Feb 19, 2026 (MarketLine via COMTEX) --
Obsidian Energy Ltd. reported its operating and financial results for the fourth quarter and full year of 2025.
OBSIDIAN ENERGY LTD. (TSX: OBE) (NYSE American: OBE) ("Obsidian Energy", the "Company", "we", "us" or "our") is pleased to report our operating and financial results for the fourth quarter and full year of 2025.
PRESIDENTS MESSAGE
"Obsidian Energy had a very dynamic year in 2025; from closing the sale of our operated Pembina assets in April for ~$325 million, to moderating capital spending as WTI oil prices fell due to announced tariffs in the United States, while returning capital to shareholders via the execution of our share buyback program and driving strong reserve replacement metrics via our development program" commented Stephen Loukas, Obsidian Energy's President and CEO. "As we closed out 2025, we maintained our balanced capital program between our Willesden Green and Peace River areas. In Willesden Green, we drilled a successful Belly River program and completed an infrastructure project in Open Creek which is being utilized on our 2026 wells and will allow for future production growth. In Peace River, our capital program was focused in the Clearwater formation and we advanced our waterflood initiatives in both the Dawson and Nampa areas. Late in the fourth quarter, our base operations in Peace River were impacted by extreme cold weather and significant snowfall, which affected trucking routes and resulted in an increase in oil inventories. This temporary interruption reduced fourth quarter production by approximately 500 boe/d. We were back to normal operations by mid-January and expect to reduce the oil inventory build over the next few months."
Mr. Loukas continued, "During the fourth quarter we continued executing our prepaid equity forward program to help mitigate the impact of our share-based compensation plans. In 2025, we purchased ~3.3 million shares under this program and have remained active in 2026 with an incremental ~1.0 million purchased. We are also in the process of renewing our normal course issuer bid ("NCIB"), which should be in place in early March."
2025 FOURTH QUARTER AND FULL YEAR CORPORATE HIGHLIGHTS
Funds Flow from Operations - The Company generated FFO of $272.1 million ($3.92 per share basic) compared to $432 million ($5.69 per share basic) in the prior year. Fourth quarter 2025 FFO totaled $56.6 million ($0.84 per basic share) compared to $107.7 million ($1.45 per basic share) in the fourth quarter of 2024. Lower oil prices as well as lower production levels post our disposition of the Pembina assets in April 2025 were the main drivers of the variance from 2024.
Capital Program - Our 2025 capital program focused on further development and delineation of our Peace River asset, progressing on waterflood initiatives with two pilots in Peace River and active drilling in Open Creek, including drilling wells in the emerging Belly River formation with strong initial results. Our capital program was ahead of schedule in late 2025 which allowed us to add incremental injector wells and bring forward the start of our 2026 capital program. Capital expenditures totaled $298.9 million (2024: $343.1 million), while decommissioning expenditures totaled $28.8 million (2024: $23.9 million). Fourth quarter capital expenditures were $65.0 million (2024: $84.1 million) and decommissioning expenditures were $10.3 million (2024: $3.5 million).
Pembina Asset Disposition - In April 2025, the Company closed the disposition to InPlay Oil Corp. ("InPlay") of our operated Pembina (Cardium) assets ("Pembina Disposition"). Total consideration (including final InPlay share sale proceeds) was approximately $325 million with the proceeds from the disposition applied against our syndicated credit facility. The transaction included all the Company's operated assets in Pembina which had first quarter 2025 average production of approximately 11,000 boe/d.
Our decommissioning liability was reduced by over 50% with a total of $390 million removed from our portfolio on an undiscounted, uninflated basis, including $189 million associated with inactive properties.
The Company also acquired InPlay's 34.6 percent interest in the Willesden Green Cardium Unit #2 property as part of the transaction.
Net Debt - Net debt levels decreased to $268.2 million at December 31, 2025, compared to $411.7 million at December 31, 2024, mainly due to the Company applying the proceeds of the Pembina Disposition to our outstanding debt.
On December 31, 2025, the Company had $9 million outstanding on our $235 million syndicated credit facility.
In December 2025, the Company completed a refinancing and issued five-year senior unsecured notes for an aggregate principal amount of $175.0 million with an interest rate of 8.125 percent (the "Notes"). These Notes mature on December 3, 2030. The Company used the net proceeds from the Notes to redeem all of our previous outstanding 11.95% senior unsecured notes due July 27, 2027, and to pay down outstanding amounts on our syndicated credit facility.
Active Share Buyback Program - A total of approximately 7.6 million shares were repurchased and cancelled under the Company's NCIB for $54.9 million (at an average price of $7.20 per share) in 2025. There have been no shares repurchased since August 2025 when we reached the maximum purchase allotment approved under the current NCIB.
Since the inception of our NCIB program in 2023, we have repurchased and cancelled approximately 17.2 million shares at an average price of $8.37 per share for $143.9 million.
We are currently in the process of renewing our NCIB and expect to be in a position to potentially commence repurchases in March 2026 upon renewal.
Prepaid Equity Forward Program - We continued to enter prepaid equity forward contracts on our shares
A total of 3,340,000 shares were purchased in 2025 for $28.7 million or $8.62 per share.
Subsequent to December 31, 2025, an incremental 950,000 shares were purchased for a total of $9.1 million or $9.57 per share.
Net Operating Costs - Net operating costs were higher in 2025 at $14.92 per boe (2024: $13.85 per boe) and $15.19 per boe for the fourth quarter of 2025 (2024: $13.91 per boe) as a result of higher trucking costs and processing fees in Peace River due to our expanded operations in the area. Late in the fourth quarter of 2025, Peace River operations were negatively impacted by extreme cold weather and significant snowfall which resulted in higher repair & maintenance activity while also temporarily reducing production. We anticipate operating costs per boe to decrease in 2026 as additional water disposal capabilities are expected to reduce trucking expenses in Peace River.
G&A Costs - General and administrative ("G&A") costs were $1.84 per boe in 2025 compared to $1.50 per boe in 2024, and $1.98 per boe in the fourth quarter of 2025 compared to $1.39 per boe for the same quarter in 2024. G&A costs increased on a per boe basis given our lower production levels as a result of the Pembina Disposition.
Net Income - The Company recorded net income of $35.2 million ($0.51 per share basic) in 2025 compared to a net loss of $202.6 million ($(2.67) per share basic) in 2024. In 2025, net income was the result of the Company's positive operating results combined with lower depletion and depreciation expense resulting from the Pembina Disposition. This was partially offset by lower production revenues due to the lower oil pricing and lower production amounts following the closing of the Pembina Disposition.
2025 FOURTH QUARTER AND FULL YEAR CAPITAL PROGRAM & HIGHLIGHTS
Our 2025 capital program consisted of further development and delineation in both Peace River and Willesden Green. In the first half of the year, we focused on primary development as well as exploration in Peace River, specifically in Harmon Valley South ("HVS") and Dawson. Our program in the second half of the year was balanced between heavy and light oil assets with continued development in Peace River, particularly in the Clearwater, in addition to advancing waterflood initiatives with one pilot in Dawson (Clearwater) and another in HVS (Bluesky). In Willesden Green, we were active in Open Creek, including drilling initial wells in the emerging Belly River formation with strong results. Capital program highlights for 2025 are as follows:
Operated Wells Rig Released and On Production - We rig released a total of 63 (61.4 net) wells and brought 58 (56.4 net) wells on production by the end of 2025, contributing to reserve additions.
Solid Reserve Performance with Strong Reserve Replacement Ratios - We achieved strong results with volume increases across all categories, replacing production, adding new locations, and improved efficiency of our capital program (excluding dispositions).
Reserve replacement with 118 percent on a proved developed producing ("PDP") reserves basis, 185 percent on a proved ("1P") reserves basis and 235 percent on a proved + probable ("2P") reserves basis, based on 2025 production (adjusted for dispositions) and driven by the impact of drilling infill wells and field extensions in both Peace River and Willesden Green.
Reserves before-tax net present value discounted at 10 percent ("NPV10") to $1.0 billion, $1.4 billion and $2.1 billion for PDP, 1P and 2P, respectively.
Future Development Capital ("FDC") is moderated in both the 1P and 2P reserve categories to reflect the current commodity price environment, the Pembina disposition and anticipated capital spending levels. FDC generates a five-year program of approximately $243 million per year on a 2P reserve basis.
Our total undeveloped 2P reserve locations (excluding the impact of the Pembina disposition) increased by 39 net locations to 357 total net locations booked, with 22 net new locations in Willesden Green and 20 net new location in Peace River offset by a reduction of 3 net locations in Viking.
130 net locations in Willesden Green/PCU #11;
(Cardium 113 locations, Belly River 14 locations, Mannville 3 locations)
103 net locations in the Peace River (Clearwater);
77 net locations in the Peace River (Bluesky); and
47 net locations in the Viking.
Reserve life index ("RLI") continues to be stable with approximately 6.0, 10.1 and 13.3 years on a PDP, 1P, and 2P reserves basis.
Active Decommissioning Program - We successfully abandoned a combined total of 58 net wells and 34 net kilometres of pipeline in 2025 as part of activities from our decommissioning spend of $28.8 million. We will be able to use approximately $4 million of this amount to reduce our 2026 Alberta Energy Regulator ("AER") spending obligation.
SECOND HALF 2025 GUIDANCE
A comparison of our second half guidance metrics to actual results is outlined below. During the fourth quarter of 2025, our operations in Peace River were impacted by extreme cold weather and significant snow accumulation. This led to issues transporting our oil out of the area and increased our tank inventory, ultimately impacting our production volumes by approximately 500 boe/d for the quarter. Additionally, our net operating costs were higher than expected due to unplanned repair and maintenance activity as a result of freeze-ups and the substantial snowfall. We were back to normal operations by mid-January and anticipate the inventory build will be reduced to normalized levels over the next few months. Additionally, capital expenditures exceeded our guidance due to our election to advance drilling certain 2026 waterflood injector wells into 2025 as our overall Peace River program finished ahead of schedule, as well as incremental land purchases. Our FFO was below the midpoint of our guidance due to the lower production and higher operating costs previously discussed, as well as lower oil prices.
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COMTEX_476295537/2227/2026-03-31T08:04:36
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