Obsidian strong start to our first half 2022 development program with activity in Willesden Green, Pembina, and Peace River areas remaining on schedule. An update on our activities from our 2022 guidance release is as follows:
Obsidian Permit Download
Wells Drilled
Facility Permits
- Willesden Green: Extending the success of our 2021 horizontal drilling program in our Crimson and Faraway assets, we have drilled and rig released 4 wells (4.0 net) of the 10 wells (10.0 net) planned in the first half of 2022. Obsidian currently has two rigs actively drilling in the field. Shown below are the initial production updates for our recent wells that closed out the 2021 drilling program on an average per well, gross basis.
- Faraway 4-17 pad (two wells):
- On production early February
- Average IP10 of 262 boe/d (87 percent light oil) per well
- Faraway 1-25 existing pad (one additional well):
- On production early February
- IP10 of 424 boe/d (80 percent light oil)
- Faraway 4-17 pad (two wells):
- Pembina: Offsetting our successful 2021 program wells, three wells (2.7 net) of the six wells (5.5 net) planned for the first half of 2022 have been rig released. We are currently drilling on the 8-27 pad in South Pembina with one active rig in the field. The three wells shown below were brought on production in mid-February and we anticipate early production data later in February.
- PCU#9 16-9 pad (two wells)
- LNU 12-17 pad (one well)
- Peace River: Results from the four well program (4.0 net) targeting the Bluesky formation that was drilled in 2021 have fully cleaned up and are producing above expectations. These new wells are exhibiting very strong initial total production rates of over 2,000 boe/d (99 percent heavy oil) with peak oil production over 2,700 boe/d. Updated results for the Bluesky wells are shown on an average per well, gross basis:
- 6-31 pad (three wells):
- Average last 30 days of 474 boe/d (greater than 99 percent heavy oil) per well
- 14-25 pad (one well):
- Average last 14 days of 608 boe/d (greater than 99 percent heavy oil)
- 6-31 pad (three wells):
We drilled one well to date of the six Bluesky locations planned in 2022 and began drilling the second well in mid-February.
ASRP UPDATE
Early in 2022, we received an additional $2 million of ASRP funds with the expansion of Period 5, bringing total support to over $37 million (on a gross basis). Including the impact from our $14 million in planned decommissioning expenses in 2022, we anticipate successfully abandoning over 300 net wells and over 500 km of pipelines (net) during the year, further demonstrating our commitment to reducing our impact on the environment.
2022 OUTLOOK AND GUIDANCE
As outlined in our 2022 drilling program and guidance release, we expect to grow average production to 29,100 to 30,100 boe/d in 2022. Should commodity prices remain favourable, we are positioned for additional development in the second half of 2022.
Net operating costs per boe are expected to be lower than 2021 levels due to increased production volumes and continued operational cost controls, despite current inflationary pressures on the industry. Increases in both FCF and FFO are expected due to the continued strong performance of our high netback assets, the higher commodity price environment and a diverse development program. FCF generated in 2022 will initially be directed toward further debt reduction and is expected to result in a 2022 net debt to funds flow from operations of below 1.0 times. In the first half of 2022, we plan to refinance our debt facilities to consist of senior debt to provide operating liquidity and junior debt to provide a longer-term maturity profile. Our full year 2022 guidance is presented below.
| 2022 Guidance | ||||||||||
| Production1 | boe/d | 29,100 – 30,100 | ||||||||
| % Oil and NGLs | % | 66 | ||||||||
| Capital expenditures | $ millions | 143 – 149 | ||||||||
| Decommissioning Expenditures2 | $ millions | 14 | ||||||||
| Net operating costs3 | $/boe | 12.00 – 12.90 | ||||||||
| General & administrative costs4 | $/boe | 1.55 – 1.65 | ||||||||
| Based on midpoint of above guidance | ||||||||||
| WTI Range | US$/bbl | 70.00 | 75.00 | 80.00 | ||||||
| Funds flow from operations5, 6 | $ millions | 309 | 326 | 345 | ||||||
| Free cash flow5, 6 | $ millions | 149 | 166 | 185 | ||||||
| Net debt5, 7 | $ millions | 271 | 254 | 235 | ||||||
| Net debt to FFO3, 7 | times | 0.9 | 0.8 | 0.7 |
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