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Obsidian Energy Corporate Presentation
March 2018
ObsidianEnergy.com | TSX/NYSE: OBE
Important Notices to the Readers This presentation should be read in conjunction with the Company's audited consolidated financial statements, management's discussion and analysis ("MD&A") for the year ended December 31, 2017. All dollar amounts contained in this presentation are expressed in millions of Canadian dollars unless otherwise indicated.
Certain financial measures included in this presentation do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore are considered non-generally accepted accounting practice ("non-GAAP") measures; accordingly, they may not be comparable to similar measures provided by other issuers. This presentation also contains oil and gas disclosures, various industry terms, and forward-looking statements, including various assumptions on which such forward-looking statements are based and related risk factors. Please see the Company's disclosures located in the Appendix at the end of this presentation for further details regarding these matters.
2
ObsidianEnergy.com | TSX/NYSE: OBE
Peace River
Manufactured Cold Flow, High Rate, Low Cost with Multiple Egress Options
4,963 boe/d Q4 2017 Net Sections: 235
Obsidian Energy Corporate Profile
3
Share Price Feb. 28, 2018
$/share $1.18
OBE-TSX Daily Volume % of shares outstanding
MM 1.5 0.3%
OBE -NYSE Daily Volume % of shares outstanding
MM 1.9 0.4%
Market Capitalization $MM $595
Net Debt $MM $383
Enterprise Value $MM $978
Corporate Metrics
Index Map
See end notes
Legacy Asset Production of 4,429 boe/d in Q4 2017, Portion of OBE’s legacy production sold in early 2018. See press release titled “Obsidian Energy Announces Legacy Asset Disposition” dated January 31st for details
FY 2018 Guidance
Deep Basin
Multi Horizon Potential Highly Economic Mannville Development
1,356 boe/d Q4 2017 Net Sections: 700
Cardium
Meaningful Free Cash Flow Generation, Waterflood Approach with Primary Optionality
18,190 boe/d Q4 2017 Net Sections: 450
Alberta Viking
Short Cycle Investment to Toggle Growth Industry Leading IP Rates
2,508 boe/d Q4 2017 Net Sections: 170
Production boe/d 29,000-30,000
Growth % 5%
Total Expenditures Capital Expenditures Decommissioning
$MM $MM
$125 $10
Expenses Operating Expense G&A Expense
$/boe $/boe
$13.00 - $13.50 $2.00-$2.50
ObsidianEnergy.com | TSX/NYSE: OBE
Total Expenditures
Guidance $160
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
Total Expenditures Guidance
Operating Cost Guidance
$13.00 - $13.50
$12.50
$13.00
$13.50
$14.00
Guidance
20,000
23,500
27,000
30,500
34,000
Q4 2016 Q4 2017
Production Guidance
30,500 - 31,500
30,000
30,500
31,000
31,500
32,000
Guidance Beat
31,723 boe/d
4
Total Capital Within Guidance
$157MM
Developing a Track Record of Delivering Results
Q4 2017 A&D Adj. Production boe/d
FY 2017 Production boe/d
2017 Total Expenditures $MM
2017 Operating Expenses $/boe
Double Digit Growth
31,447 boe/d
Operating Costs Within Guidance
$13.40/boe
*Net of Peace River Carry
ObsidianEnergy.com | TSX/NYSE: OBE
3547
666
8
12
6
8
10
27
32
43
75
96
131
0
20
40
60
80
100
120
140
PDP 1P 2PLight & Medium Crude Oil (mmbbl) Heavy Crude Oil & Bitumen (mmbbl)Natural Gas Liquids (mm bbl) Conventional Natural Gas (mmboe)
5
2017 Reserves Highlight Revitalized Operational Delivery
• Reserve book reflects a conservative future development profile centered around a growing quantum of low F&D waterflood additions
• Adding reserves at just over $13 per boe through 2017 demonstrates a powerful engine to reward investors
Corporate Reserves
NAV Valuation ($/Share)
Replaced 126%
Replaced 131%
Replaced 121%
Replaced Over 100% of Produced Reserves for the first time in five years
Cardium operated development costs down 24% from year-end 2016
Commercial Trades Increased Liquids Weighting by Six Percent
Independent reserve engineers recognizes the Deep Basin potential for the first time
PDP 2P
2P NPV10 ($BN) $1.18 $1.71
Net Debt ($BN) $0.38 $0.38
Shares O/S (MM) 504 504
Total NAV / Share $1.58 $2.63
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
10,000
15,000
20,000
25,000
30,000
35,000
Q1 2018 Q2 2018 Q3 2018 Q4 2018
Base Production 2017 Development 2018 Development
16% Base Decline Rate
22% Base + 2017 Development Decline Rate
6
Low Decline Rate Underpins Growth 16% Corporate Base Production Decline Rate Cardium Asset Under Historical Waterflood
Capital Efficiencies of $6,500/boe/d on 2017 Optimization Projects Optimization of existing base wellbores
2017 Base Production & 2017 Development Declines 16% in 2019
Corporate Base Production boe/d
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
20,000
22,000
24,000
26,000
28,000
30,000
32,000
2017E A&D Adjusted FY 2018E
7
Focused 2018 Plan
• Predictable & Liquids Weighted Growth Profile • Development Capital is 64% of Total Expenditures • Flexibility to expand capital program in H2 and extend growth rate
2018 Production (boe/d) 29,000 – 30,000 boe per day
2018 Total Expenditures ($MM) $135 million
5% A&D Adjusted Production Growth
Base & Infrastructure
Capital$25 18%
2018 Development
$86 64%
Enviro$10 8%
Regulatory$14 10%
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
AB Viking$6 7%
PROP$8 9%
Deep Basin$8 9%
Optimization$14 16%
Cardium$50 58%
Cardium 11
Deep Basin2
PROP4
AB Viking4
21
0
5
10
15
20
25
2018 Wells Spud
8
Portfolio Optionality on Display Employing a quicker payout program that balances primary drilling with targeted low capital integrated waterflood opportunities
2018 Development Allocations ($MM) Budget 2018 Operated Spuds
21 Operated spuds planned in 2018 (excludes non-operated activity)
80% Av. IRR 45% Av. IRR
40% Av. IRR 100% Av. IRR
50% Av. IRR
Increased Cardium Horizontal Drilling Focus by $9MM
(three wells)
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
0
50
100
150
200
250
300
350
400
450
0 6 12 18 24 30 36 42 48
Pro
ducti
on (
bb
l/d
)
Months on Production
9
Willesden Green Results Command More Capital
• 4 well pad in Willesden Green Cardium on-stream as of Jan. 3, 2018. Average IP30 650 boe/day per well (87% liquids)
• 2 well pad on stream Feb 20, 2018. Averaging 450 boe/day per well
• Adding 3 incremental Willesden Green Cardium wells to our 2018 development
5 miles
10 kms
OBE Operated Cardium land
OBE producing well
Industry HZ well
INDEX MAP
R8W5
T42
WILLESDEN GREEN
WILLESDEN GREEN 11-03-43-8W5 Pad
WILLESDEN GREEN 14-01-043-08W5 Pad
Recent Drills Above Type Curve
Inputs
Waterflood
Type I
DCET Cost ($MM) $6.5
Incremental Water Cost ($/bbl water) $0.20
Production
EUR (Mboe) 545
IP30 (boe/d) 340
IP365 (boe/d) 265
Liquids (%) 80%
Economic Outputs
NPV (10%) ($MM) $5.0
PIR (10%) 0.8
IRR (%) 35%
Payout (years) 2.5
Capital Efficiency ($/boe/d) $24,500
F&D ($/boe) $11.95
2017 Analyst Day Type Curve Economics
Select 2018 Metrics
DCET Cost ($MM) $3.3
IRR (%) >50%
Capital Efficiency ($/boe/d)
$21,000
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE 10
Multi-Cycle Bioturbated Drilling • Drilling in the bioturbated rock and
fracking into clean intervals above reduces drill complexity and costs
• Drill optionality between several cycles based on reservoir quality
• Ability to target multiple cycles throughout a single drill path
10
Grain Size Gamma Ray
Fracs
Cardium C
Multi-Cycle Bioturbated
Cardium B
Cardium D
Conglomerate
Bioturbated
Bioturbated Window
Bioturbated Window
Bioturbated Window
OBE Operated Cardium unit
OBE Cardium land
OBE Bioturbated Drilling Activity
T42
T41
3 miles
5 kms
R9 R7W5
T43 2 Operated primary wells for 2018
Bioturbated Drilling Activity 50 wells since 2014 in Willesden Green
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
PEMBINA
10 miles
15 kms
OBE Cardium land
OBE land
OBE producing well
Industry HZ well
INDEX MAP
R11W5
T50
11
Dominating Pembina Acreage
• Integrated waterflood approach improves recovery factor
• After 50+ years, resource and geology is delineated and well understood
• High-netback light oil production with low decline rate
Inputs
Waterflood
Type I
DCET Cost ($MM) $6.3
Incremental Water Cost ($/bbl water) $0.20
Production
EUR (Mboe) 530
IP30 (boe/d) 185
IP365 (boe/d) 150
Liquids (%) 89%
Economic Outputs
NPV (10%) ($MM) $6.1
PIR (10%) 1.0
IRR (%) 35%
Payout (years) 3.1
Capital Efficiency ($/boe/d) $42,000
F&D ($/boe) $11.80
0
20
40
60
80
100
120
140
160
180
200
0 6 12 18 24 30 36 42 48
Pro
ducti
on
Months on Production
PEMBINA 8-25-47-9W5 Pad
2017 Analyst Day Type Curve Economics Select 2018 Metrics
DCET Cost ($MM) $3.5
IRR (%) >50%
Capital Efficiency ($/boe/d)
$19,000
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
R10
12
AB Viking Program Continues to Exceed Expectations
• Light-oil, high netback shorter cycle wells
• Infrastructure advantage with key owned and operated gas plants and minimal incremental facility spend
• Targeting structural lows offsetting top performing 2017 wells to maximize light oil productivity
10 miles
15 kms OBE gas plant
OBE land
INDEX MAP
Compeer GP
Esther GP
Misty GP
Monitor West GP
R1W4
T30
R10
Inputs
DCET Cost ($MM) $1.5
Production
EUR (Mboe) 75
IP30 (boe/d) 175
IP365 (boe/d) 95
Liquids (%) 51%
Economic Outputs
NPV (10%) ($MM) $0.7
PIR (10%) 0.4
IRR (%) 50%
Payout (years) 1.7
Capital Efficiency ($/boe/d) $15,500
F&D ($/boe) $20.00
0
20
40
60
80
100
120
140
160
180
200
0 6 12 18 24 30 36 42 48
Pro
ducti
on
Months on Production
Total Production (boe/d)
Liquids Production (bbl/d)
2017 Analyst Day Type Curve Economics
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
0
50
100
150
200
250
0 6 12 18 24 30 36 42 48
Pro
ducti
on (
bo
e/d
)
Months on Production
13
PROP Program in the Heart of Harmon Valley South
• Large contiguous position in a crude oil resource highly amenable to conventional cold-flow production
• Strong initial results confirm optimism for 2018 plans in heart of Harmon Valley South
• Cash flow torque to increasing oil price with significant long term inventory
• Successful in mitigating differential spreads by utilizing multiple sales points
10 miles
15 kms
OBE land
Acquired land in 2017
PROP
INDEX MAP R15W5
T80
Harmon Valley
Harmon Valley South
Seal
Inputs
DCET Cost ($MM) $2.8
Production
EUR (Mboe) 400
IP30 (boe/d) 215
IP365 (boe/d) 210
Liquids (%) 93%
Economic Outputs
NPV (10%) ($MM) $2.6
PIR (10%) 0.9
IRR (%) 50%
Payout (years) 2.6
Capital Efficiency ($/boe/d) $13,500
F&D ($/boe) $7.00
2017 Analyst Day Type Curve Economics
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
INDEX MAP
5 miles
10 kms
OBE land
OBE operated Cardium unit
WILLESDEN GREEN
R8W5
T42
Deep Basin Results are Liquids Rich • First Deep Basin program executed on
schedule and on budget
• Condensate volumes in the 2017 program exceeded expectations making gas pricing less relevant
• Two-mile Falher well expected to be on stream at the end of March, initial pressure metrics and production tests look encouraging
Falher B Trend
100/02-03-044-09W5 On Production:
10/26/2017 Initial Rate: 3.9 MMCFD
100/14-30-043-07W5 On Production:
8/30/2017 Initial Rate: 3.2 MMCFD
100/02-07-043-07W5 On Production:
10/12/2017 Initial Rate: 3.4 MMCFD
Average Liquids Ratio 55 bbl/mmcf (135 bbl/d per well)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
0 6 12 18 24 30 36 42 48
Ga
s P
rod
ucti
on (
Mcf/
d)
Months on Production
Inputs
DCET Cost ($MM) $4.0
Production
EUR (Mboe) 720
IP30 (boe/d) 1,030
IP365 (boe/d) 620
Liquids (%) 19%
Economic Outputs
NPV (10%) ($MM) $3.4
PIR (10%) 0.9
IRR (%) 60%
Payout (years) 1.5
Capital Efficiency ($/boe/d) $6,500
F&D ($/boe) $5.50
2017 Analyst Day Type Curve Economics
Select 2018 Metrics
DCET Cost ($MM) $4.0
IRR (%) 80%
Liquids (%) 22%
Capital Efficiency ($/boe/d)
$7,000
See end notes 14
ObsidianEnergy.com | TSX/NYSE: OBE 15
Total 2018 Corporate Capital Efficiencies $/boe/d
2018 Capital Efficiency Buildup • Program leverages the short cycle opportunity set in our portfolio • Development Capital efficiencies of <$15,000/boe/d • Total Capital efficiencies of <$25,000/boe/d
$7,000 $8,000
$14,000
$16,000
$20,000
<$15,000
<$25,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
DeepBasin
Optimization PROP AB Viking Cardium Total 2018Development
Total 2018Capital
Ca
pit
al
Eff
icie
nc
ies (
$/b
oe
/d
)
$86MM Development Capital
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
6 2 % 3 % 6 5 %
0%
25%
50%
75%
100%
2018ELiquids Weight
LegacyAdjustment
2018EProforma Liquids
Weight
16
Reducing Liability Through Legacy Asset Disposition
• January 2018 sale of a significant portion our non-core legacy assets in exchange for the assumption of abandonment and reclamation liabilities
• Cash flow accretive based on opex savings and liquids weight
• Reduces discounted decommissioning liabilities, improves corporate netback
Liquids Weight (%)
Midpoint of Production Guidance (boe/d)
Decommissioning Liabilities ($MM)
Midpoint of Opex Guidance ($/boe)
R1W4
INDEX MAP SUGDEN
T25
R10 R20 R1W5
T35
T45
T55
MIKWAN
ACADIA
WIMBORNE
ALSASK
BASHAW
30 miles
45 kms
Legacy Package OBE land
Legacy Asset Disposition Lands
$ 17 0
$ 14 7
$ 2 3
$0
$50
$100
$150
$200
$250
Q4 2017Decommissioning
Liabilities
LegacyAdjustment
Q4 2017Proforma
DecommissioningLiabilities
3 1 ,5002 9 ,500
2 ,000
0
10,000
20,000
30,000
40,000
2018EPreviousGuidance
LegacyAdjustment
2018EProforma
Production
$13.75 $13.25 $ 0.50
$0.00
$5.00
$10.00
$15.00
$20.00
2018EPreviousGuidance
LegacyAdjustment
2018EProforma Opex
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE
$19,000
$14,000
$8,000
$0
$5,000
$10,000
$15,000
$20,000
$25,000
2015 2016 2017
$15,000
$13,500
$12,000
$0
$5,000
$10,000
$15,000
$20,000
2015 2016 2017
$92,000
$83,000
$66,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Corporate2015 2016 2017
17
Reducing Liability Through Efficient Asset Retirement • Program based abandonment
• Working with AER as part of the Portfolio Management Pilot on full field abandonment to realize efficiencies and further reduce decommissioning expense
• Conducting science based methodology
• Streamlines reclamation phase and trajectory towards reclamation
Asset Retirement Operations
Average Well Abandonment Cost ($/Well) Average Reclamation Cost ($/Hectare) Average Pipeline Abandonment Cost ($/km)
28% Decrease 20% Decrease 58% Decrease
See end notes
ObsidianEnergy.com | TSX/NYSE: OBE 18
Why Obsidian Energy, Why Now?
• Track record of lowering costs; stripped out $130 million of Opex and G&A in 2017 alone and lowered net debt by $120 million
• Prudent infrastructure investment and liability management
• Cardium waterflooding, complemented with primary development, yields sustainable liquids growth in the near and long term
Balanced and disciplined operator
• Leading position in the Cardium, one of the most attractive assets in the basin. Larger land footprint than # 2 & 3 combined
• Analogous Cardium fields prove the upside of secondary recovery
• 16% corporate base decline generates meaningful cash for reinvestment at leading finding and development costs
• Over 1,000 drilling prospects across key development areas
Deep inventory across key
development areas
• Kick-started a disciplined growth story that is well positioned for self funded 2019 cash flow expansion
• Robust pipeline of drill ready prospects to quickly capitalize on incremental free cash flow
• One time legacy and regulatory costs roll off in second half 2018, freeing up cash for larger 2019 development capital allocation
Unique entry point in our story
ObsidianEnergy.com | TSX/NYSE: OBE
Appendix
ObsidianEnergy.com | TSX/NYSE: OBE
End Notes
20
All slides should be read in conjunction with “Definitions and Industry Terms”, “Non-GAAP Measure Advisory”, “Oil and Gas Disclosures Advisory” and “Forward-Looking Advisory” Slide 3. Obsidian Energy Corporate Profile
Daily Volume (shares) is the 30 day average share volume traded on Canadian and US Exchanges per Bloomberg. Production is based on Q4 2017 results.. The net sections are approximate numbers and are internal estimates.
Slide 5. 2017 Reserves Highlight Revitalized Operations Delivery
NAV Valuation is based on 2P NPV10 as prepared by our independent reserves evaluation (Sproule Associates Limited) as at year-end 2017. Net Debt and share count is as at year-end 2017. All numbers are rounded
Slide 6. Low Decline Rate Underpins Growth
Corporate base production and decline is based on actual data generated internally. Lines have been smoothed for illustrative effect to adjust for volatility inherent in day to day oil and gas operations. Capital efficiencies on optimization projects are internal estimates and rounded.
Slide 7. Focused 2018 Plan
Production, capital expenditures are based on internal estimates for 2018.
Slide 8. Portfolio Optionality on Display
Internal Rates of Returns are rounded and based on a blended Sep 30, 2017 strip price and independent reserves evaluator (Sproule Associates Limited) price deck
Slide 9. Willesden Green Results Command More Capital
Economics are based on Investor day presentation and are internal estimates WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 & AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 20. Select 2018 economics are based on Ed Par - Cad$66.93/bbl in 2018, Cad$64.72/bbl in 2019, escalating through 2022 and AECO - C$1.67/Mcf in 2018, C$1.88/Mcf in 2019, escalating through 2021
Slide 10. Bioturbated Drilling
Bioturbated chart is for illustration only. Wells labeled Bioturbated are wells that had a strategy to target the bioturbated interval before drilling .
Slides 11, 12, 13 & 14 (Asset Slides)
Economics are based on Investor day presentation and are internal estimates WTI - US$52/bbl in 2017, US$53/bbl in 2018, escalating through 2021 & AECO - C$2.90/Mcf in 2017, C$2.65/Mcf in 2018, escalating through 20 Select 2018 economics are based on Ed Par - Cad$66.93/bbl in 2018, Cad$64.72/bbl in 2019, escalating through 2022 and AECO - C$1.67/Mcf in 2018, C$1.88/Mcf in 2019, escalating through 2021
Slide 15. 2018 Capital Efficiency Buildup
Capital efficiencies for each core area are based on capital spent in that area on new production adds, 12 month forward production average, on an capital weighted average basis and rounded. Corporate Capital efficiencies includes all capital spent, 12 month forward production average, on an capital weighted average basis and rounded.
Slide 16. Reducing Liability Through Legacy Asset Disposition
All figures are internal estimates.
Slide 17. Reducing Liability Through Decommissioning Expense
All figures are internal estimates and are rounded
ObsidianEnergy.com | TSX/NYSE: OBE
Definitions and Industry Terms
21
IP means initial production, which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
IP means initial production, which is the average production over a specified time period
IRR means Internal Rate of Return which is the interest rate at which the NPV equals zero
km means kilometers
Liquids % means the percentage of crude oil and NGLs from the total barrels of oil equivalent of production
Liquids means crude oil and NGLs
Mmcf means million cubic feet
Mmcf/d means million cubic feet per day
M means meters
MM means millions
NAV means net asset value
Net Debt means Senior Debt plus bank debt plus non-cash working capital deficit, detailed in the Non-GAAP measure advisory
NGL means natural gas liquids which includes hydrocarbon not marketed as natural gas (methane) or various classes of oil
NPV means net present value
Opex means operating costs
PCU #9 Means Pembina Cardium Unit number 9
PIR means profit investment ratio
PROP means Peace River Oil Partnership
TD means total depth where drilling has stopped
Spud mean the process of beginning to drill a well
WI means working interest
1P means proved reserves as per Oil and Gas Disclosures Advisory
2P means proved plus probable reserves as per Oil and Gas Disclosures Advisory
Av., Ave., Avg. means avearge
A&D means oil and natural gas property acquisitions and divestitures
A&D Adj. means oil and natural gas property acquisitions and divestitures
Base means production with no additional production from new drilling
bbl means barrel or barrels
$BN means billions of dollars
Bopd means barrel of oil per day
boe and boe/d mean barrels of oil equivalent and barrels of oil equivalent per day, respectively
Capital Expenditures & Capex includes all direct costs related to our operated and non-operated development programs including drilling, completions, tie-in, development of and expansions to existing facilities and major infrastructure, optimization and EOR activities
Company or OBE means Obsidian Energy Ltd; as applicable
DCET means drilling, completions, equip and tie-in costs
Enviro means decommissioning expenditures
E means estimate
EUR means estimated ultimate recovery
F&D means finding and development costs
FX means foreign exchange rate, in our case typically refers to C$ to US$ exchange rates
Free Cash Flow, which is Funds Flow from Operations less Total Capital Expenditures
FY means fiscal year
G&A means general and administrative expenses
H2 mean second half of the year
Hz means horizontal well
ObsidianEnergy.com | TSX/NYSE: OBE
Non-GAAP Measures Advisory
22
Non-GAAP measures advisory
In this presentation, we refer to certain financial measures that are not determined in accordance with IFRS. These measures as presented do not have any standardized meaning prescribed by IFRS and therefore they may not be comparable with calculations of similar measures for other companies. We believe that, in conjunction with results presented in accordance with IFRS, these measures assist in providing a more complete understanding of certain aspects of our results of operations and financial performance. You are cautioned, however, that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of our performance. These measures include the following:
Netback is a measure of cash operating margin on an absolute or per-unit-of-production basis and is calculated as the absolute or per-unit-of-production amount of revenue less royalties, operating costs and transportation. The measure is used to assess the operational profitability of the company as well as relative profitability of individual assets. For additional information relating to netbacks, including a detailed calculation of our netbacks, see our latest management's discussion and analysis which is available in Canada at www.sedar.com and in the United States at www.sec.gov; and
Net debt is the amount of long-term debt, comprised of long-term notes and bank debt, plus net working capital (surplus)/deficit. Net debt is a measure of leverage and liquidity
ObsidianEnergy.com | TSX/NYSE: OBE 23
Reserves Disclosure and Definitions Any reference to reserves in this presentation are based on the report ("Sproule Report") prepared by Sproule Associates Limited dated January 29, 2018 where they evaluated one hundred percent of the
crude oil, natural gas and natural gas liquids reserves of Obsidian Energy and the net present value of future net revenue attributable to those reserves effective as at December 31, 2017. For further
information regarding the Sproule Report, see Appendix A to our Annual Information Form dated March 6, 2018 ("AIF"). It should not be assumed that the estimates of future net revenues presented herein
represent the fair market value of the reserves. There is no assurance that the forecast price and cost assumptions will be attained and variances could be material. The recovery and reserves estimates of
crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas
liquid reserves may be greater than or less than the estimates provided herein. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all
properties, due to the effects of aggregation.
Production and Reserves
The use of the word "gross" in this presentation (i) in relation to our interest in production and reserves, means our working interest (operating or non-operating) share before deduction of royalties and without
including our royalty interests, (ii) in relation to wells, means the total number of wells in which we have an interest, and (iii) in relation to properties, means the total area of properties in which we have an
interest. The use of the word "net" in this presentation (i) in relation to our interest in production and reserves, means our working interest (operating or non-operating) share after deduction of royalty
obligations, plus our royalty interests, (ii) in relation to our interest in wells, means the number of wells obtained by aggregating our working interest in each of our gross wells, and (iii) in relation to our interest in
a property, means the total area in which we have an interest multiplied by the working interest owned by us. Unless otherwise stated, production volumes and reserves estimates in this presentation are stated
on a gross basis. All references to well counts are net to the Company, unless otherwise indicated.
Reserve Definitions
reserves are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on the analysis of drilling,
geological, geophysical, and engineering data; the use of established technology; and specified economic conditions, which are generally accepted as being reasonable. Reserves are classified according to the
degree of certainty associated with the estimates.
probable reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less
than the sum of the estimated proved plus probable reserves.
proved reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated
proved reserves.
Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories:
Developed reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example,
when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and nonproducing.
Developed producing reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if
shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.
Developed non-producing reserves are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is
unknown.
Undeveloped reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render
them capable of production. They must fully meet the requirements of the reserves category (proved, probable) to which they are assigned.
For additional reserve definitions, see "Notes to Reserves Data Tables" in our AIF.
ObsidianEnergy.com | TSX/NYSE: OBE
Forward-Looking Information Advisory
24
Certain statements contained in this presentation constitute forward-looking statements or information (collectively "forward-looking statements. Forward-looking statements are typically identified by words such as "anticipate",
"continue", "estimate", "expect", "forecast", "budget", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "objective", "aim", "potential", "target" and similar words suggesting future events or future
performance. In addition, statements relating to "reserves" or "resources" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and
resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this presentation contains, without limitation, forward-looking statements pertaining to the following: that
adding reserves at just over $13 per boe through 2017 demonstrates a powerful engine to reward investors; our expected base decline rates for production in 2018 and 2019; that we are working with the AER as part of the portfolio
management pilot on full field abandonment to realize efficiencies and further reduce decommissioning expenses; that conducting science based methodology in connection with abandonment streamlines reclamation phases and
trajectory towards reclamation; our expected 2018 guidance for production, growth, total expenditures (including capital and decommissioning), operating expenses, when we expect wells to come on production, and projected liquids
weightings; the payout time at certain locations; that we have a predictable & liquids weighted growth profile, the expected development capital percentage of Total Expenditures and that there is flexibility to expand the capital
program in the second half of the year and extend the growth rate; the expected average internal rates of return and costs at the various locations; that the Willesden Green and Pembina 2018 programs are less capital intensive with
higher rates of return; that drilling in the bioturbated rock and fracking into clean intervals above reduces drill complexity and costs; that there is drill optionality between several cycles based on reservoir quality; that in the Alberta
Viking we are targeting structural lows in 2018 to maximize light oil productivity; that in Peace River the recent results confirm optimism for 2018 plans in heart of Harmon Valley South, and that there is cash flow torque to increasing
oil price with significant long term inventory; our expected approach to development including the area-specific asset development plans; the timing and our expectations of such development activities; that the 2018 program
leverages the short cycle opportunity set in our portfolio; the expected development capital efficiencies and total capital efficiencies on a location and Company wide basis; that the Cardium waterflooding, complemented with primary
development, yields sustainable liquids growth in the near and long term; that we have the leading position in the Cardium, with one of the most attractive assets in the basin; that the analogous Cardium fields prove the upside
secondary recovery; that corporate base decline generates meaningful cash for reinvestment at leading finding and development costs; the amount of drilling prospect across key development areas; that we have kick-started a
disciplined growth story that is well position for self funded 2019 cash flow expansion; that there is a robust pipeline of drill ready prospects to quickly capitalize on incremental free cash flow; that one time legacy and regulatory costs
roll off in the second half of 2018, freeing up cash for larger 2019 development capital allocation; that the integrated waterflood improves the recovery factor with our large reserve base; and that we will add more horizontal drilling.
The key metrics for the Company set forth in this presentation may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable Canadian securities laws. Financial outlook and future-
oriented financial information contained in this presentation are based on assumptions about future events based on management's assessment of the relevant information currently available. In particular, this presentation contains
projected operational and financial information for 2018, 2019 and beyond for the Company. The future-oriented financial information and financial outlooks contained in this presentation have been approved by management as of the
date of this presentation. Readers are cautioned that any such financial outlook and future-oriented financial information contained herein should not be used for purposes other than those for which it is disclosed herein.
With respect to forward-looking statements contained in this document, we have made assumptions regarding, among other things: our ability to complete asset sales and the terms and timing of any such sales; the economic returns
that we anticipate realizing from expenditures made on our assets; future crude oil, natural gas liquids and natural gas prices and differentials between light, medium and heavy oil prices and Canadian, WTI and world oil and natural
gas prices; future capital expenditure levels; future crude oil, natural gas liquids and natural gas production levels; drilling results; future exchange rates and interest rates; future taxes and royalties; the continued suspension of our
dividend; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including weather, infrastructure access and delays in obtaining regulatory approvals and
third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully; our ability to obtain financing on acceptable
terms, including our ability to renew or replace our reserve based loan; our ability to finance the repayment of our senior secured notes on maturity; and our ability to add production and reserves through our development and
exploitation activities. In addition, many of the forward-looking statements contained in this document are located proximate to assumptions that are specific to those forward-looking statements, and such assumptions should be taken
into account when reading such forward-looking statements. Please note that illustrative examples are not to be construed as guidance for the Company and further details on assumptions can be found in the Endnotes section of the
presentation.
Although Obsidian Energy believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because
Obsidian Energy can give no assurances that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Actual results could
differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to: the risks associated with the oil and gas industry in general such as operational risks in development,
exploration and production; the possibility that the semi-annual borrowing base re-determination under our of our reserve-based loan is not acceptable to the Company or that we breach one or more of the financial covenants
pursuant to our amending agreements with holders of our senior, secured notes; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of estimates and projections
relating to reserves, production, costs and expenses; health, safety and environmental risks; commodity price and exchange rate fluctuations; interest rate fluctuations; marketing and transportation; loss of markets; environmental
risks; competition; incorrect assessment of the value of acquisitions; failure to complete or realize the anticipated benefits of acquisitions or dispositions; ability to access sufficient capital from internal and external sources; failure to
obtain required regulatory and other approvals; reliance on third parties; and changes in legislation, including but not limited to tax laws, royalties and environmental regulations. Readers are cautioned that the foregoing list of factors
is not exhaustive.
Additional information on these and other factors that could affect Obsidian Energy, or its operations or financial results, are included in the Company's most recently filed Management's Discussion and Analysis (See "Forward-
Looking Statements" therein)), Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) and other reports on file with applicable securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com), EDGAR website (www.sec.gov) or Obsidian Energy's website.
Unless otherwise specified, the forward-looking statements contained in this document speak only as of March 12, 2018. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.