Obsidian Energy Corporate Presentation August 2018
Important Notice to the Readers This presentation should be read in conjunction with the Company’s unaudited consolidated financial statements, Management's Discussion and Analysis ("MD&A") for the three and six months ended June 30, 2018. 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
Obsidian Energy Corporate Profile Corporate Metrics Peace River Share Price C$/share $1.39 Manufactured Cold Flow, High Rate, Low July 31st, 2018 Cost with Multiple Egress Options 4,834 boe/d Q2 2018 OBE-TSX Daily Volume MM 0.7 Net Sections: 235 % of shares outstanding 0.2% OBE-NYSE Daily Volume MM 1.0 % of shares outstanding 0.2% Cardium Market Capitalization $MM $705 Deep Basin Net Debt $MM $408 Meaningful Free Cash Flow Generation, Waterflood Approach with Primary Optionality Multi Horizon Potential, Enterprise Value $MM $1,113 18,400 boe/d Q2 2018 Highly Economic Deep Basin Development Net Sections: 450 1,541 boe/d Q2 2018 FY 2018 Guidance Net Sections: 700 Productio ion boe/d 29,000-30,000 Growth th % 5% Index Map Total al Expendi ditur tures Capital Expenditures $MM $180 Decommissioning $MM $10 Alberta Viking Expense ses Operating Expense $/boe $13.00 - $13.50 Short Cycle Investment to Toggle Growth, G&A Expense $/boe $2.00 - $2.50 Industry Leading IP Rates Legacy Asset Production of 1,782 boe/d Q2 2018 2,140 boe/d in Q2 2018. Net Sections: 170 See end notes 3 ObsidianEnergy.com | TSX/NYSE: OBE
Looking back on 2017 ✓ Beat production guidance & delivered double digit production growth for the second time in 10 years ✓ Reduced Opex and G&A by $130 million through divestments & efficiencies ✓ Dropped debt by $120 million and leverage to the lowest level in six years ✓ Replaced over 100 percent of produced reserves for the first time in five years ✓ Put in place a reserve based lending facility ✓ Settled legacy SEC corporate litigation ✓ Reduced decommissioning liability by approximately 35 percent ✓ Rebranded the Company 4 ObsidianEnergy.com | TSX/NYSE: OBE
2019: An Inflection Point in the Business 2019/2018 CFPS growth versus 19 EV-DACF at DSI price assumptions* 100% Median 80% 19/18 CFPS growth (%) OBE 60% The analyst community recognizes OBE’s cash flow growth potential, with an attractive 40% valuation 20% Median 0% 3x 4x 5x 6x 7x 8x 9x 19 EV/DACF (x) Chart excludes five peers with either CFPS growth <0% and or EV/DACF > 9.0x Peers Include: AAV, ARX, ATH, BNP, BTE, CPG, CR, ERF, FRU, LXE, MEG, NVA, OBE, PEY, PGF, PNE, PONY, POU, PXX, RRX, TOG, TOU, TVE, VET, VII, WCP * Desjardins price deck: 2018 [ US$63.94/bbl WTI, C$1.69/mcf AECO, US$0.78/C$ FX ] and 2019 [ US$60.00/bbl WTI, C$2.00/mcf AECO, US$0.78/C$ FX ] Source: Desjardins Capital Markets, Bloomberg 5 ObsidianEnergy.com | TSX/NYSE: OBE
The Largest Land Holder in the Cardium Play Fairway Significant Inventory Upside R10W5 INDEX MAP Reserve book includes 129 highly confident locations Pembina Booked Locations 87 Additional Inventory 363 Total Inventory 450 T50 Willesden Green PEMBINA Booked Locations 42 Additional Inventory 208 Total Inventory 250 Total Inventory 700 Reserves Summary T45 15 kms Large light oil weighted reserves 10 miles Willesden Green Units Pembina OBE Cardium WI Land Arc PDP MMboe 35 23 Baccalieu Bonterra Proved MMboe 45 28 Inplay Prairie Storm Proved + Probable MMboe 64 37 Ridgeback WILLESDEN Tamarack Valley Whitecap GREEN 2P BTCF NPV10 $MM $877 $525 Yangarra T40 See end notes 6 ObsidianEnergy.com | TSX/NYSE: OBE
Why Willesden Green, Why Now? • The Cardium is a premium light oil play and we hold a material position • Industry is improving with longer laterals and increased frac intensity • OBE outperformed the industry average oil production per well for the past four years Willesden Green Average Cumulative Oil by Year R7W5 60 Average Cumulative Oil Production / Well (MBBL) 50 T43 40 30 10 kms 5 miles 20 OBE land 2017 OBE well 2017 industry well T40 2016 OBE well 2014 - OBE 2014 - INDUSTRY 2016 industry well 10 2015 - OBE 2015 - INDUSTRY 2015 OBE well 2015 industry well 2016 - OBE 2016 - INDUSTRY 2014 OBE well 2014 industry well 2017 - OBE 2017 - INDUSTRY 0 0 10 20 30 40 50 60 Months See end notes 7 ObsidianEnergy.com | TSX/NYSE: OBE
Fast Tracking the Cardium Priority 1: Intensify short cycle Willesden Green Cardium drilling PROVIDIN DING G INVESTORS TORS WITH ENABLED BY Strong results A focused that demand capital more capital allocation model Deliver on Cardium focused light oil Manufacturing Shallow decline growth process to waterflood systematically business unlock value Adding $50MM of development capital to drill 13 primary wells in Light oil growth H2 2018 The best acreage trajectory with in the play torque to rising fairway prices We will set ourselves apart in the Cardium 8 ObsidianEnergy.com | TSX/NYSE: OBE
Obsidian Energy Has CRIMSON LAKE NEAR-TERM FOCUS AREA Distinctive Running Room Crims mson n Lake “Halo” • Line of sight to 80 primary locations, focused in Willesden Green • Both inside unit H1 2018 Develo elopmen pment boundaries and in the “Halo” acreage Addit itio ional nal H2 2018 Wells ls • Additional primary development potential in East Willesden Green and “Halo” Crim imson Lake flanks • Fast track Cardium Open plan has 15 primary Creek Faraway wells in H2 2018 with 5 wells expected to be on production by year Additional end primary development potential • Remaining wells Near term inventory OBE well coming on early 2019 5 kms Industry well OBE unit land 3 miles OBE Cardium WI land 9 ObsidianEnergy.com | TSX/NYSE: OBE
Why Obsidian Energy, Why Now? • Kick-started a disciplined growth story that is well positioned for self funded 2019 cash flow expansion Setting ing up for growt owth • Robust drill-ready portfolio focusing in Willesden Green, allowing quick capitalization on incremental free cash flow • Cost reduction track record; reduced Opex and G&A by $130 million and lowered net debt by Focused sed and $120 million in 2017 discip sciplined lined operat rator or • Depth and repeatability of inventory allows for programmatic scale of Cardium development Stable ble asset et base e • 16% corporate base decline generates meaningful underpi erpins s cash year over year reinvestment decisions commodi modity y pric ice e • Robust margins and high liquids position set up well for 2019+ price leverage upsid ide See end notes ObsidianEnergy.com | TSX/NYSE: OBE 10
2018 Budget & Asset Details ObsidianEnergy.com | TSX/NYSE: OBE
Focused 2018 Plan • Predictable & Liquids Weighted Growth Profile • Development Capital is 72% of Total Expenditures 2018 Production (boe/d) 2018 Total Expenditures ($MM) 29,000 – 30,000 boe per day $190 million 32,000 Regulatory Base & 5% A&D 5% D Adju just sted ed $19 Infrastructure ion Grow owth h Enviro Produc uctio 10% 30,000 Capital $10 $25 5% 13% 28,000 26,000 24,000 2018 22,000 Development $136 72% 20,000 2017E A&D Adjusted FY 2018E See end notes 12 ObsidianEnergy.com | TSX/NYSE: OBE
Portfolio Optionality on Display Increas reased ed Cardi rdium um Capit pital al Employing a quicker payout program that by $50MM M (13 wells) ls) balances primary drilling with targeted low capital integrated waterflood opportunities 2018 Development Allocations ($MM) Budget 2018 Operated Spuds 34 Operated spuds planned in 2018 80% Av. IRR (excludes non-operated activity) 100% Av. IRR 45% Av. IRR Deep 34 35 Basin PROP Optimization $7 $14 $14 5% PROP 9% 10% 30 8 Deep Basin 25 2 20 15 Cardium 24 10 Cardium $101 5 74% 0 65% Av. IRR 2018 Wells Spud See end notes 13 ObsidianEnergy.com | TSX/NYSE: OBE
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