- Capital program with 78 operated wells expected to generate 12 percent annual production growth over 2023
- ~$350 million capital program is ~$30 million lower from previous forecast at midpoint
- Development plan weighted towards Peace River, expanding on our Bluesky and Clearwater success from 2023
- 2024 plan is expected to generate funds flow from of operations of ~ $400 million and positive free cash flow of ~$27 million at US$75/bbl WTI
OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) (“Obsidian Energy“) is pleased to announce our 2024 capital and operating program and financial guidance which outlines our activity for the first year of our three-year corporate growth plan, building on our success in 2023.
“In September 2023, we unveiled our three-year growth plan (the “Growth Plan“) with a stated production goal of over 50,000 boe/d in 2026. Today, we are pleased to provide our formal 2024 capital and operating program that matches our Growth Plan forecast of 36,000 boe/d, with approximately $30 million less capital spending,” commented Stephen Loukas, Obsidian Energy’s President and CEO. “The momentum of our second half 2023 drilling program has allowed us to optimize our capital program and reduce capital spending from our previous forecast. Consistent with our Growth Plan, our 2024 capital program is focused on maintaining production in our light oil business to generate free cash flow to support growth within our heavy oil business at Peace River, as well as to continue to fund our normal course issuer bid (“NCIB“) activity.”
Mr. Loukas continued, “Our 2024 capital program is flexible and affords us optionality to accelerate our growth and/or NCIB activity in a strengthening commodity price scenario or reduce our capital expenditures if commodity prices materially weaken.”
2024 GUIDANCE
Obsidian Energy’s 2024 capital program is designed to grow production through the development of new and existing fields while further delineating our Peace River asset. The Company is planning between $345 and $355 million in capital expenditures (including $25 million for exploration/appraisal activities) plus an additional $23 to $24 million in decommissioning expenditures in 2024. Capital expenditures are weighted towards our Peace River asset and the continued development of our de-risked Walrus Bluesky and Dawson Clearwater plays to build on the momentum from our 2023 program’s success. Our plan calls for continued investment in our light oil business to maintain production while generating significant free cash flow to be utilized in our heavy oil business. Results from our first half development and exploration/appraisal activities are expected to provide us the opportunity to further optimize our second half program.
In 2024, production is expected to average approximately 36,000 boe/d (midpoint of guidance) – a 12 percent increase from 32,275 boe/d1 in 2023. Production is expected to grow consistently in the first half of 2024 and exit the second quarter over 36,000 boe/d as new wells come on stream. In the beginning of the second half of the year, production is expected to decline as development activity slows during spring break up, then increase to over 37,000 boe/d by year-end. Production growth is expected to continue over the year and into 2025 with forecasted first quarter 2025 production of approximately 40,000 boe/d.
In 2024, net operating costs per boe are expected to be slightly lower than 2023 levels, driven by higher production. Our 2024 guidance is based on US$75/bbl WTI, US$3.00/bbl MSW differential, US$15/bbl WCS differentials and $2.25/GJ AECO natural gas (down from $3.00/GJ as previously forecast). Our plan anticipates funds flow from operations (“FFO“) of approximately $400 million, resulting in a 2024 net debt to FFO of approximately 0.8 times, and free cash flow (“FCF“) of approximately $27 million.
