of the RSUs granted during the periods were as follows:

Nine months ended September 30
2022 2021
Average fair value of RSUs granted (per RSU) $ 10.57 $ 1.99
Expected life of RSUs (years) 2.9 1.0
Expected forfeiture rate 0.5 % nil

Performance Share Unit (“PSU”) grants under the RPSU plan

The RPSU plan allows Obsidian Energy to grant PSUs to employees of the Company. The PSU obligation is classified as a liability due to the cash settlement feature and could be settled in cash, shares purchased on the open market or shares issued from treasury.

PSUs (number of shares equivalent) Nine months ended <br>September 30, 2022 Year ended<br>December 31, 2021
Outstanding, beginning of period 1,138,465 453,845
Granted 124,610 684,620
Vested (181,018 ) -
Forfeited (133,017 ) -
Outstanding, end of period 949,040 1,138,465
As at
--- --- --- --- ---
PSU liability September 30, 2022 December 31, 2021
Current $ 5.3 $ 0.2
Non-current 6.6 4.2
Total $ 11.9 $ 4.4

Stock Option Plan

Obsidian Energy has a Stock Option Plan that allows the Company to issue options to acquire common shares (“Options”) to officers, employees, directors and other service providers.

Nine months ended <br>September 30, 2022 Year ended <br>December 31, 2021
Options Number of<br>Options Weighted Average<br>Exercise Price Number of<br>Options Weighted Average<br> Exercise Price
Outstanding, beginning of period 3,021,672 $ 1.56 961,954 $ 0.94
Granted 156,400 10.64 2,116,120 1.99
Exercised (897,400 ) 1.29 (11,938 ) 0.56
Forfeited - - (44,464 ) 8.74
Outstanding, end of period 2,280,672 $ 2.29 3,021,672 $ 1.56
Exercisable, end of period 755,498 $ 1.68 748,438 $ 1.29
OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 13
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The fair value and weighted average assumptions of the Options granted during the periods were as follows:

Nine months ended September 30
2022 2021
Average fair value of Options granted (per Option) $ 6.56 $ 1.11
Expected volatility 87.0 % 86.9 %
Expected life of Options (years) 3.9 3.4
Expected forfeiture rate 0.3 % 0.5 %

Non-Treasury Incentive Award Plan (“NTIP”)

In 2021, Obsidian Energy implemented the NTIP that allows the Company to issue restricted awards whereby employees receive consideration that fluctuates based on the Company’s share price on the TSX. The Company has the option to provide the consideration in the form of cash or shares purchased on the open market.

NTIP Restricted Awards Nine months ended <br>September 30, 2022 Year ended<br>December 31, 2021
Outstanding, beginning of period 1,093,800 -
Granted 3,400 1,120,660
Vested (353,503 ) -
Forfeited (43,535 ) (26,860 )
Outstanding, end of period 700,162 1,093,800
As at
--- --- --- --- ---
NTIP liability September 30, 2022 December 31, 2021
Current $ 2.5 $ 1.4
Non-current 1.7 1.1
Total $ 4.2 $ 2.5

Deferred Share Unit (“DSU”) plan

The DSU plan allows the Company to grant DSUs in lieu of cash fees to non-employee directors providing a right to receive, upon retirement from the Board, a cash payment based on the volume-weighted-average trading price of the common shares on the TSX.

Deferred Share Units Nine months ended <br>September 30, 2022 Year ended <br>December 31, 2021
Outstanding, beginning of period 2,018,499 2,087,580
Granted 42,509 239,754
Exercised (249,763 ) (308,835 )
Outstanding, end of period 1,811,245 2,018,499
As at
--- --- --- --- ---
DSU Liability September 30, 2022 December 31, 2021
Current $ 18.2 $ 10.7
Non-current - -
Total $ 18.2 $ 10.7

In the first nine months of 2022, $3.6 million of DSUs were redeemed. Currently, the Company has no outstanding DSUs that are redeemable.

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 14

Share-based compensation

Share-based compensation consisted of the following:

Three months ended <br> September 30 Nine months ended<br>September 30
2022 2021 2022 2021
DSUs $ 0.2 $ 0.8 $ 11.1 $ 8.7
PSUs 2.0 0.8 8.6 3.6
NTIP 0.6 0.8 5.6 1.4
Cash settled share-based incentive plans $ 2.8 $ 2.4 $ 25.3 $ 13.7
RSUs $ 0.9 $ 0.2 $ 2.5 $ 0.9
Options 0.3 0.4 1.1 0.8
Equity settled share-based incentive plans 1.2 0.6 3.6 1.7
Share-based compensation $ 4.0 $ 3.0 $ 28.9 $ 15.4

The share price used in the fair value calculation of the DSU, NTIP and PSU obligations at September 30, 2022 was $9.93 per share (2021 – $4.51).

  1. Commitments and contingencies

The Company is involved in various litigation and claims in the normal course of business and records provisions for claims as required.

  1. Government grants

The Company received grant allocations under the Alberta Site Rehabilitation Program beginning in 2020. These awards have allowed the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. For the first nine months of 2022, the Company utilized $15.6 million of net grants (2021 – $8.8 million).

OBSIDIAN ENERGY THIRD QUARTER 2022 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 15

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Stephen Loukas, Interim President and Chief Executive Officer of Obsidian Energy Ltd., certify the following:

  1. Review: I have reviewed the interim financial report and interim MD&A (together the “interim filings”) of Obsidian Energy Ltd. (the “issuer”) for the interim period ended September 30, 2022.

  2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

  3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

  4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

  5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A.

5.3 N/A.

  1. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 8, 2022

(signed) “Stephen Loukas”

_______________________

Stephen Loukas

Interim President & Chief Executive Officer

EX-99.5

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Peter Scott, Senior Vice President and Chief Financial Officer of Obsidian Energy Ltd., certify the following:

  1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Obsidian Energy Ltd. (the “issuer”) for the interim period ended September 30, 2022.

  2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

  3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

  4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

  5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A.

5.3 N/A.

  1. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2022 and ended on September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 8, 2022

(signed) “Peter Scott”

_______________________

Peter Scott

Senior Vice President and Chief Financial Officer

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