Calgary-based exploration and production (E&P) company Obsidian Energy Ltd. said Monday it would try to capitalize on higher commodity prices by spending an additional C$3.2 million ($2.5 million) in 2020 to begin drilling the first pad in its Central Alberta Willesden Green asset.
Obsidian’s 2020 capital spending is set to increase to C$56 million ($43 million) while its production guidance would slightly change to 25,300-25,500 boe/d from 25,000-25,500 boe/d.
“We will begin drilling on the three well pad in early December, and as we look forward into 2021, we continue to assess commodity prices against our significant portfolio of development opportunities and expect to finalize the size and scope of our first half 2021 development program over the coming few weeks,” said CEO Stephen Loukas.
Obsidian, known as Penn West Petroleum Ltd. before changing its name in June 2017, has assets in three plays in the Western Canadian province of Alberta — Cardium in Central Alberta, Peace River in the north and the Viking prospect in the south.
The company focuses on manufacturing repeatable low-decline and high-netback light oil wells in the Cardium, where 3Q2020 production averaged 20,661 boe/d.
Obsidian said in its December corporate presentation that it plans pursue the acquisition of Calgary-based Bonterra Energy Corp. to create “The Cardium Champion.” Bonterra’s board in early October unanimously rejected the offer and advised shareholders to do the same. The board called the offer a hostile “take-under” bid that undervalues Bonterra, which focuses on the Pembina Cardium play.
Obsidian disclosed an initial offer to pay two common shares for each share of Bonterra. Obsidian predicted the combination would have oil and gas production equivalent of 35,000 boe/d.
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