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Obsidian Energy: Wildfires Impact Q2 2023 Production

Jun. 01, 2023 4:51 AM ETObsidian Energy Ltd. (OBE), OBE:CA8 Comments


  • The Albertan wildfires may reduce Obsidian's Q2 2023 production by over 2,000 BOEPD, while impacting its full-year production by around 600 BOEPD.
  • This (and lower commodity prices) reduces my estimates for Obsidian's 2023 FCF to US$45 million.
  • Obsidian is helped by narrowing heavy oil differentials, while lower royalties offset some of the commodity price impact.
  • I now estimate its value at around US$8 per share in a long-term $75 WTI oil environment.
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Weaker commodity prices and the impact of Alberta wildfires (resulting in shut-in production) have reduced my estimates of Obsidian Energy's (NYSE:OBE) 2023 free cash flow to approximately US$45 million now, down from

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Elephant Analytics has 15 years of analytical experience and unique skills in numerical analysis and practical mathematics. He is currently ranked in the top 2% of analysts by TipRanks.
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Comments (8)

Earnings are out...lowered guidance some but with improved WTI should help FFO and earnings:
cedarwoodken profile picture
OBE bought back a total of 200k+ shares costing C$1.5 million on May 26 & 29.
SaaS Sniper profile picture
@cedarwoodken Wonder whether they bottom fished. Those dates are mighty close to lows dating back to Jan '22.

OBE technical chart sitting at these levels w/ bullish descending wedge near break out. If it breaks below $5.50-6USD, $4 would be next major support level.
@cedarwoodken not even 1% of market cap, in fact it’s about .2% of market cap, 👎
how do you come up with the heavy oil price?

given where differentials are right now (and the quality discount) it seems a bit low (about $5 USD).
Elephant Analytics profile picture

It basically assumes US$31 discount versus WTI for OBE's heavy oil during the last three quarters of 2023. OBE's realized heavy oil price was ~US$12 less than WCS during 2022, so that would imply a WCS differential of negative US$19 to WTI during the last three quarters of 2023.
Joshua Hartman profile picture
@Elephant Analytics Good news! Eric Nuttall just shared that the differential is down to $11. I think that will keeping dropping as pipeline capacity comes online. twitter.com/...
@Elephant Analytics congrats, you hit it pretty much on the nose. I’m curious as to your opinion on management. This company always seems to have one more corner to turn, compensation of executives and directors appears to be a significant chunk of free cash flow, and op ex was up a little over 8% YOY despite a substantial decline in revenue.
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