Obsidian Energy arranges $175-million note financing

Executive Summary

• Obsidian Energy Ltd. has entered into an underwriting agreement to privately place $175 million in aggregate principal amount of 8.125% five-year senior unsecured notes due December 3, 2030.
• The net proceeds from this new issuance will be primarily used to redeem existing $80.8 million senior unsecured notes due July 27, 2027, with remaining funds allocated to pay down indebtedness under the syndicated credit facility and cover transaction expenses.
• The refinancing reduces the company's interest rate burden and strengthens its balance sheet, with the syndicated credit facility expected to be approximately $5 million drawn post-completion.

Key Details

• New Debt Issuance: $175.0 million aggregate principal amount of 8.125% five-year senior unsecured notes due December 3, 2030.
• Pricing/Structure: Issued at par under a trust indenture; direct senior unsecured obligations ranking equal with all other present and future senior unsecured indebtedness.
• Closing Date: Expected on or about December 3, 2025, subject to customary closing conditions.
• Use of Proceeds:
  • Redemption of existing $80.8 million, 11.95% senior unsecured notes due July 27, 2027.
  • Pay down indebtedness under the syndicated credit facility.
  • Pay related transaction expenses.
• Debt Position Post-Transaction: The company's $235 million syndicated credit facility will be approximately $5 million drawn.
• Redemption Notice: Obsidian Energy has given notice of redemption for the 2027 notes, conditional upon the successful closing of the new offering.
• Underwriters: BMO Capital Markets and RBC Capital Markets acting as bookrunners.
• Jurisdiction: Offered in each province of Canada and in the United States on a private placement basis; not qualified for distribution to the public or registered under securities laws.

Notable Quotes

• "Given the strength in the credit markets, the company took the opportunity to refinance our unsecured notes at a considerably lower interest rate than our previous note issue... This refinancing further strengthens our already solid balance sheet during this period of commodity price volatility. Additionally, it provides significant flexibility to grow our production at Peace River and Willesden Green when prices are appropriate to doing so, further our enhanced oil recovery opportunities and continue with our shareholder return initiatives." — Stephen Loukas, President and CEO