CA - Obsidian Energy: Strong Peace River Development Results But Dispute Must Be Resolved

2024-05-31 05:32:42 ET

Summary

• Obsidian's development program is going well, and it has recently averaged over 35,500 BOEPD in production despite 4,500 BOEPD in shut-in production.
• It also made a US$55 million Peace River acquisition that further adds to its inventory and production.
• A blockade by the Woodland Cree First Nation is resulting in the shut-in production.
• While Obsidian has unaffected Peace River assets (including its recent acquisition), it will need to resolve the dispute to have full development opportunities.

Obsidian Energy ( OBE )(OBE:CA) announced positive results for its 1H 2024 development program, underpinned by strong heavy oil well results. It also made a Peace River acquisition that increases its net sections of Peace River land by over 25% and its Peace River production by over 20%.

I believe these items should increase Obsidian's estimated value by approximately US$0.50 per share. However, Obsidian is currently involved in a significant dispute with the Woodland Cree First Nation. That dispute is currently resulting in around 4,500 BOEPD in shut-in production....

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