Obsidian Energy Announces 2026 Guidance and Provides an Operational Update
Executive Summary
- Obsidian Energy announces its 2026 capital budget of $190‑$230 million and production guidance of 27,900‑29,900 boe/d (midpoint 28,900 boe/d), with 73% liquids.
- Expected funds flow from operations (FFO) of $225 million ($3.35 per share) and positive free cash flow of ~$7 million at assumed WTI prices of US$58/bbl H1 and US$62/bbl H2 2026.
- Detailed drilling program includes 38 net operated wells (26 development, 2 appraisal, 8 injectors) across Peace River (heavy oil) and Willesden Green/PCU #11 (light oil), plus optionality for additional water‑flood injectors.
Key Details
- Capital Expenditures
- Total $190‑$230 M; $128 M allocated to light‑oil assets (Willesden Green/PCU #11) and $80 M to heavy‑oil assets (Peace River).
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$22 M of the Peace River budget dedicated to water‑flood projects (Dawson & Nampa areas).
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Production Guidance
- 2026 average production: 27,900‑29,900 boe/d (midpoint 28,900 boe/d).
- Liquids mix: 73% oil/NGLs.
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Asset‑level averages: Heavy Oil 12,700 boe/d (93% liquids); Light Oil 16,200 boe/d (58% liquids).
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Financial Guidance
- FFO: $225 M ($3.35/share) at WTI $58/H1, $62/H2.
- Positive free cash flow: ~$7 M ($0.10/share).
- Net operating costs: $14‑$15 per boe.
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Net debt (pre‑NCIB): $272 M; net‑debt/FFO ratio 1.2×.
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Drilling Program – Heavy Oil (Peace River)
- Total 26 net wells planned: 9 development in Bluesky, 9 producers in Clearwater, plus 8 water‑flood injectors (first half) and optional 9 additional injectors (second half).
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Water‑flood spend: $22 M (first half), optional $14 M (second half).
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Drilling Program – Light Oil (Willesden Green/PCU #11)
- 12 net wells planned in Willesden Green (10 in Open Creek, 2 in Crimson) plus 4.5 net non‑operated wells at PCU #11.
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New pipeline infrastructure completed in Open Creek, reducing tie‑in costs.
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Operational Update – Q4 2025
- Completed second half of 2025 capital program; added 2 net wells in Willesden Green and 7 net wells in Peace River (including 5 Clearwater producers and 2 injection wells).
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Notable initial production rates: Clearwater pads averaging 209‑230 boe/d IP30; Open Creek Belly River pad IP30 rising from 199 to 418 boe/d after infrastructure commissioning.
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Hedging Position (as of Jan 2026)
- WTI swap: 6,127 bbl/d at $84.12 per barrel (Jan 2026).
- AECO natural‑gas swaps: total ~62,756 mcf/d at $2.71‑$3.30 per mcf (Jan–Oct 2026).
- FX forwards covering CAD/USD exposure (~8.5 M USD).
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Equity forward contracts for 2028‑2029 expiries at C$8.31‑$8.89.
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Sensitivity Analysis – Impact on 2026 FFO (midpoint)
- ± $1/bbl WTI → $9.4 M change.
- ± 0.01 CAD/USD → $3.4 M change.
- ± $1/bbl MSW differential → $3.6 M change.
- ± $1/bbl WCS differential → $6.1 M change.
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± $0.25/GJ AECO price → $1.6 M change.
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Corporate Actions
- Plan to renew Normal Course Issuer Bid (NCIB) in March 2026; share‑repurchase volume may vary with market conditions.
Notable Quotes
“We employed a disciplined approach to our 2026 plans given the current volatility in commodity prices, resulting in a small free cash flow positive budget for the year… while marginally growing production.” – Stephen Loukas, President & CEO
All figures are presented as disclosed by Obsidian Energy and reflect forward‑looking assumptions.