Obsidian Energy 2021 budget GUIDANCE $127 million and reported production of 26,400 barrels of oil equivalent (BOE) per day.
CAPITAL GUIDANCE
Obsidian Energy 2021 budget of $127 million in capital expenditures plus an additional $8 million in decommissioning expenditures is planned for our development and environmental programs in 2021. We intend to utilize a two-rig continuous drilling program in the second half of 2021 with plans to drill 23 wells (19.3 net), predominantly in our Willesden Green and Pembina Cardium assets. Combined with the nine net wells drilled in the first half of the year, we expect to bring 25 wells (22.8 net) on production in 2021, with the remaining seven wells (6.8 net) expected on production early in the first quarter of 2022. In addition, our successful optimization program continues with $8 million allocated for 2021 (included in the capital expenditure figures above) to capture further highly attractive capital efficiencies. The Company has significant capability to scale our development drilling in response to changes in commodity prices.
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Obsidian Energy 2021 budget is replacing our previous guidance for first half 2021 to full year 2021 as our longer-term bank and senior note extensions, coupled with improved commodity prices provide added stability. A total budget of $127 million in capital expenditures plus an additional $8 million in decommissioning expenditures is planned for our development and environmental programs in 2021. We intend to utilize a two-rig continuous drilling program in the second half of 2021 with plans to drill 23 wells (19.3 net), predominantly in our Willesden Green and Pembina Cardium assets. Combined with the nine net wells drilled in the first half of the year, we expect to bring 25 wells (22.8 net) on production in 2021, with the remaining seven wells (6.8 net) expected on production early in the first quarter of 2022. In addition, our successful optimization program continues with $8 million allocated for 2021 (included in the capital expenditure figures above) to capture further highly attractive capital efficiencies. The Company has significant capability to scale our development drilling in response to changes in commodity prices.
Net operating expenses per boe are expected to be higher than 2020 levels largely due to reduced production volumes, higher staff costs due to the full reinstatement of salaries, minimal benefit from the Canadian Wage Subsidy program and a forecasted increase to well repairs and maintenance given the recent improvement in commodity prices. Increases in both cash flow and funds flow from operations are expected due to the continued strong performance of our high netback Willesden Green focused development program and the higher pricing environment.
We are continuing our participation in the ASRP and ABC programs Obsidian Energy 2021 budget, focusing on fields in Northern Alberta in the first quarter of 2021 where we’ve abandoned 106 net wells and 154 net kilometres of pipelines year to date. Decommissioning activity will be expanded over the next two years with an anticipated 485 net wells and 647 net kilometres of pipelines abandoned prior to the end of 2022 with the support of nearly $30 million of ASRP grants.
Our Obsidian Energy 2021 budget and 2022 forecast are designed to steadily restore average production to approximately 25,400 to 26,400 boe/d in 2022, while also paying down debt. We expect to generate approximately $45 million of free cash flow in 2021 (net of non-recurring transaction expenses associated with our bank facility and senior note extensions, using the midpoint of our guidance and WTI US$60 per barrel), which will be directed toward debt reduction. This is expected to result in an annualized fourth quarter 2021 net debt to EBITDA ratio of 2:1. We anticipate 2022 free cash of approximately $100 million (at WTI US$60 per barrel and the mid-point of the 2021 production forecast) driven by higher production and the absence of transaction expenses.
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Obsidian Energy Well Permits & Wells Spud
The oil and gas industry is highly regulated by Government agencies. One of the responsibilities is to approve well permits. A well permit is the intent of an oil & gas operator to drill a new well. Well permits include oil wells, gas wells, water wells and more..
Spudding is the process of beginning to drill a well in the oil and gas industry. … After the surface hole is completed, the main drill bit—which performs the task of drilling to the total depth—is inserted and this process can also be referred to as “spudding in.”
Obsidian Energy Wells Drilled Last 2 Years Map
Obsidian Energy 2021 budget is focused on the Cardium Play has been one of the largest oil fields in the Western Canada Sedimentary Basin with production history of almost six decades. … The areas with highest liquid content are Lochend and East Pembina, the highest initial production is typically encountered in Lochend, Willesden Green and Ferrier areas.
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About Obsidian Energy
Obsidian Energy Ltd. (TSX: OBE) (NYSE: OBE) is an intermediate-sized oil and gas producer with a well-balanced portfolio of high-quality assets producing roughly 30,000 boe per day. These assets, and the organization we have crafted around them, provide the right platform to deliver bottom-line results, and an entrepreneurial spirit that will allow us to succeed in this evolving industry.
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